A Sustainable Development Expert’s Take on the 10th Anniversary IGEL Conference

By Noam Lior, PhD, Professor of Mechanical Engineering and Applied Mechanics, University of Pennsylvania

The vital urgent challenge: with projected population increase of 30%, to 9 billion within the next 33 years, exponential increase in the demand for resources, the associated large scale of projects, the proven serious impact on the environment, all development must be done sustainably to prevent major deterioration of present and future life quality or even global disaster. For the utter skeptics: at the very least, prepare for damage to the business, and stricter government regulations, monitoring, and enforcement.

Education, for business or otherwise, requires, as much as possible, definitions, methods that are quantitative/scientific, correct data, and wide acceptability, standardization and uniformity. This is especially important for the complex highly multidisciplinary field of sustainable development which is of vital importance to humanity’s survival (or at least well-being), and thus also has a meta-ethical foundation. Education in business sustainability must increasingly and more rigorously address the role of sustainability as a business paradigm, including multi-generational and international/global considerations. Business education should consider and support the evaluation and substantiation of national and international sustainable planning policies, now for example the US new administration’s directions, and the UN Sustainable Development Goals (SDG). It should include a description of the dangers of Greenwashing and other sustainability fraud.

Sustainable development requires a scientific approach, close and honest cooperation between all humans, across any borders they drew, vision of the future, and much respect for the environment that we so temporarily occupy.

Creating the Next Generation of Business Leaders

By Erin Meezan, CSO, Interface, Inc.

Last week, on the 10th Anniversary of the formation of the Wharton Initiative for Global Environmental Leadership (IGEL), the organization hosted an energizing conference focused on The Future of Education In Business Sustainability. I was honored to participate on a panel of business leaders including Johnson & Johnson, Interface, Coca-Cola and others, and offer perspective on what skills and experiences are required for future business leaders.

The pivotal point of discussion surrounded how business schools should prepare students for sustainable business management. Should curriculum focus on creating graduates with strong foundational business skills combined with an understanding of how to implement sustainable business practices, such as supply chain management? Or, should schools aim to form ethically-minded, collaborative business leaders who have the capacity to lead the organizational change necessary to solve the world’s greatest challenges? The former approach seems wholly inadequate for creating the next generation of business leaders. But sadly, it’s what most business school programs are focused on creating.

As the Chief Sustainability Officer for Interface, a global carpet tile manufacturer with sustainability at its core, I’ve seen the skills and capabilities needed in our business evolve dramatically over the last ten years. When Interface first began its transition toward a more sustainable business model, we needed business leaders with strong business knowledge who were willing to “learn sustainability.” They needed to know how to implement ideas like zero-waste and closed-loop thinking in our factories. But we never would have started to transform our business if our founder, Ray Anderson, had not recognized that the way we were running Interface, divorced from the consequences of our decisions and their impacts on people and planet, was ethically wrong. He called it a “spear in the chest moment” when he realized our business was fundamentally flawed, and so he set a new vision for Interface. Interface has made great progress to reduce its environmental impacts, and we’ve done it with a fantastic set of business leaders who “learned sustainability.” But as we look toward the future and start creating, promoting and finding the next generation of Interface business leaders, we need something different.

Last summer, Interface’s new leadership team, building on Ray’s legacy, set a new mission for the business – engineer a “climate take back.” In response to the threat of global climate change, we’ve committed to run our business in a way that creates a climate fit for life. And we hope to inspire other businesses to follow our lead. This means, simply, we have to move beyond the mindset of just reducing our carbon emissions – we need to focus on removing carbon from the atmosphere. We’re creating a map for how we as manufacturers can achieve this goal. We’ll focus on how we can source materials, run our operations and create products that remove carbon from the atmosphere. When I think about hiring the next generation of business leaders at Interface to help us lead this revolutionary approach, I think about those ethically-minded, collaborative leaders who can go way beyond implementing sustainable business practices, to designing solutions in our business that help change the world. And I hope that I will be able to find and hire them.

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Wharton IGEL 10th Anniversary Dinner & Conference: The Future of Education in Business Sustainability

This gallery contains 23 photos.

April 25th & 26th, 2017 On April 25th & 26th, founding and current corporate sponsors of IGEL joined leading academics in the field to examine lessons learned in the effort to promote education in business sustainability looking towards the future. … Continue reading

B-School Fundamentals for Sustainability

By John Mandyck, CSO of United Technologies
April 21, 2017

As the chief sustainability officer of United Technologies, I am often invited to college campuses to speak to students about what my company does to advance sustainability in the United States and around the world. And I’m proud of the answer.

People, Communities, and the Environment

The United Technologies sustainability platform consists of three pillars:

People — Among United Technologies’ greatest assets are the expertise, creativity and passion of our employees. We sustain our workforce through opportunity and employee development. In the last twenty years, we’ve invested $1.2 billion through our Employee Scholar Program to help our employees earn 38,000 college degrees.

