The emergence of the ´sustainability´ market

A gradual but intensifying process of ´greening´ has been under way in many markets around the world for the last few decades. This evolution has been punctuated by two major surges of growth in environmental concern. The first was in the late 1960s - early ´ 70s and the second occurred in the late 1980s - early ´ 90s.

The first surge alerted the community to the extent of bad environmental practice throughout industry and the community. The second surge, triggered by a deepened realisation of the global dimensions of environmental decline, alerted people to the need for sustainable development. But it will take a third surge to push societies over the threshold so that they make sustainable development as defined above actually happen (2).

What might trigger such a third surge? The next decisive surge is likely to occur as:

• the scientific basis for major environmental threats firms
• transformative technologies spread
• community-based lifestyle programs with an educational feedback loop to business spread
• win-win macro-economic policies are developed and begin to be applied
• tools for sustainability-promoting businesses strategies become readily available
• key corporations break away from the pack and go for sustainability to compete
• media interest in these changes grows.

Transformative technologies have the power to dramatically change the environmental impact of industry. But even more importantly, by altering the industrial structure, they will change the relative influence of different industry sectors and they will change public perceptions about what is possible. For example, Amory Lovins and co-workers at the Rocky Mountain Institute have been promoting an new car design, based on a hybrid electric drive and a carbon fibre shell, that could reduce energy use by 75-90% for the same performance level as current cars. They have attracted about 25 significant companies to invest around US $1000m in this development and expect to see the new cars rolling out of factories by about the year 2000.

This technology will have very serious implications for the oil and steel industries whose products will be virtually displaced in the automobile market (Lovins et al., 1996).

Another transformative technology that is expected to come on stream by about the year 2000 is grid-connected solar photovoltaic electricity generation that will be price competitive with coal-based electricity. This technology, pioneered by Pacific Solar in Australia, will fundamentally shake up the coal and electricity generation industries(3).

Community lifestyle programs: Already programs like the Global Action Plan are spreading through Europe, North America and beyond. They involve householders in reviewing their environmental impact and their consumption patterns. Once an educational feedback loop back to business is added to these programs they will become a very powerful influence on ´green´ product development and uptake.

Win-win macro-economic policies: There will not be much corporate enthusiasm for the pursuit of ecological sustainability while most businesses think the economy will suffer as a result. But there is increasing awareness that win-win economic strategies can be developed to deliver superior environmental, employment and GDP results (4). The European Union is leading this development, but interest is being generated elsewhere in the world.

Green business tools for sustainability: Businesses will not be able to become proactive in their pursuit of sustainability until tools are readily available to help them manage themselves as sustainability-promoting firms. A number of organisations are developing just such tools (5).

Key corporations go for sustainability: With the globalisation of the economy, large multinational corporations have become the dominant players in business. Until a number of these firms 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 public relations significance. A small but influential band of large multinationals are now moving tentatively in the direction of such a transformation (6).

Media interest: It is rare for major shifts in public, corporate or government thinking to occur until the issues are picked up by the media. The globalisation of the media has gone so far that local media outlets usually only treat an issue as newsworthy after the international news networks have picked it up in what they see as the trend-setting countries.

Ecological sustainability and the role of firms

To achieve ecological sustainability, society will most probably have to do the following:

• reduce carbon dioxide (CO2) emissions globally by at least 60% of the 1988 levels (see Houghton, 1990) rather than the reductions of 20% or less that governments have been considering
• prevent the accumulation of toxic and artificial substances in the natural environment
• ensure that the chemical and physical composition of the atmosphere and of water stays within natural levels
• ensure that there is virtually no further destruction of natural environments globally
• restore natural habitats to the extent needed to safeguard threatened species
• adopt a closed-cycle economy in which virtually all wastes are recycled. (7)

Improvement at this rate is technically feasible but the implied rate of social and technical change is extremely testing. Certainly this magnitude and pace of change will not be achieved if significant forces in society are opposed to the changes, causing the reform process to become deadlocked.

So the rate and scale of change needed cannot be achieved without the support of strategic sections of industry. But, if this support is to be worth having, it has to be won without compromising the commitment to the achievement of ecological sustainability.

To achieve ecological sustainability an increasing number of firms, large and small, will have to take on an internal commitment to help catalyse the change. These firms need to become ´sustainability-promoting´. The most effective way to do this is to adopt a sustainability-promoting environmental management system. However this is easier said than done.

Almost all EMS activity at present falls into a very predictable ´default´ pattern which unfortunately is particularly unsuited to the pursuit of sustainability because of its restricted focus, as is explained below.

A typology of environmental action

Before describing the ´default´ approach a number of concepts used in the following discussion need to be explained. In this paper a distinction is made between three contrasting pairs of terms:

• Negative environmental impacts result in environmental damage or resource wastage.
• Positive environmental impacts result in improvements in environmental conditions or increased resource stocks.

