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New Bottom Line Volume 3.7 – EcoAudits: Giving Your Company an Environmental Check-Up

April 13, 1994

J.M. Juran, one of the fathers of Total Quality Management, once observed that “To be in a state of self-control, a person should be provided with knowledge about: (1) what he or she is supposed to do, (2) what he [or she] is actually doing, and (3) what choices he has to improve results wherever necessary…. If any of these three conditions are not met,” Juran noted, “a person cannot be held responsible.”

For a company to be in a state of self-control regarding its environmental practices and impacts, the same criteria apply. Environmental audits address the critical dimension of a company knowing “what it is actually doing.”

Just as most consideration of the environmental “industry” has focused on waste management and cleanup, most environmental auditing activity has focused on regulatory compliance. That in itself is a complex enough endeavor for many companies, with thousands of pages environmental regulations to contend with, at one governmental level or another.

Now that many companies are looking beyond compliance, at their fundamental efficiency, other types of environmental audits are emerging. Joel Makower, in The E Factor, identifies four types of environmental audits: compliance audits, which “evaluate whether a company, division or plant meets the full complement of federal and local environmental regulations, as well as internal corporate policies and standards”; waste audits, which analyze the characteristics of a waste stream to dientify opportunities for was reduction or reuse; product audits, which examine environmental impacts throughout a product’s life cycle, to support improved design; and energy audits, which may look at both direct energy use and the energy “embodied” in a company’s purchases.

Energy audits have been widely available, often with the support of utility companies’ demand side management programs. A new genre of “comprehensive” environmental audits go beyond mere compliance and beyond just energy efficiency.

Green Audit, a New York company recently launched by Green Seal veterans Rena Shulsky and David Mager, drew on the Elmwood EcoManagement Guide and other sources to provide a three-stage audit: auditing for compliance with applicable regulations, auditing for compliance with a company’s own stated environmental goals and policies, and auditing for environmental “excellence.” Nancy Hirshberg, environmental director at New Hampshire yogurt manufacturer Stonyfield Farms, says that Green Audit enabled a level of analysis that her small EH&S staff simply couldn’t provide on its own.

HVO Eco Services, in Mineola NY, specializes in environmental audits for a vertical market: hotels. HVO Eco’s scope of examination includes energy & equipment, solid waste, water, regulatory compliance and employee education. Like Green Audit, it provides the additional value of a “seal of approval” that audited companies can display for marketing purposes.

The author’s company, based in Berkeley CA, performs eco-audits focused on environmental quality and efficiency (EQE), using the model of natural ecosystems–the world’s most experienced R&D lab for efficiency, stability and resilience–in a three stage process that maps a company’s “metabolism”; diagnoses procedures and practices for profitable EQE improvement; and assesses company business, product and marketing strategy in relation to audit findings.

A recent eco-audit conducted for Odwalla, Inc., Northern California’s largest manufacturer and distributor of fresh juices, charted resource flows (including energy, water and commodities), procurement (including recycled content and agricultural production), waste generation and recycling. The eco-audit suggested “key indicators” — including energy and water use and waste generated per gallon of product–to track, in parallel with financials and production indicators, in the coming year. The next step will be a re-examination of procedures and practices, in light of the eco-audit, at each Odwalla facility, and integrating the EcoAudit process into company information systems to make information about environmental quality and efficiency progress readily accessible throughout the year.

As with many environmental innovations, much of the environmental auditing action is in Europe. The European Community has promulgated a voluntary eco-management and audit scheme (EMAS; Council Regulation No 1836/93). Implementation is likely to follow the British standard BS 7750, according to “Environment Watch: Western Europe”, since there is concern that the International Standards Organization (ISO) will focus on auditing of environmental management systems rather than environmental performance.

National environmental audits are also emerging. According to “Business and the Environment” newsletter, organizations ranging from the Organization for Economic Cooperation and Development (OECD) in Paris to the New Economics Foundation in London are comparing national level environmental performance on such indicators as pollution, waste production, endangered species and energy efficiency. NEF’s rating of the 24 OECD countries puts Austria, Portugal and Japan at the top of the list–and the United States at the bottom.

Other approaches will no doubt emerge. In the meantime, your company would do well to remember Juran’s forty-five year old prescription for self-control.

(c) 1994 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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