Communities — We believe that financial performance and corporate responsibility go hand in hand while we strive to improve people’s quality of life everywhere we do business. We support initiatives and employee volunteerism for vibrant communities, STEM education and sustainable cities.

Environment – We believe we can do good for the planet while we do good for our customers and shareowners. Whether it’s developing energy-efficient solutions for green buildings that can change how cities urbanize, pioneering technologies to extend the world’s food supply, or setting the standard for green aviation through sustainable factories and technologies, United Technologies is leading the way to solving some of the toughest environmental challenges of tomorrow.

While we maximize the effectiveness of our environmental technologies, we actively minimize our environmental footprint — in the last 20 years, United Technologies tripled its revenues while lowering greenhouse gas emissions 34% and water consumption 57%, all on an absolute basis.

What does a CSO do?

Often, after outlining UTC’s sustainability program, I am asked, “Ok, but what does a chief sustainability officer (CSO) do every day?” That’s a fair question. Sustainability is still an emerging profession – and no two jobs in this space are the same. In addition to the private sector, large cities are starting to create CSO positions too. CSOs come from all backgrounds – marketing, technology, policy, environmental affairs, and more – and reflect the culture and priorities of their companies.

Some focus on lowering their environmental footprint. Some focus on the role for emerging environmental technologies. Some focus on corporate social responsibility. Some engage with stakeholders to achieve sustainable outcomes. Some focus on thought leadership to bring new ideas forward. We organize our program at United Technologies to do all of these activities.

My day-to-day routine focuses on outreach to key stakeholders – customers, policy-makers, thought-leaders, students and more – to expand the dialogue on three issues important to us: advancing green aviation, accelerating the adoption of green buildings and lowering food waste through cold chain development. To do this, we sponsor research, we convene experts, we share our thinking and we explore possibilities to help the world grow and urbanize more sustainably.

Business Schools and Sustainability

The question of what I do each day is sometimes followed by, “If I want a career in sustainability, what are my options?”

Fortunately, business schools around the country are adopting more and more sustainability-focused classes, as well as entire programs dedicated to corporate responsibility and sustainability. Getting started in one of these programs is a great first step.

Students and business school faculty interested in advancing sustainability curricula should focus on three key areas:

  1. Connect to the mega trends in the world – our global population is expected to grow 35% in just 35 years, and at that point in 2050, nearly 70% of all people will live in cities. These megatrends are redefining our society and our economy with big implications for sustainability.
  2. Recognize sustainability as a business strategy – sophisticated companies realize they can offer a value proposition to their customers by doing good for the planet, which often times can provide differentiation in industries.
  3. Incorporate multiple disciplines into sustainability classes – successful sustainability programs are drawing on multidisciplinary backgrounds in marketing, public policy, business, communications, engineering, science, and more. Many skills and perspectives are needed to help the world advance sustainably.

Making a Difference

Increasingly, workforce entrants are looking for employers who are making a difference in the world. Sustainability is a key way companies can make that difference. And careers in sustainability are a key way business school graduates can immediately make a difference with their careers. Business schools can prepare students for this field by providing the context, strategies and skills to accelerate sustainability around the world.

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To continue the conversation, tweet me @JohnMandyck.

Latest Episode of the Kleinman Center’s Energy Policy Now Podcast, Featuring Andrew Light

Submitted by Andy Stone, Communications Manager, Kleinman Center for Energy Policy

The new episode is a conversation with a former State Department climate negotiator who was involved in the Paris climate deal.  He discusses the current White House debate around Paris, and the implications for global climate cooperation if the U.S. backs out.

The Trump administration has offered conflicting messages on its intention to remain a party to the 2015 Paris Climate Accord.  The question of U.S. involvement reaches a climax this week as senior advisers to the President hash out the administration’s path forward, with potentially far reaching implications for the climate deal, and for the United States’ role as a steady leader in global diplomacy.

In the latest episode of the Kleinman Center for Energy Policy’s Energy Policy Now podcast, former State Department climate negotiator Andrew Light discusses the battle in the White House over Paris, and the fate of the accord without U.S. leadership.  Light, a recent visiting scholar to the Kleinman Center, examines whether it will be possible for the U.S. to meaningfully “maintain its seat at the table” of climate dialogue even as it pulls back from global climate efforts.

Light also provides insights into the negotiations leading to the Paris climate deal, and the unique political environment in the U.S. and abroad that made the agreement possible.  Light is a Distinguished Senior Fellow in the Global Climate Program at the World Resources Institute and Director of the Institute for Philosophy and Public Policy at George Mason University.

An Interview with Maddie Macks, VP of Academics for the Wharton Graduate Association

Submitted by Mary Johnston, WG’18

Mary conducted an interview with Maddie Macks, VP of Academics for the Wharton Graduate Association. Maddie is in charge of Academics as part of Wharton’s Student Government, and is one of the founding members of the Wharton Sustainability Club.

 

Q: Why is Sustainability an important topic for MBAs?