• ´Product-and-organisation improvement´ environmental management programs involve the reversal or prevention of negative environmental impacts caused directly or indirectly by a firm. Broadly, an ´improvement´ environmental management program could be characterised as involving "a flight from bad practice".
• ´Sustainability empowerment´ environmental management programs are aimed at helping others to fix up their environmental problems or to create environmental opportunities - through new products (including services) or through the appropriate use of influence (9). Broadly, a sustainability-empowerment environmental management program could be characterised as involving "a race to sustainability".

• Direct environmental impacts are those caused by the physical activities of the firm in question.
• Indirect environmental impacts are caused by others as a consequence of decisions taken or influences exerted by a firm eg. the indirect effects of a manufacturing firm would include consequential environmental impacts caused by its materials suppliers and those who dispose of its products.

The ´default´ implementation of EMSs and its limitations

Environment management systems were first developed to help firms that:

• had large, direct and negative environmental impacts with a significant risk of public exposure, or
• were subject to tough legal controls, or
• were sensitive to materials costs.

Firms were often motivated to act because of concerns about legal compliance, risk management and cost saving, all issues that had a very direct bearing on the welfare of the firm (11).

The ´default´ approach, by focussing on direct, negative environmental impacts, caused firms to concentrate on their own production processes first. Some firms´ EMSs eventually led them to manage the indirect, negative impacts of their products on a life-cycle basis (product stewardship). Only rarely did the EMSs lead to the introduction of new classes of products to help customers contribute to the ´greening´ of society.

The ´default´ approach to EMSs made sense for the heavy industry sectors, especially while firms were actively bringing their performance up to a high environmental standard. But the ´default´ approach is not very relevant to a significant majority of business whose indirect impacts are greater than their direct impacts (12). This helps explain why the majority of firms is taking a long time become interested in adopting an environmental management system. Firms with low direct impacts are either unaware that they could or should be managing their indirect impacts or they feel that conventional EMS approaches do not provide an appropriate framework for them.

Unfortunately, what made sense for certain industries for a certain period of time is now being generalised by many environmental practitioners as the way to implement an EMS in all industry in all circumstances. Indeed many practitioners find it hard to imagine how ISO 14001 could be implemented in a non-´default´ way.

But there are major limitations to the ´default´ approach. These are summarised in Figure 1.

If EMS is driven ONLY by:	Then:	So:
Legal compliance	Firms will only be sensitive to those issues that are the subject of strong, well-enforced laws	Issues such as biodiversity, soil, and heritage conservation and urban planning will be missed.
Issues caused directly by the firm	Indirectly caused impacts will be missed (eg. biodiversity loss, poor land use planning)	Firms will not contribute actively to ‘whole system’ solutions.
Negative impacts	Firms will not try to provide solutions to problems caused by others	Opportunities for developing new products or new areas of business will be missed. Opportunities to significantly advance society’s capacity to be ecologically sustainable will be lost.
Issues that generate politically significant stakeholder reactions	Issues will be ignored until politically significant stakeholder reactions build up	A lot of avoidable damage will be done before action is taken.Problems that are not immediate or acute in their impact on humans or that affect a small percentage of any given population are likely to be ignored.
Significant materials costs	Firms will not take action if money cannot be saved and they are also unlikely to take action if materials costs are a small percentage of total costs	Large sections of industry will fail to conserve resources (even when doing so is cost effective).
Legal compliance, risk reduction and cost saving	Firms will not explore all opportunities for competitive advantage (eg. non-price or opportunity rather than constraint-based advantages)	Opportunities for improving the quality of products environmentally or for developing new products or new areas of business will be missed.
Short-sighted self interest	Firms will not exhibit corporate responsibility or enlightened self-interest and thus they will not tune in to the customer’s needs as a whole in the context of their family (for people) or strategic alliance network (for firms), the local and global community and the wider environment	Opportunities for a positive relationship between the firm on the one hand, and its customers and the community on the other, will be lost. Opportunities for product improvement or new product development based on a wider perspective of customer need will not be identified

Opening up possibilities beyond the ´default´

Far from the ´default´ approach being the only way to frame an EMS, it merely represents one of four possible focuses for action (see Figure 2.):

• production process improvement - the major ´default´ focus
• product stewardship
• new product development
• the use of influence.

