Environmental Statement

ISO 14001

Environmental Audit

Environmental Management System

Environmental Programme



Environmental Review

Figure 4.11. Objectives of EMAS. (Source: European Commission Environment Directorate-General.)

improvement of the level of its environmental performance. ISO 14001 "only" requires the continual improvement of the management system, with the implied improvement of the environmental performance. EMAS requires organizations also to undertake an initial environmental review and to actively involve employees in implementing EMAS. Further differences are listed in Table 4.5.

If an organization is already ISO 14001 certified, the recent revisions have made it easier to register for EMAS. Minor modifications will need to be made to the core ISO 14001 elements as well as some additional steps specific to EMAS.

The additional steps for EMAS registration include the following:

1. Initial Environmental Review - EMAS requires that an initial environmental review be performed to identify an organization's environmental aspects. If the organization already has an Environmental Management System (EMS) that is ISO 14001 certified, it does not need to conduct a formal environmental review when implementing EMAS (so long as specific environmental aspects in Annex VI are fully considered in the certified EMS).

2. Environmental Statement - The organization will need to prepare an environmental statement, based on the outcome of the EMS. At this point, the organization will need to check that the environmental statement fulfils the requirements of Annex III and examine all the data generated by the environmental management system to ensure it is represented in a fair and balanced way in the environmental statement.

TABLE 4.5. Comparison of EMAS and ISO 14001


ISO 14001


Verified initial review

No review




Environmental policy,

Environmental policy made public


objectives, environmental

and verificationa

management system and details of organization's performance made public


Specified frequency and

Audits of the environmental

methodology of audits of

management system (frequency or

the environmental

methodology not specified)

management system and

of environmental


Contractors and

Required influence over

Relevant procedures are communicated


contractors and suppliers

to contractors and suppliers

Commitments and

Employee involvement,

Commitment of continual improvement


continuous improvement

of the environmental management

of environmental

system rather than a demonstration of

performance and

continual improvement of

compliance with

environmental performance

environmental legislation

aWith the proposed revision of ISO 14001 in late 2004, some changes in Clause 4.4.3, Communication, specifically address the European Requirements (EMAR/EMAS), related to the organization's external communication of its environmental aspects (environmental performance). This is strictly voluntary globally, although within the European Union it is required.

aWith the proposed revision of ISO 14001 in late 2004, some changes in Clause 4.4.3, Communication, specifically address the European Requirements (EMAR/EMAS), related to the organization's external communication of its environmental aspects (environmental performance). This is strictly voluntary globally, although within the European Union it is required.

3. Verifying the Environmental Statement and environmental performance - For the organization to attain EMAS registration, the Environmental Statement must be independently validated (usually through the registrar). This process will check that the statement meets the requirements of Annex III and is publicly available.

Modifications to ISO 14001 to meet EMAS requirements include:

1. Environmental Policy - ISO 14001 includes a commitment, but not a provision, to comply with relevant environmental legislation. The organization must strengthen its statement of commitment included in its environmental policy to make provision for regulatory compliance. If more than one site is registered under EMAS then continual improvement must be demonstrated on a site-by-site basis.

2. Planning - EMAS has very specific requirements on the type of environmental aspects that may need to be addressed within the environmental management system, while ISO 14001 is less prescriptive in this area. The organization should ensure that in identifying its environmental aspects in the planning stage of ISO 14001, it has addressed the items listed in Annex VI that are applicable.

The organization should also ensure that all the elements of the initial environmental review, detailed in Annex VII, have been considered and incorporated where necessary in the ISO 14001 process. It is possible that the areas and the scope covered by ISO 14001 and EMAS may be different. The organization should take steps to ensure that the scope to be covered by the EMAS registration is covered by the ISO 14001 certificate.

3. Implementation - One of the additional requirements of EMAS is the open dialog with interested parties (employees, local authorities, suppliers, and so on). This includes the active participation of employees in the environmental improvement program.

The organization should also take steps to ensure that any suppliers and contractors used also comply with the organization's environmental policy.

4. Checking and corrective action - Since the frequency of the audit cycle is not specified in ISO 14001, it is necessary for the organization to check that the frequency of the audit cycle is in compliance with Annex II of the EMAS Regulation and takes place at intervals of no longer than three years. In addition to the EMS being audited, the organization's environmental performance must also be addressed annually to demonstrate continual improvement.

5. Certification of ISO 14001 - In order to comply with the requirements of EMAS, the ISO 14001 certificate must be issued under one of the accreditation procedures recognized by the European Commission.

4.3.4 Occupational Health and Safety Assessment Series (OHSAS 18001:1999)

Art Gillen

First Environment, Inc.

Parallel to the development of ISO 14001:1996 - Environmental Management Systems - several organizations developed guides, draft specifications, and requirements for occupational health and safety management systems (OHSMSs). Most of this development has been done by management system registrars with the expectation that an OHSMS be accepted and issued by a national or internationally accredited standards body, that is, International Organization for Standardization (ISO), British Standards, and so on.