A: First, resources are finite, and many industries including agribusiness, CPG, manufacturing, and energy rely on these materials for their business. My peers, as future business leaders, will be in positions where they are making supply chain, sourcing and operations decisions and will need to steward these resources to mitigate risk.

Second, while the U.S. federal government is currently trending toward deregulation, this is not the trend globally, as evidenced by The Paris Agreement. Many of my peers will be working in international companies where these regulations will be increasingly relevant.

Further, business decisions can have a big impact on local communities. For example, public health can be heavily impacted by water and air quality, and degradation of local ecosystems can impact livelihoods.

 

Q: What are other top business schools doing in their Sustainability Curricula?

A: They are ramping up their sustainability presence, offering certificates and more specific coursework. Many are integrating sustainability more into their core curriculum to ensure all students are educated on environmental issues in business. Almost all top business schools have sustainability-focused student clubs to build a community in the space on campus. Stanford, Sloan, Ross, and Yale are a few prime examples of schools that are increasing their presence in the space, and it’s attracting top students.

 

Q: What does Wharton do well now in terms of Sustainability?

A: Wharton has partnered with IGEL to offer the Environmental & Risk Management Major, which is one of the things that attracted me to Wharton. The Energy Club, Social Impact Club, and Agribusiness Club have sustainability-related programming, and as of this year, we have a group of about thirty students starting the Wharton Sustainable Business Coalition, a new club that will be up and running by Fall 2017. This group of students has also gotten to know each other well during the Energy Club’s clean energy trek to San Francisco as well as several student-run happy hours.

 

Q: What are the biggest opportunities for Wharton to increase the presence of Sustainability in the curriculum in the short term?

A: There are two things I think Wharton can do in the short term.

First, Wharton could incorporate more Environmental Responsibility content into the Business Ethics core requirement. This would help ensure that every Wharton student gets more exposure to how decision-making can have environmental consequences.

Second, Wharton could proactively ensure all relevant graduate coursework from around Penn related to Sustainable Business topics is cross-listed with Wharton to help facilitate students taking these classes. For example, the School of Earth and Environmental Sciences has several great courses.

 

Q: And how about the long term?

A: Wharton has an opportunity to continue to develop coursework related to sustainability and look into hiring more faculty who can teach courses and do research in the area. Wharton has such a huge opportunity to influence future business leaders’ decision-making, and making sustainability more present in Wharton’s curriculum would speak volumes to the issue’s importance. For example, the Environmental Risk & Management Major does a great job covering risk management, and I would love to see innovation and the financial implications of environmental choices highlighted more prominently as well. I also think there are opportunities to offer more sustainability courses as part of the Business Economics and Public Policy, Operations, Information, and Decisions, and Management Majors to name a few. Incorporating more of a focus on sustainability, can help Wharton stay on the cutting edge of business trends.

Simple Solution, Big Impact: #UsedCups

Submitted by IGEL Corporate Advisory Board Member Rubicon Global

Rubicon

As Earth Day approaches on April 22, multinational corporations, governments, nonprofits and NGOs – as well as the United Nations’ Sustainable Development Goals – continue working fast and furiously to tackle monumental challenges. It’s clear we must establish a more circular economy for the long term well-being of not only the plant, but also business and even society as a whole.

There are big challenges ahead, and in many ways Earth Day serves as a reminder of this. But what can one individual, one organization, even one country do to make a dent in these monumental challenges? At Rubicon, we’ve learned that in order to really make a difference we need to start by doing something manageable and specific. For us, it’s keeping waste out of landfills.

Did you know reuse and recycling is currently the top action society can do today to simultaneously improve the environment, the economy, sustainable manufacturing and to prevent waste from going into oceans?

We know that Americans throw away 25 billion Styrofoam coffee cups and 58 billion paper cups annually. These cups are not recycled, most are not recyclable, and yet we keep using them over and over because many aren’t aware of the environmental impact.

What if this year in honor of Earth Day we keep it simple and simply remember to save #UsedCups?

Think about what you drink out of every day, at home, at work and on the go. Do you opt for the reusable coffee mug or a single-use disposable cup? If you must choose single-use, do you recycle or compost it afterward? These are questions very few people think about on a daily basis, but if people did, they could have a profound positive impact on the environment.

So help us change this bad habit that we’ve developed as a society. We invite you to join us in raising awareness about cup-use and get others to do the same this Earth Day.

Post about your beautiful reusable cups on Instagram, Twitter or Facebook with #UsedCups between now and April 19th and be entered to win two 3-day passes to Sweetwater 420 Fest in Atlanta or an Apple Watch Series 2.

Every reusable beverage container counts. Reusable water bottles, ceramic coffee mugs, perhaps even a sippy cup. Every cup reused or recycled is one less cup in the landfill, so go ahead, show us your #UsedCups!

 

Learn more about the #UsedCups campaign, and follow Rubicon on Instagram, Twitter and Facebook.