• the current or ´default´ model, driven primarily by private interest
• a preferred sustainability-promoting model, driven by both society´s interest and private interest (13)

	Product-and-organisation improvement program	Sustainability-empowerment program
Direct environmental impact	Focus on production process improvement	(Not applicable)
Indirect environmental impact	Focus product life-cycle performance improvement (product stewardship)	Focus on: the creation of new products programs of influence - as means of improving society’s environmental performance

The ´default´ model starts with production process improvement and might eventually progress to new product development if the incentives and opportunities are strong enough. The preferred model, explores opportunities first in the area of new product development and the use of the firm´s influence and then progresses through product stewardship to process improvement (see Figure 3).

	The ‘default’ model or paradigm "Flight from bad practice"	The preferred model or paradigm "Race to sustainability"
Main motivation	Primarily private interest (the firm’s and the direct customer’s)	Both society’s need and private interest
Main drivers	Pursuit of private opportunity within social constraints set by laws and economic incentives	Pursuit of social needs and private opportunity
Typical action sequence	Production process improvement >> product stewardship >> new product development	New product development >> product stewardship >> production process improvement

New product development is needed to achieve win-win results for the environment and for economic performance. Incremental improvements in products will not achieve sufficiently large and rapid improvements in environmental performance, nor will they achieve this while maintaining the community´s standard of living. The transformative technologies discussed earlier show what is needed and what is often possible when sufficient creativity is applied to the task.

Under a preferred sustainability-promoting model, EMSs should not only help firms to ´do things right´ (ie. minimise the environmental impact existing processes or products) but more importantly they should ensure that firm are ´doing the right thing´ (ie. producing appropriate products and exercising influence in an appropriate fashion).

So firms should design their EMSs to help them to simultaneously create maximum environmental value for society (ie. ecological sustainability) and gain maximum competitive and strategic benefit for themselves. Their EMSs should help them develop green markets and position themselves so that they are ideally suited to satisfy these markets.

Developing ´green´ markets involves more than marketing and product development. Firms will also need to be active in encouraging governments to create appropriate incentive structures to help bring forth such markets.

Although ISO 14001 does not require an EMS to be framed in the ´default´-style, the specification standard and the 14004 implementation guidelines are written in a way that powerfully, if unintentionally, reinforces the ´default´ rather than a sustainability-promoting approach.

Unless there is something in the ISO 14001 or 14004 procedures that can be relied upon to lead firms ´out-of-the-box´ and to a sustainability-promoting orientation, their original preoccupations (with pollution, compliance, risk and liability reduction, cost saving, and reducing the firm´s direct impacts rather than helping to achieve sustainability for society) will create a lasting culture that defines and limits what environmental management means for them.

ISO 14001 builds in four mechanisms that some might argue have the potential, over time, to draw a firm across to a sustainability-promoting orientation. These are:

• a suggestion that life-cycle thinking could be used
• a requirement to comply with relevant laws
• a requirement to engage in continual improvement in line with the firm´s environmental policy.
• a requirement to consider the views of interested parties.

The ISO 14001 requirement to comply with relevant legislation and regulations means that if society legislates to control new issues or manage existing issues differently in order to achieve ecological sustainability, firms will have to respond. However if firms are not internally committed to promoting sustainability they are just as likely to lobby to prevent the legislative change, while maintaining an ISO 14001 conforming EMS.

ISO 14001 requires firms to institute a program for continual improvement in their environmental management systems in line with their own environmental policy. So long as firms commit themselves to legal compliance and pollution prevention and as long as their certifiers think that their EMS policy is appropriate to the nature, scale and environmental impact of their activities, products or services, they are not obliged to take on a sustainability-promoting approach (14). So a firm that was committed to the ´default´ approach would simply have to get better at that approach to remain ISO conforming.

ISO 14001 requires firms to determine their issues-scope and environmental directions in their environmental policy. The views of interested parties are only required to be considered when the already-determined-policy is translated into objectives and targets. So, for example, an oil company that committed itself in its policy to reducing the environmental impact of oil production, could ignore arguments from interested parties that the firm should shift from fossil fuel-based oil to renewable energy production when the objectives and targets of the EMS are set.

Given the lack of effective drivers for the adoption of a sustainability-promoting approach in the ISO 14001 process, a firm wanting to avoid the reflex adoption of the ´default´ will have to take its own deliberate and self-motivated steps to ensure that it moves in a different direction. Simply following the ISO 14001 requirements and the ISO 14004 guidelines will not be enough to turn things around.

Practical idealism

Firms are unlikely to commit themselves to the alternative EMS model if they think it is pie-in-the-sky.

Practical experience shows just how hard it is to make relatively small changes in products or production processes. So how can the vast and seemingly impossible changes needed for ecological sustainability be achieved. And how can the complexity of the task be managed?

Zero defects? Impossible!

Goal-directed innovation can be used to achieve win-win solutions in, what appear to be, impossibly demanding situations. A good illustration of this is the Japanese pursuit of ´zero defects´ in manufacturing after the Second World War.