The most recognized version of an OHSMS is British Standards Institution (BSI) Occupational Health and Safety Series OHSAS 18001 - Occupational Health and Safety Management Systems - Specification. This specification, prepared to assist organizations in managing their health and safety programs and to improve performance, was released in the spring of 1999. OHSAS is not an ISO specification, nor has it been accepted by any other accredited standards body. Organizations can, however, obtain third-party certification for their OHSMS.

According to the BSI, the OHSAS 18001 specification was developed in response to urgent customer demand for a recognizable occupational health and safety management system standard against which their management system can be assessed and certified. OHSAS 18001 has been developed to be compatible with ISO 14001. They both contain 17 elements and 95 percent of the differences between the two are replacing "environment" and "environmental" from ISO 14001 with occupational health and safety (OH&S) for OHSAS 18001. Other differences are on emphasis and format. OHSAS 18001 stresses communication to employees and interested parties, top management's commitment and role, workplace safety and ergonomics within operational controls. It also distinguishes between reactive and proactive measurement and monitoring and adds accidents and incidents to nonconformance and preventative and corrective actions.

In addition, there are minor phrasing or syntax changes to OHSAS 18001 from the ISO 14001 specification. These include the addition of risk to many sections, and presenting the sections in outline rather than paragraph form. OHSAS 18001 also takes advantage of its later publication date to add a few words here and there for clarification.

The major change is in Section 4.3.1 - Environmental Aspects under ISO 14001 and Planning for hazard identification, risk assessment and risk control under OHSAS 18001. OHSAS is much more detailed and prescriptive in how hazards are identified, and how risks are identified, assessed and controlled compared to how aspects and impacts are managed under ISO 14001. The environmental benefits derived from implementation of ISO14001 would similarly be expected to be realized by including occupational health and safety into the applicability of an environmental management system. For the record, many organizations have chosen to add occupational health and safety into the scope of their ISO 14001 EMS.

For that reason, many manufacturing and service organizations are resisting the standard's accreditation of OHSAS 18001. In many circles this standard is viewed as an additional accreditation expense with no value added. The resistance to developing ISO 18001 within many nations further demonstrates this point. On the other hand, the recent proposed changes to ISO 14001 are expected to call for similar changes to OHSAS 18001. Still others are stating that OHSAS 18001 is too new to be revised and are requesting status quo for the time being.

Comparisons between OHSAS 18001 and the new Responsible Care® Management System (RCMS) Technical Specifications are expected. While the RC14001 specifications do add health and safety to ISO 14001, there are other topics included in both RC14001 and the non-ISO RCMS specification.

4.3.5 Using Six Sigma Management Initiatives

Robert B Pojasek

Pojasek and Associates

Sustainability programs are usually focused on "projects" and working in a more general fashion to improve predesignated sustainability indicators. It is much too easy to isolate the sustainability program in its own "silo" with this approach. Much of the rest of the organization may already be using quality management techniques and tools to organize its improvements that are designed to keep the company competitive in the marketplace. This section specifically addresses how six sigma techniques may help improve the sustainability effort while helping to integrate it into the core business.

Three popular management initiatives are "lean," "six sigma," and lean six sigma. Lean is process improvement methodology that emphasizes gains in quality by eliminating waste and reducing delays and total costs. It fosters an organizational culture in which all workers continually improve production processes and their own skill levels. Six sigma focuses on eliminating wasteful mistakes and rework using a measurement approach, statistical analysis methods, and alignment to organizational priorities to increase customer satisfaction and enhance the bottom line. The designation, six sigma, denotes that the operation is capable of having only 3.4 defects per million operations. Using sigma as a common metric across processes permits the comparison of relative quality across similar and dissimilar products, services, and processes. This ability to measure in a consistent manner is largely absent from sustainable development initiatives. Lean six sigma represents a recent morphing of these two process improvement programs into a single effort.

Neither lean nor six sigma are standardized in practice. The terms have been used to describe many variants of these programs. No matter what form of lean six sigma program is in place, there are four specific programmatic aspects that are important to a sustainability program:

1. Integration of the human and process aspects of business improvement. This includes operating with a sense of urgency and correcting problems focusing on customer and other interested party concerns. All work is conducted in project teams seeking bottom-line results and emphasizing continuous improvement and innovation. Lean six sigma creates a constancy of purpose in an organization by adding a new dimension to business process measurement - variation as an indicator of process improvement. Everyone is involved in the program.

2. Concentration on determining bottom-line results using structured methods that link analytical tools into an overall program framework. Management understands that it is their responsibility to foster and encourage improvement efforts. This is done by making the improvement of the company's business processes and products/services a part of every employee's job, and providing appropriate training at all levels of the organization.

3. A standardized method for resolving work problems. Workers use quality management tools on projects that are approved by management. Projects are chosen to improve the business processes (i.e., those processes that provide competitive advantage for the enterprise).

4. An integrated, phased approach to applying standard quality management tools for problem solving and decision-making. The quality tools are used in a prescribed order to optimize the use of these tools on each lean six sigma project. By using the same tools in all projects, it is much easier to transfer information and share best practices.