Interviews: Paving the Way Towards a Future of Sustainability in Business Education

By: Elena Rohner, Graduate IGEL Coordinator.  April 12th, 2017

Solutions for improving sustainability in business education often center on creating integrated, cross-disciplinary courses or concentrations; yet this requires a large investment of time and resources. It can take at least a semester to put together the syllabus, materials and teaching tools for a new course, not to mention the time dedicated to overcoming administrative bureaucracy. Therefore, one of the best solutions that business schools can employ to better prepare students for roles in sustainability is: get them talking to professionals!

I recently interviewed two leaders in sustainability for a final assignment in a course called Leading Change for Sustainability (ENVS 682) taught by Penn alum and Sustrana Sr. Associate, Kim Quick and Penn’s Sustainability Director, Dan Garofalo. One interviewee was Todd Hoff, VP of Marketing and Customer Solutions at CHEP North America. Hoff reiterated, in a more nuanced manner, strategies and take-aways commonly touted in the sustainability world. He also shared stories of achievements and challenges, highlighting the seemingly basic pathways and pitfalls of sustainability that continue to pervade industry and create unsolved barriers to sustainability.

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Here are some of my take-aways from our conversation:

  • People don’t know what sustainability is…
    • Sustainability remains an enigma—a concept widely misunderstood with a different definition according to pretty much anyone you ask. Many business executives define sustainability as a strategic force in leadership where an organization makes impactful choices that preserve economic and environmental resources.
    • Hoff shared that sustainability should not be understood as something separate from the business activities. Business can make a difference through business itself, and as a result sustainability should be embedded in the decision-making and the core operations of the company. Hoff also finds peoples’ confusion about sustainability to be the most challenging aspect of working as a sustainability proponent. He highlights the example of employees confusing a sustainability initiative with office supply recycling. And, while recycling is one facet of “sustainability,” it is only that. A single and siloed leverage point. People fail to understand the need for a multifaceted approach to sustainability. As an example, Todd shared his experience at Brambles, the parent company of CHEP, where they have a multi-faceted sustainability strategy including Better Planet, Better Business, and Better Community. http://www.brambles.com/sustainability
  • Having a growth mindset is key:
    • A lot of class time in ENVS 682 is spent identifying and leveraging strengths and mindset. Hoff, whose team just took the Gallup Strength Finder questionnaire, said his results were: relator, learner, arranger, achiever, and includer. Hoff also highlighted his growth mindset when it comes to work—he is motivated by the work itself and the constant growth and learning involved in his role. It is clear that a successful sustainability, or any business, leader has a growth mindset, strong communication skills, and a talent for seeing and making connections.
  • Adam Grant got it right.
    • In class we saw Adam Grant’s quote, “The stories we tell ourselves shape what we do. If you believe people are fundamentally selfish, you will act in ways that make it true.” This stuck with me, so I asked Hoff what he thought about the quote and whether it held relevance for his work. He agreed with Grant and without me bringing up the concept of positive psychology, Hoff gave a great example of how he lives by this concept every day. Hoff noted his learner strength and that he tries to always stay positive in his learning approach. He said that “it’s all related”—that is, successfully managing a large diverse team and achieving the results he wants to see.
  • Surprise! Money plays a critical role:
    • Hoff highlighted how financials are always a motivating factor in any sustainability conversation. He spoke about the “business sense” argument as an invaluable strategy when working with people who are not on board with a sustainability initiative. In other words, he makes sure to include the environmental benefits of the service or product, but what truly seals the deal is conveying how a client can also make or save money. His strategy is to sell the “Win-Win” concept. In this sense, money is the problem solver—it creates a common ground, a business language that everyone speaks and understands. And many, myself included, agree with this idea.

As I hope was conveyed above, interviews and coffee chats are an incredibly rewarding experience for students in any field. From the student and professional’s perspective, the benefits of an interview are a win-win, including:

  • Students learn insider tips
  • Professionals share anecdotes that highlight key, industry-specific take-aways
  • Both parties build their network

And, the best part about interviews is the minimal infrastructure and planning required—all you need is a phone and 20-30 minutes of someone’s day.

 

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U.S. Environmental Regulatory Trends: Past, Present and Future

By Larry Cahill, CPEA, Wharton IGEL Alumni Advisory Group member

“The care of human life and happiness, and not their destruction, is the first and only object of good government.”  Thomas Jefferson

 

Thomas Jefferson was a very smart man.  Perhaps though, his view of the purpose of government has been lost over time.  Recently there has been much discussion on the economic damages inflicted by the federal government related to the regulatory burden that industry faces in the United States.  Although these discussions are not solely limited to environmental regulatory burdens, many do believe that the pendulum has swung too far in controlling industrial operations and their air, water, and waste discharges.  I am not one of those individuals.  Yes, the Cuyahoga River in Cleveland no longer catches fire.  And Pittsburgh’s success as a city is no longer defined by the smoke being emitted from the stacks of its steel industry plants.  And the hidden Love Canal surprises are hopefully behind us.  Yet, there continues to be noteworthy cases of major environmental incidents and non-compliances across the nation. The 2015 Volkswagen “clean diesel” scandal is only one of many.  Did you know that every single year for the past 20 years the U.S. Department of Justice has charged some 200 to 300 individuals with committing environmental crimes?  That might not seem like many but in total these are criminal charges against over 5,000 individuals, not simply civil charges for exceeding permit limits or discharge standards.