To compete with the Americans, the Japanese needed to lift product quality while maintaining their cost advantage.

To reduce their defect rate American firms´ inspected their output. If a higher quality of shipped product was needed the Americans simply increased the proportion of output inspected, allowing them to weed out a higher proportion of defective units. But in the process the cost per item despatched was significantly increased.

To overtake the Americans the Japanese decided to adopt a much faster and cheaper improvement process.

The Japanese set ´zero defects´ as their goal even though it was technically and economically impossible to achieve at that time.

Innovation programs were set in motion, inspired by the goal. Rather than taking current best practice as their benchmark, the Japanese used an ideal goal and then ´reverse engineered´ a solution that approached the ideal ever more closely. Instead of controlling quality using inspection, they concentrated on manufacturing improvements to make it highly probable that the product was produced correctly the first time. This quality improvement process decreased costs and gave the Japanese a decisive competitive advantage.

The economics and management theory of inspirational stretch goals

Inspirational ´green´ stretch goals

Du Pont, which has a 190 year history of pursuing a ´zero accidents´ policy, now has an accident rate less than one thirtieth of the average for all US industry and one tenth of the average for comparable industries globally. With this experience under its belt the company is now extending its approach to the environment. In 1994 it established company goals of ´zero waste and emissions´ (Du Pont, 1994). Many other companies have similar inspirational goals.

So highly demanding inspirational goals are already a reality in business. But for a sustainability-promoting firm it is necessary to reformulate the stretch goals. This is because the inspirational goals have to drive the firm´s sustainability-empowerment program and not just its product-and-organisation improvement program. Consequently the goals need to focus on what must be done to help society to become ecologically sustainable.

Appropriate inspirational stretch goals for a sustainability-promoting firm would be to foster the creation of an economy and society that aims to achieve:

• 'zero' extinctions
• 'zero' encroachment on nature
• 75% of land for nature
• 'zero' climate damage
• 'zero' net greenhouse gas emissions
• 'zero' soil degradation
• 'zero' damage to natural eco-cycles
• 'closed-cycle' production (based on zero pollution and waste and 100% recycling of materials)
• dematerialisation (based on reducing resource throughput by 90% in countries with high per capita consumption (15)
• renewed resources (16)
• sustainable population levels
• win-win achievement of the above objectives without a major trade-off with income, employment and social justice objectives.

The magic of whole-system design

Managing complexity: standardised system frameworks

Knowing that whole system design is the key to achieving ecological sustainability with win-win productivity gains is one thing. Doing something about it is another.

There are two reasons why whole system design is not undertaken often. One is that most people have not been trained to handle this approach. The other is simply that it is harder to do whole system design and implement whole system changes than it is to deal with incremental changes. That is why those looking for fast pay-off action tend to leave the area alone.

One very important way to reduce the difficulty of handling whole systems is to use techniques that reduce the complexity of change.

One reason that incremental change is easier than system change is that most of the factors affecting the process are fixed or predetermined. But once a change to the wider system is proposed things become much more uncertain because, while there is one present there can be many possible futures.

This uncertainty can be reduced however by creating shared visions around which individual actions can coalesce. Commercial early mover risk can be reduced even further if shared visions are adopted as standardised system frameworks and are formalised as industry standards.

Standardised system frameworks can also be used to maintain the sustainability of the system over time. A number of standardised system frameworks could be designed which, when combined, are known to be sustainable. Then, as long as each product is designed to fit into one of these frameworks, the sustainability of the system as a whole is likely to be maintained.

For example all products could be required to be recycled through a limited number of standard take-back and reprocessing systems (eg. kerb-side mixed paper collection, parcel-post-style return system for high value-low bulk products). A product would only be allowed onto particular regional markets if it could be handled by the available systems or if the product manager was prepared to develop and implement a viable alternative return-recycling system, that is, they take responsibility for creating a new standardised system framework.

An analogous approach is now being used in software development, the construction of very large office towers, sophisticated aircraft, and to the coordination of inter-related product offerings from a range of independent companies. In these areas systems are reaching such high levels of complexity that no one person can comprehend all the detail of the system.

To make it possible for many people to work together on these products or projects, it is necessary to treat the components of the products or indeed whole products as modules of a larger system. A shared standard is developed, or adopted defacto. Then the components or products can be designed and fabricated semi-independently and yet they still work together finally.

It might be appropriate for standardised system frameworks to be developed by joint government-industry-community working groups. National and international standardisation bodies might play a role too.

Standardised system frameworks should be considered in the EMS process before the EMS objectives and targets are set. The need to fit into existing standardised system frameworks would be determined in the review stage of the EMS. Then, in the EMS strategy process, the need for new frameworks would be considered. Applicable standardised system frameworks would guide the setting of objectives and targets.