One could logically ask the question – Where does the U.S. stand today with regard to environmental regulations and enforcement as the country experiences a new presidential administration with an uncertain regulatory philosophy and strategy?  Are we indeed better off and is it time to take the foot off the gas or is there still much work that needs to be done?  Recent regulatory and enforcement data released by the U.S. EPA help us to better understand where we are presently as a country and where we might be headed.

Environmental Laws: The Historical Setting

The First Earth Day occurred on April 22, 1970 in the midst of a nationwide college campus strike protesting the Vietnam War.  Protests in the streets all over the land.  Hmmm… Sound familiar?  That year of 1970 became a springboard for the passing of major federal environmental laws in the U.S.  As shown in Table 1, in the next two decades, some 12 critically important environmental, health and safety laws were passed.  Interestingly enough, eleven of the twelve were authorized and signed by Republican presidents; a legacy that is sometimes forgotten or ignored.  Each law, of course, required the creation of regulations to accomplish the stated goals.  And indeed that has occurred.

TABLE 1:  Major U.S. Federal Environmental Legislation (1969-1986)

No.

Year Title

Signing President

1. 1969 National Environmental Policy Act (NEPA) Nixon (R)
2. 1970 Clean Air Act (CAA) Nixon (R)
3. 1970 Occupational Safety and Health Act (OSHA) Nixon (R)
4. 1972 Federal Water Pollution Control Act (FWPCA) Nixon (R)
5. 1972 Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) Nixon (R)
6. 1972 Noise Control Act (NCA) Nixon (R)
7. 1973 Endangered Species Act (ESA) Nixon (R)
8. 1974 Safe Drinking Water Act (SDWA) Ford (R)
9. 1976 Resource Conservation and Recovery Act (RCRA) Ford (R)
10. 1976 Toxic Substances Control Act (TSCA) Ford (R)
11. 1980 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Carter (D)
12. 1986 Emergency Planning and Community Right-to-Know Act (EPCRA) Reagan (R)

 

Environmental Regulations: The Current Setting

All federal regulations, including those created by the EPA, are codified in the Code of Federal Regulations (CFR), published annually by the Government Printing Office.  That is, each year the CFR is released to the public and it contains all current and updated regulations effective on July 1st of that year.  The individual volumes for each year are usually available in January or February of the following year.  The EPA is responsible for the 37 volumes of Title 40 of that Code.  By early 2017 the EPA had released the 2016 CFRs effective July 1, 2016.  The total page count for EPA’s Title 40 regulations in 2016 was 27,074, the most on record. (See Figure 1) Combined with OSHA’s 3,096 pages in Title 29 there were, for the first time, over 30,000 pages in total, with EPA regulations accounting for 90% of that total.

In taking a closer look at the data, some interesting additional facts emerge.  For example:

  • Recent Growth.  There was an approximately 800 page, or 3%, increase in the number of pages in Title 40 in 2016.  This increase was almost twice as large as the total page count in 1972, the first year of regulatory codification.
  • Distribution by Media.  Approximately 66% of the pages in Title 40 are devoted to Clean Air Act regulations.  This represents roughly 17,750 pages, meaning that the Clean Air Act alone has almost six times as many pages of regulations than all of OSHA’s Title 29 Code.
FIGURE 1: Growth of U.S. EPA Regulations (1972-2016)

Fig1

  • Comparison with the U.S. Tax Code.  By comparison, the 30 thousand pages of EHS regulations is only about 40% of the total page count of ~75,000 pages in the federal tax code.
  • Comparison with the Dow.  Interestingly, if one does the calculations for the 1972-2016 period, there is a 95% statistical correlation between the growth of environmental regulations and the growth of the Dow Jones Industrial Average (DJIA).  Granted this is some outside-the-box thinking, but could this mean that regulatory growth is good for the economy!?

Will Environmental Regulations Continue to Grow?

Will the growth of federal environmental regulations continue or has it peaked?  One way to anticipate the answer to the regulatory growth question is to take a look at the Agency’s Semi-Annual Regulatory Agenda, which was last released on November 17, 2016 (as part of the Executive Branch’s Unified Agenda) in the Federal Register.  This is a spring and fall requirement for all regulatory agencies[i].  In November the EPA listed 203 additional regulations (not pages, but individual regulations) that either had been recently promulgated (but not yet codified) or were under development.

Eventually, all of these new regulations will be added to Title 40, continuing the growth, unless there is a concerted effort to halt the regulatory development process; more on that later in this chapter.  It is very interesting to note, as depicted in Figure 2, that each of EPA’s Semi-Annual Regulatory Agendas from 1999 to 2011 listed somewhere between 350 and 450 regulations under development, a consistency that is stunning.  This means that for over a decade, there were always around 400 regulations under development on the docket.  Interestingly, there has been a dramatic reduction in the number of regulations listed to roughly 200 from years 2012 to 2016.  Maybe the regulatory pipeline is beginning to empty.

FIGURE 2: EPA Semi-Annual Regulatory Agenda Trends

Fig2

Yes, there are still regulatory gaps

In spite of the fact that there are now over 27 thousand pages of federal environmental regulations, there remain some additional risks and vulnerabilities that have yet to be addressed appropriately at the federal level.  Three of those that have surfaced on environmental audits of industrial facilities over the past 30 years are:

  • Water Storage Tanks. For large firewater and other water supply above-ground storage tanks, there is no requirement for tank integrity testing or secondary containment protections.  These tanks are often located adjacent to electrical substations and transformers in utility areas where a tank breach could short out the entire electrical system of the site and possibly the surrounding community.  And history tells us that large volumes of unexpected water releases can do considerable damage to facility equipment.  In 2011 a tsunami disabled the backup generators at the Fukushima, Japan nuclear power plant resulting in a meltdown of three nuclear reactors.  One global consumer products company has recognized this water storage issue as an unacceptable risk and has developed a corporate standard that requires secondary containment for all above ground storage tanks worldwide.
  • Hazardous Waste Storage.  Hazardous waste stored at 90-day accumulation areas require only that drums and containers be labeled, physically intact, and inspected weekly.  Surprisingly there is no federal requirement that containers be placed on an impervious surface incorporating secondary containment protections.  Thus, a pretty much unlimited amount of containers and drums holding hazardous waste can be stored directly on the ground for up to 3 months at these locations. Several states, including Massachusetts, have recognized this as a gap and require additional protections such as secondary containment for accumulations areas.
  • Accidental Discharges of Hazardous Substances.  Spill Prevention, Control and Countermeasure (SPCC) Planning requirements promulgated under Section 112.7 of the Clean Water Act regulations are designed to prevent the accidental release of only oil-containing substances into the nation’s waters.  Facilities subject to the regulations must develop an SPCC Plan that is certified by a Professional Engineer and must provide appropriate containment and/or diversionary structures or equipment to prevent a discharge of oil. New Jersey is one state that has recognized that regulating only oil in this way is a gap and has promulgated Discharge Prevention, Containment and Countermeasure (DPCC) regulations that cover not only oil but numerous other hazardous substances.

There are certainly other gaps as well and also existing regulations that require additional clarification.  A great example of the need for clarification are the “weekly”, “monthly”, and “annual” requirements found in many environmental regulations.  Be assured that there have been many lively discussions among site staff, regulators and auditors over whether “annual” means every 12 months or once a year.  There is a big difference in the two interpretations.

U.S. EPA Enforcement Activity Remains Substantial

The EPA has had a substantial enforcement program throughout its history.  EPA’s current Enforcement budget is approximately 10% of its total $8.1 billion budget and, for comparison purposes, is 35% more than the entire budget of the Occupational Safety and Health Administration (OSHA).  On December 19th, the EPA released its enforcement results for fiscal year 2016, which ended on September 30, 2016.[ii]  Included in those results were data on administrative, civil judicial penalties, and criminal fines assessed.

As shown in Figure 3, EPA issued $5.8 billion in civil and criminal penalties in FY2016, the most ever in history.  However, the great majority of the penalties issued were due to a $5.6 billion settlement with BP Exploration & Production for Clean Water Act violations stemming from the April 20, 2010 Deepwater Horizon blowout and subsequent oil spill.  Note further that the 2013 penalty amount of approximately $2.6 billion was impacted significantly by billion dollar penalties against Transocean and BP, again for the Deepwater Horizon incident.

FIGURE 3: U.S. EPA Enforcement Penalty Trends

Fig3

Notwithstanding the two Deepwater Horizon enforcement actions in 2013 and 2016, on average, over the past ten years the EPA has issued approximately $200 million in civil and criminal monetary penalties each year.  This should be viewed together with the over 5,000 individuals that have been charged with environmental crimes by the DOJ over the past 20 years.  These numbers are not inconsequential.  And with almost a billion dollars being spent annually by EPA on enforcement, environmental noncompliance remains a serious issue, unmatched by any other country.  As EPA has stated in its FY 2013 OECA National Program Manager Guidance, we will “aggressively go after pollution problems that make a difference in communities.  EPA will use vigorous civil and criminal enforcement that targets the most serious water, air and chemical hazards, as well as advance environmental justice by protecting vulnerable communities”.[iii]

The Cautionary Tale of December 2016

So where does that leave us?  Should there be a continuing emphasis on environmental regulatory compliance and enforcement or should we indeed take the foot off the gas as some would propose.  Well, if the fortnight in the middle of December 2016 tells us anything, this is not the time to ease up.  Take note of the following headlines taken from that very short period:

  • DuPont agrees to pay $50 million in natural resource damages to resolve claims stemming from the release of mercury in the 1930’s and 1940’s from its Waynesboro, VA plant (December 16th).
  • Michigan’s Attorney General brings more criminal charges over the Flint, Michigan water crisis, including felony charges against two former state appointees and two former city officials (December 20th).
  • Volkswagen reaches $1 billion deal with the USDOJ and California in the ongoing diesel emissions scandal (December 21st).
  • A federal jury finds DuPont liable for $2 million in compensatory damages for an individual’s cancer stemming from the dumping of Teflon manufacturing chemicals (C8) into the Ohio River. An additional 3,500 cases are pending (December 21st).
  • Shell Oil will pay $22 million to the city of Clovis, California for chemical (TCP) found in drinking water supply (December 27th).