An EMS structure for a ´non-default´ sustainability-promoting interpretation of ISO 14001

How can all these ideas be brought together to create an interpretation of ISO 14001 that promotes sustainability-promoting?

An EMS that conforms to ISO 14001 is a mechanism for ensuring that a firm:

• thinks about the environment
• decides what it wants to do (18)
• works out how to do it
• actually does it
• corrects deviations from the plan, and
• reviews its directions for the future so it can do better next time.

By-the-book application of ISO 14001/4 (BTB)	‘Sustainability-promoting’ interpretation of ISO 14001/4 (SPI)	Comments
0 - Initial environmental review	1 - Review and set directions	Initial review not required by BTB if EMS already operating
	Values review	BTB equivalent is under ‘Environmental policy’
Review of views of interested parties	Review of society’s environmental needs and society’s environmental strategies	Systematic assessment of environmental needs not specifically required by BTB
Identification of environmental aspects	Review of significant -ve environmental impacts and aspects for the product-and-organisation improvement program	If initial review not required, BTB equivalent is under ‘planning’
Legislative and regulatory requirements (14001) and voluntary requirements (14004)	Requirements review (legal, voluntary, etc.)	If initial review not required, BTB equivalent is under ‘planning’
Examination of all existing environmental management practices and procedures; evaluation of feedback from the investigation of previous incidents	Management review	If initial review not required, BTB equivalent is under ‘management review’
1 - Environmental policy	Policy development
	Strategy development	Not required by BTB
	Identification of significant environmental aspects for the sustainability-empowerment program	Not specifically required by BTB
2 - Planning	2 - Plan
Environmental aspects		The SPI equivalent is under ‘review and set directions’
Legal and other requirements		The SPI equivalent is under ‘review and set directions’
Objectives and targets	Objectives and targets
Environmental management programs	Environmental management programs
3 - Implementation and operation	3 - Do
Structure and responsibility; training, awareness and competence; EMS documentation; document control; operational control; emergency preparedness and response	Same as BTB
4 - Checking and corrective action	4 - Check and correct
Monitoring and measurement; non-conformance and corrective and preventive action; records; EMS audits.	Same as BTB
5 - Management review		The SPI equivalent is under ‘review and set directions’

Underpinning the EMS cycle for a sustainability-promoting interpretation of ISO 14001 is top level and organisation-wide commitment to the values that drive the firm´s environmental action and commitment to capability building, real action outcomes and continual improvement. The issue of ´commitment´ and the ´review and set directions´ and ´plan´ steps are discussed in detail below.

Commitment

Every step in a sustainability-promoting EMS cycle needs to be underpinned by a commitment to values, capability, outcomes and continual improvement.

Values:

The key values underpinning a sustainability-promoting approach are:

• seeing environment as a goal and opportunity rather than a constraint or threat (see Figure 11)
• a commitment to help society achieve ecological sustainability, globally and locally, for the sake of people and nature
• a commitment to a ´no major trade-offs´ approach
• the use of the EMS to promote creativity and effectiveness, as well as the ´default´ emphasis on control and efficiency.

Capability:

A sustainability-promoting firm will need skills not required by other firms. They will need skills in:

• adapting the normal commitment to customer service to help the firm focus on society´s need for ecological sustainability, for example, by adopting the concept of the 5-in-1 Customer (where products have to simultaneously serve the needs of the direct product user, the local community, people globally, future generations and nature)
• product conception and design for the promotion of ecological sustainability
• whole system design and the creation and use of standardised system frameworks
• problem solving and opportunity creation for ´no major trade-offs´ (19)
• managing the product life-cycle often managing via influence rather than control
• handling non-traditional issues ie. biodiversity protection on a life-cycle basis
• the development of strategies to make the pursuit of ecological sustainability commercially and strategically beneficial for the firm
• exerting influence for positive environmental outcomes on a society-wide basis (see Figure 12).

Review and set directions

The ´review and set directions´ stage of a sustainability-promoting EMS cycle integrates the ISO 14001-14004 steps of:

• ´management review´
• ´environmental policy´, and
• the first two elements of ´planning´ (ie. environmental aspects and legal and other requirements).

The review

There are five suggested elements of the review part of the ´review and set directions´ process.

A values review: a firm will not be fully aware of the objectives behind the EMS review process, its choice of EMS scope, the classes of environmental issues to be managed and the roles that the firm wants to play unless it clarifies its values at the start of the process.

An assessment of environmental needs: a sustainability-promoting firm should not rely wholly on interested parties and stakeholders to draw its attention to society´s environmental needs. The firm should take responsibility for proactively identifying these needs as part of its normal customer needs assessment process. In this case the focus is on the 5-in-1 Customer.

The identification of significant negative environmental impacts and the environmental aspects for the product-and-organisation improvement program: this corresponds to the ´default´ consideration of impacts and environmental aspects. Unlike in the by-the-book ISO process, this step should be taken routinely ahead of the policy step so that the results inform policy development. An assessment should also be made of the relative impact of direct versus indirect (life-cycle) impacts.

A review of requirements (legal or voluntary): This is the same as the by-the-book ISO implementation. This review should also routinely feed into policy development.

A management review of the defacto or formal EMS: ISO 14001 requires an environmental management system review at the end of each formal EMS cycle and prior to the policy-making step at the start of the next cycle. However, firms implementing an EMS for the first time are not required to assess their defacto EMS in the initial review phase that precedes policy making. Failure to carry out this assessment, however, could lead to weaknesses in the EMS policy and hence in the first formal EMS. Setting directions

There are three suggested elements of the direction setting part of the ´review and set directions´ process.

The development of policy: The EMS policy (´environmental policy´ in ISO by-the-book jargon) for a sustainability-promoting firm must much more rigorously set the framework for setting objectives and targets than is the case for a ´default´-style firm. So the policy may need to be longer than the typical inspirational one pager. If the EMS policy has to be longer or complex than is appropriate for inspirational and educational purposes, then a separate inspirational summary policy should be produced.

The EMS policy can refer to externally developed sets of guiding principles. A sustainability-promoting firm might wish to refer to the Guiding Principles.

Strategy development: reactive firms do not need strategies, proactive ones do. A sustainability-promoting firm must therefore include a strategy step in their EMS cycle. The strategy should be guided by the EMS policy or at least a good draft of it. Then some of the key insights or directions that emerge from the strategy development process may need to be included in the final EMS policy.

The objective of the strategy is to help the firm decide how it can best help society achieve ecological sustainability while at the same time advancing its own competitive or strategic interests. The strategy will need to guide the firm on the best combination of action:

• for its sustainability-empowerment and product-and-organisation improvement programs
• for timely leapfrog change and incremental change
• on the strategic stances (ethical opportunist, catalyst and pioneer - see the section on strategic stances for details)
• on direct and indirect impacts
• to achieve effectiveness-promoting creativity and quality-assuring control, and
• on correction and prevention.

Overall, sustainability-empowerment programs (product or influence-based) benefit society more than product-and-organisation improvement programs, despite the very considerable importance of the latter. Fortunately in many cases firms will also gain the greatest long term commercial advantage from pursuing an empowering program of product development.

The identification of significant environmental aspects for the sustainability-empowerment program: It has always been possible under ISO 14001 to look at the environmental aspects associated with an empowering program. But the structure of the typical or ´default´ ISO EMS cycle makes it very difficult to identify them. Environmental aspects for the product-and-organisation improvement program are relatively easy. For example, when a firm works out what it is doing to cause pollution it has identified the relevant improvement aspect. To find a sustainability-empowerment aspect, a firm would have to decide which action, out of the infinite possibilities, it should take to help society achieve ecological sustainability. A strategy is needed to decide on the best choice of activity. Only then can the firm work out the sustainability-empowerment aspects of its operations that need to be managed well to implement its choice.

Plan

The ´plan´ stage of a sustainability-promoting firm´s EMS cycle needs to be different from the ISO by-the-book cycle. It is desirable to start the ´plan´ stage of a sustainability-promoting EMS cycle with the setting of objectives and verifiable targets that cover three program areas:

• sustainability-empowerment program:
  • via products - to provide other firms and the community at large with the goods and services needed to achieve sustainability
    
  • via influence - to spread sustainability-promoting and to catalyse sustainability-directed change to overcome blockages and to reform the business playing field
• product-and-organisation improvement program:
  • life-cycle product stewardship - to improve all activities in the supply chain and in the use and disposal of the product or associated materials
    
  • production process improvement - to improve all of the firm´s own activities
• EMS quality assurance program: to ensure that the commitments in the EMS policy, objectives and targets are followed through and that actions to promote continual improvement are taken. This program is made up of the ´do´ and ´check and correct´ elements of the EMS cycle.

Strategic stances

Sustainability-promoting firms can exhibit a number of different orientations towards environmental issues. The three stances of most interest to a sustainability-promoting firm are:

• ethical opportunist: the organisation generally tries to ´do the right thing´ on environmental issues as long as action is clearly economically viable and does not involve significant risk.
• catalyst: the organisation identifies environmental problems or opportunities that need action and it triggers other organisations to pioneer the solution or to take the necessary action
• pioneer: the organisation works to make desirable environmental outcomes technically, organisationally and economically feasible. Pioneering can be directed at incremental or leapfrog movements towards inspirational goals.