Frankly, it’s hard to believe that all five of these incidents occurred over a two-week period in the last month of 2016.  They suggest that the U.S. is nowhere near where it needs to be with respect to the environment.  Continuing oversight is needed and both public and private sector institutions need to be held accountable for meeting, if not exceeding, regulatory requirements.

What Might Change

During the 2016 presidential campaign and now with the new Trump Administration in place concern has been expressed over the regulatory burden placed on U.S. industry and the regulated community in general.    It should be noted that this concern is nothing new.  For example, on January 18, 2011 President Obama issued Executive Order 13563, “Improving Regulation and Regulatory Review”.  The Order required a government-wide review of existing rules “to remove outdated regulations that stifle job creation and make our economy less competitive.  It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules…”[iv]  In response to President Obama’s Executive Order, EPA created the Regulatory Development and Retrospective Review Tracker (Reg DaRRT), which provides information on the status of EPA’s priority rulemakings, as well as information on the status of retrospective reviews of existing regulations.  One positive outcome of the Executive Order was the July 31, 2013 issuance of a final EPA rule on solvent-contaminated wipes that reduced the regulatory burden on tens of thousands of facilities using these wipes routinely.

What is different today is the approach that is being proposed by the current Administration.  President Trump has said numerous times that his goal is to eliminate as many as 75% of all existing federal regulations.  The first step in that effort was the January 30, 2017 issuance of an Executive Order: “Reducing Regulation and Controlling Regulatory Costs.”  This Order calls for every “one new regulation issued, at least two prior regulations be identified for elimination with the goal of zero incremental costs.”  As with most Executive Orders further guidance will be required and the Director of the Office of Management and Budget is required to develop that guidance.  In fact, on February 2, 2017 the White House issued guidance stating that the Order would only apply to “significant” regulations, as defined in Executive Order: “Regulatory Planning and Review”, issued by the Clinton Administration in 1993.  Significant regulations are those imposing an annual economic cost ≥$100 million.  The Director must also identify the total amount of incremental costs that will be allowed for each agency for each fiscal year.

This “one in, two out” approach, if enacted as stated, obviously will have significant impacts on federal rulemaking within all agencies including the EPA.  As stated previously, the EPA in its November 2016 Semi-Annual Regulatory Agenda listed 203 new regulations under development or review.  Will this mean that if all of these regulations are put forward that over 400 other, existing regulations must be eliminated?  As arbitrary as this sounds, the answer today is yes.

Another potential impact caused by the Executive Order would come from the new chemical requirements in the Frank R. Lautenberg Chemical Safety for the 21st Century Act signed into law on June 22, 2016.  The Act requires that the EPA evaluate and communicate the risks of existing chemicals from the current inventory of 83,000 chemicals in use in the U.S.  The first 10 chemicals were identified on November 29, 2016 and include asbestos, carbon tetrachloride, methylene chloride, and trichloroethylene.  If an assessment determines that a chemical poses an unreasonable risk the Agency must mitigate that risk within two years.  Further, for each risk evaluation completed, another must be initiated with at least 20 ongoing evaluations being conducted by the end of 2019.  Does this mean that any resultant rule addressing mitigations for a particular high-risk chemical cannot be promulgated unless two other unrelated rules are eliminated?  This seems rather arbitrary as well.  Perhaps in this and other cases the “significant regulation” threshold will have a moderating impact and the effects will not be as severe as expected.

Another regulatory reform initiative taking place but receiving considerably less attention is the use of the Congressional Review Act enacted in 1996, which allows lawmakers to take certain actions for those laws enacted during the waning days of an administration.  The Congress has already used this power to rescind EPA’s Stream Protection Rule promulgated in December 2016, which sought to protect the nation’s waterways from debris generated by coal surface mining activities.  Congress is also attempting to rescind the EPA’s revised Accidental Release Prevention Requirements contained in its Risk Management Program final rule issued on January 13, 2017.  A bill to rescind the rule has been introduced in the House as of this writing.  Historically, the Congressional Review Act has been used sparingly but this has not been the case in early 2017.

In sum, there is strong evidence that significant regulatory reform is ahead driven by a Republican Congress and Presidency.  One can only hope that logic will prevail and that protection of human health and the environment will continue as a fundamental goal for the nation.

Why the EPA’s Mission Remains Critically Important

With good reason President Nixon created the EPA in 1970.  The Agency’s basic mission is to protect human health and the environment.  This is accomplished with an $8 billion budget and 15,000 full time equivalent staff.  Although it often is not evident in our daily lives, we have all been impacted in a positive way by the Agency’s efforts and programs.  Consider if you will the scope of the Agency’s oversight and responsibilities:

  • Nationwide Facility Coverage.  Over 800,000 facilities in the U.S. generate air emissions, wastewater, and hazardous waste at a level sufficient to require regulatory oversight through mechanisms such as Title V air permits, NPDES wastewater discharge permits, and/or hazardous waste generation and disposal requirements.  That’s an average of 16,000 facilities per state where there is regulatory oversight and controls over the release of pollutants.
  • Hazardous Waste Generation.  There are over 26,000 large quantity hazardous waste generators in the U.S., generating over 33 million tons of hazardous waste annually.  These generators are required to manage the wastes properly and report to the EPA every other year on their activities.
  • Toxic Releases.  There are over 22,000 facilities in the U.S. that release listed toxic chemicals at a sufficient level to require reporting under the Toxics Release Inventory (TRI) requirements of the Emergency Planning and Community Right-to-Know Act.  Over 3.3 billion pounds of toxics were released nationally in 2015.  TRI reporting has resulted in a better understanding of pollutants in our environment and has driven a reduction over time of releases.
  • Superfund Sites.  As a result of the 1980 passage of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) some 1,188 “Superfund” sites have been cleaned up as of November 30, 2016.  However, there remain 1,337 National Priorities List (NPL) Superfund sites yet to be cleaned up.
  • Toxic Chemicals.  There are 85,000 chemicals inventoried and regulated under the Toxics Substances Control Act.  These include materials containing asbestos and PCB’s, which were considered “miracle” products when first produced.  Very few of the inventoried chemicals have undergone meaningful risk assessments to determine hazards posed to human health or the environment.  The Frank R. Lautenberg Chemical Safety for the 21st Century Act signed into law on June 22, 2016 contains provisions to assure that these assessments are conducted.

It is important to note that, save for the Superfund sites, all of the chemicals, wastes, releases, and discharges discussed above are being managed in compliance with existing environmental regulations.  Do we really want to eliminate 75% of these regulations resulting in fewer controls over discharges and releases?

Closure

The future of environmental regulation in the U.S. is cloudy indeed.  It is really too soon to tell exactly what might be the impact of President Trump’s Executive Order and other pending regulatory reform initiatives.  It would be prudent to keep a close watch…

 

[i] The Regulatory Flexibility Act and Executive Order 12,866 require Spring and Fall Regulatory Agendas.

[ii] U.S. Environmental Protection Agency, “Fiscal Year 2016 EPA Enforcement and Compliance Annual Results,” Office of Enforcement and Compliance Assurance, December 19, 2016.

[iii] U.S. Environmental Protection Agency, FY 2013 Office of Enforcement and Compliance Assurance (OECA), National Program Manager (NPM) Guidance, April 30, 2012, p. 6.

[iv] Obama, Barak, “Toward a 21st-Century Regulatory System”, Wall Street Journal, January 18, 2011.

Newest Knowledge@Wharton Report, Sponsored by Dow, Explores the Circular Economy

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The Circular Economy: From Concept to Business Reality

In an ideal world, everything manufactured by people would automatically be either re-purposed or reduced to its component parts and recycled for other uses, thus presenting a sustainable, closed loop that wasted no resources. But it’s not a perfect world, and the usual destination for our unwanted goods — especially in the U.S. — is the landfill. Can we turn that situation around?

After more than a century of linear thinking about the path products take from cradle to grave, excitement is growing among environmentalists and business leaders about the revolutionary potential of the circular economy — which fights waste by aiming to extract the maximum value from commercial goods. The recent Wharton conference on the subject, co-sponsored by Dow and Wharton’s Initiative for Global Environmental Leadership (IGEL), brought together pioneers from industry, academia, and non-profit organizations. This report extends the discussion begun at the conference by looking more in depth at the issue.

Turning Waste Streams into Value Streams

Recycling waste salvages just a tiny fraction of a product’s original value. Far more productive uses can be found through re-manufacturing, cascading materials through several lifecycles, and developing new business models that move us away from the concept of ownership all together.

Designing for the Circular Economy

Innovative companies are exploring strategies that address end-of-life issues upfront — when a product is being designed. Some are looking to extend the life of products through old-fashioned durable construction, modern modular design, and futuristic repair-before-failure. Others are developing new materials and new types of products tailored to the circular economy.

The Producer Pays

Germany enacted the first countrywide extended producer responsibility (EPR) law in 1991, and much of Europe (and Asia) followed, but there is no national EPR law in the United States. EPR’s profile is rising,  though, even in this country. The concept has gained a foothold at the state and local levels, and some companies are taking voluntary steps in the direction of EPR.

 

Download the entire report here.