Many firms that eventually adopt an ethical opportunist stance, may start out as ´cynical opportunists´ (20). For example, successful experience with ´green´ niche marketing or with the application of an EMS may create a positive climate in which the shift can occur.

The catalyst stance is reflected in the cultural or policy influence the organisation attempts to achieve in order to promote sustainability. Advertising, customer and employee education programs, sponsorships and policy advocacy are some of the channels for achieving influence. They are often used at present to promote the self-interest of firms rather than the public good. However this need not be the case if firms are actively repositioning themselves to make a living by pursuing the public good. This stance is relevant for all organisations but sometimes it might be the only one that can be pursued actively if it is not possible, at a particular point in time, to make rapid progress developing or improving products or production processes.

The pioneering stance is likely to be most successful where complete management units are involved. This allows all the management structures and processes to be aligned with the stance. Such an alignment is necessary if the organisation is to have the sticking power to make the necessary breakthroughs. Pioneering management units can exist within an organisation that is opportunistic overall.

The catalyst stance would almost always be found in combination ie. with ethical opportunism or pioneering. Because of the risk and cost associated with pioneering, it would be rare for an organisation to pioneer in everything it did, even where pioneering is a core strategy.

Guiding principles for a sustainability-promoting organisation

The following guiding principles could be referred to in the EMS policy of a sustainability-promoting organisation.

If firms want to be classed as 'sustainability-promoting' there are five things they need to do as their minimum commitment:

• Declare the goal: publicly declare the goal of helping society to be sustainable (instead of just aiming to reduce the negative impact of the firm's existing products and activities)

• Use the entire product range to contribute to society's sustainability: strive to ensure that their entire product range helps society to achieve sustainability (instead of just marketing sustainability-promoting products to the aware and sustainability-neutral or sustainability-undermining products to the unaware)

• Promote society's 'sustainability take-off': (21) use the firm's influence to help the economy (locally and globally) to reach a condition of 'sustainability take-off'

• Urge governments to be proactive: press governments to take action to favour the achievement of sustainability

• Promote large scale, urgent action: make sure their actions match the scale and pace of change needed if society is to achieve sustainability in a desirable timeframe.

• Customer service: ensure that when products (including services) and production processes are developed or modified to meet the needs of the active users that they are also designed to serve the needs of the local community, people globally, future generations and nature (22)

• Management: implement a sustainability-promoting management system that enables the organisation to help society achieve sustainability in a timely fashion, for example, through the use of leapfrog pioneering strategies (23)

• Market: take action to maximise the market for products that contribute to sustainability and as far as possible favour the servicing of other firms and final users that are making a positive contribution to the achievement of sustainability

• Operations: change the way activities are carried out or the way production is undertaken - to foster sustainability

• Proliferation: promote the spread of the sustainability-promoting approach generally: through the private, public and community sectors and up and down the supply chain

• Cooperation: cooperate with other sustainability-promoting organisations to foster sustainability-promotion.

Conclusion

For many firms, the last three decades years have been a confusing time. No sooner have governments set environmental standards than the community has demanded higher standards. It seems that trade-offs between environmental quality and economic production are not respected and the goal-posts keep shifting.

However, once firms adopt a sustainability orientation this constant change is no longer seen as a lack of faith but as continual improvement leading to a win-win environmental and economic outcome, that is, to sustainable development.

Firms will improve their chances of long term success if they understand the destination and can position themselves to take advantage of the change. So when firms design their environmental management system it is essential that they adopt a sustainability-promoting interpretation of ISO 14001. Anything less than this is not best practice.

Acknowledgments

I would like to thank Manningham City Council in Melbourne, Australia for their vision and pioneering spirit in pursuing sustainability-orientated environmental management. No words can express the debt that I owe Kathy Preece for her continuing support.

Notes

1 Other bodies include those that provide education services and that engage in research and development.

2 Sustainable development is often wrongly defined as development that takes environment into account in a ´balanced´ way, that is, environmental objectives are not pursued too vigorously so as to reduce the perceived risk of a major trade-off with economic, employment and income objectives.

3 Pacific Solar is owned by the largest electricity generator in Australia. See Lawley, 1996.

4 See DRI, 1994 and Jacobs, 1994.

5 For example, European Partners for the Environment/SustainAbility/Wuppertal Institute in Europe, the Natural Step Environmental Institute in Sweden, Australia and the US and Green Innovations Inc. in Australia are developing sustainability orientated management tools for business.

6 Given the slowness with which even the leading countries are putting an ecological sustainability compatible industrial base, leading-edge ´green´ firms may have to support the establishment from scratch of such an industrial base in one or more of the newly developing countries. Historically major shifts in industrial paradigm are associated with a geographical shift in the technological frontier or leading edge (the frontier moved from craft production in the UK to production based on interchangeable parts/mass production in the US, and from there to Japan with the development of lean production). See Wallace 1996.

7 The predicament that gives rise to the need for such massive changes is well described in Meadows et al. 1992. This study also make it clear that the restructuring of the economy needs to begin urgently.

8 If solar electricity rapidly displaces coal generation and is used to produce hydrogen as an oil and gas substitute then the 5% per annum improvement in resource use efficiency could be lowered while still achieving the necessary greenhouse gas reduction targets.

9 A firm can exert influence via advertising, public relations, training, strategic alliances, lobbying, etc.

10 For most heavy industries, issues such as flora and fauna, soil conservation, and urban planning tend to attract attention as direct environmental impacts only occasionally, for example when capital works are undertaken and after that they are forgotten again. (Mining is an exception with flora and fauna protection being a continuing issue.) Even where organisations try to manage their indirect impacts, most life-cycle assessment techniques do not deal with issues such as flora and fauna, soil conservation, and urban planning because they are hard to reduce to a small number of simple, quantifiable indices.

11 Issues that caused difficulty mainly for society or the natural environment, rather than for the firm, were much less likely to be dealt with.

12 Even in a resource intensive economy like Australia´s, the sectors of the economy that include firms with high direct impact (ie. mining, agriculture, forestry, fishing, energy production, manufacturing, construction, transport and tourism) only constitute about 40% of the total economy. Since not all firms in these high impact sectors themselves have high direct impact, the ´default´ approach to EMSs would not apply well to more than 60% of the Australian economy. (Figures based on data from ABS 1996.)

13 Being driven by society´s interests means much more than being ´market-led´. Many firms undertake extensive market research to find out what the public´s needs or desired are. However, this research usually only discovers aggregated private needs and interests. Even where public opinion polling deliberately searches for people´s views on what is good for the community-as-a-whole asking for off-the-cuff comments is not good enough because of the complexity of the issues involved. The results of in-depth consultations and research studies would need to be drawn on as well.

14 It is unlikely that certifiers will see the promotion of ecological sustainability as the logical end point of ISO 14001 continual improvement programs.

15 The Wuppertal Institute in Germany has adopted this goal and is promoting it in industry through its Factor 10 Club.

16 Where virtually all the throughput resources (those not recycled in the economy) are derived from renewable sources (eg. solar energy and biological materials).

17 The regenerative recycling of non-toxic biodegradable material is possible now using natural processes (eg. composting and digestion to decompose biodegradeable materials and vegetation growth as a way of building the breakdown products back into useful complex materials). However, a comprehensive system for the regenerative recycling of toxic and non-biodegradable materials is still to be developed.

18 ISO 14001 requires compliance with relevant legislation and regulations. This sets the standard´s only environmental performance requirements.

19 Eli Goldratt is actively disseminating methods for achieving ´no major trade-off´ outcomes in industry. See The Avraham Y. Goldratt Institute, 1994 and Goldratt, 1994

20 A cynical opportunist organisation is interested in environmental issues only as a source of commercial opportunities and for no other reason. Cynical opportunist firms add ´green´ products to the range as market research shows that there is demand. However, products with poor environmental performance are continued without improvement for as long as demand exists. Cynical opportunist companies are more likely to perform well in the ´green´ market if their product development and production staff servicing ´green´ niches personally have ethical opportunist or pioneer orientations. A team made up entirely of cynics will find it hard to identify ´green´ opportunities and is unlikely to have the commitment or insights necessary to make ´green´ initiatives work well.

Only the ethical opportunist, catalyst and pioneer stances match the spirit of ISO 14000. However, the ISO 14000 series definition of continual improvement (improvement up to the level set in the EMS policy) and the ability to apply ISO 14001 to only parts of an organisation suggests that a cynical opportunist organisation could successfully meet the technical requirements of the standard and be certified if it wrote its policy carefully.

21 'Sustainability take-off' is as a condition where concern for the sustainability is embedded in the culture, where action to achieve sustainability is continuous over decades, where sustainability programs do not get significantly wound back during economic down- turns (or better still they are advanced in ways that are appropriate to that stage of the business cycle), where changes in government do not significantly set back sustainability-promotion, where public policy is driven by a vision of a preferred sustainable future and where the leading sections of the business community are sustainability-promoting. A discussion of the related concept of ecological take-off can be found at: http://www.peg.apc.org/~psutton/takeoff2.htm

22 The author calls this the 5-in-1 Customer concept where the firms tries to simultaneously serve the needs of five 'customer' classes: the immediate user of the product, as well as the local community, people globally, future generations and nature. 23 Pioneering involves developing new capacities or qualities from scratch. Leapfrogging involves significant advances that go beyond incremental change.

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