These four programmatic aspects would help organize sustainability projects into a coherent program, as opposed to conducting separate projects. In other words, recognition and use of these aspects would help operationalize the sustainability program.

The use of quality as the means of communicating the program between workers, management, and outside parties is very important since this has been the language of business for many years. It is very important that the sustainability program learns to translate many of its objectives and targets into the well-known language.

Lean six sigma also promotes a culture that motivates employee teams to work on common problems in an organization to achieve higher levels of performance effectiveness and productivity at a lower cost. Once an organization has operated a lean six sigma program for a number of years, the concepts of management by fact, root cause analysis, and the definition of problems according to their source of variation all become part of the organization's business language and form a common bond between employees at all levels.

DuPont became an early adopter of the six sigma philosophy. Many other companies in the chemical industry have followed. The following groups are also actively promoting lean six sigma: the National Institute for Science and Technology (NIST), the American Society for Quality, and a number of trade associations. It is very likely that the use of these business improvement methods will continue to expand in the future.

All sustainability projects could be easily adapted to be consistent with the lean six sigma framework. Integration of these management initiatives into the sustain-ability program (or vice versa) will require changes in how sustainability programs are operated.

1. Sustainability needs to develop a process focus. All sustainability issues must be assigned to a process, that is, back to the source. The process needs to be mapped so everyone will understand it and see the connection. Hierarchical process maps (Pojasek, 2003a) are particularly helpful since they encourage systems thinking - an important concept for sustainability programs that is largely absent in lean six sigma. All resources, activities, and information for the selected work step can be viewed as the employee team initiates its work on the project. It is easy to identify everyone with a connection to this issue at its source.

2. The sustainability project teams need to convince the lean six sigma project directors (often referred to as value stream managers in lean and "black belts" in six sigma) for permission to begin work on these projects within the system. These program "gatekeepers" are often uninformed on environmental and social responsibility issues. They will need to be convinced that there is a strong relationship to a process and will look for ways to change the process while meeting strict financial return criteria. These program managers are often judged largely on their financial returns. It is important that the sustain-ability program people become educated in their company's lean six sigma programs. They need to be trained to a level referred to as "green belt" in six sigma. It certainly would not hurt to have at least one sustainability black belt to lead the integration effort.

3. All sustainability projects should be conducted using quality management tools to help the program become more mainstream in the business organization. Six sigma uses a five-step problem-solving process: define, measure, analyze, improve, and control (i.e., DMAIC). The use of this process helps establish the business context for a six sigma change management process. Each of the DMAIC steps uses quality management tools. A Systems Approach to process improvement has been proposed (Pojasek, 2002) that has selected from the body of quality management tools those tools that are the most visible and the most interactive in their use. Because it takes considerable skill to use quality management tools effectively, it is very important that a lean six sigma program seek to standardize its use of tools while limiting them to a small number of tools. The systems approach helps accomplish this task. These tools have been used in ISO 14001 programs (Pojasek, 2002) that also use a quality approach to project development.

4. Many lean six sigma programs have formal supply chain programs and "design for six sigma" (DFSS) components. The objective of the DFSS is to ensure that the processes, products, or services consistently meet customer needs and to anticipate the changing requirements of the future market. This aspect of six sigma is mirrored in lean by the development of "future state" value stream process maps. Sustainable development programs can use these aspects of lean six sigma to help keep their programs focused on continuous improvement and innovation.

If your company does not have a lean or six sigma management initiative, you could also use one of the other management systems described in this chapter for process improvement to apply such a management structure to the sustainable development program and provide it with a business language. This can be done within the ISO 14001 program or independently using one of the other systems approaches. When your company does decide to implement lean six sigma, the sustainability program will already have a consistent approach that can be easily accommodated into these popular process improvement programs.

Should you already have a lean six sigma program in your company, it is important that you understand this program and learn how to use its operationalization methods. A more detailed examination of the use of these programs for guiding sustainability and other process improvement projects has been prepared (Pojasek,

2003b). A number of books that describe these programs have been provided in the "suggested reading section" of this chapter that can start you on the path to either integrating lean six sigma into your sustainability program or integrating your sus-tainability program into the lean six sigma effort. The triple bottom line focus of sustainable development is a natural fit no matter which way you go.


Karl-Henrik Robert

Blekinge Technical University and The Natural Step, Stockholm

Sissel Waage

The Natural Step, USA

Dicksen Tanzil

BRIDGES to Sustainability

Most people are familiar with CFCs (chlorofluorocarbons) and how they eventually became doomed as an input into modern industrial products. Ironically, these compounds were initially introduced as environmentally perfect alternatives due to their nontoxic and nonbioaccumulative nature. This is one of many examples of decisions - in this case about "safe" materials - that have been made on large scale, only to be followed by a late awakening and significant costs to society and individual organizations. Some of the more recent examples now looming on the horizon may be even worse due to their direct impacts on humans - antibiotic-resistant strains of microbes from antibiotics in biota, hampered kidney function from cadmium in foods, and endocrine disruption from plastic additives, to mention just a few.

On the principle level, society is repeating the same kind of mistake over and over again. The industrial history of such events tells us a few things that should be kept in mind for future planning. It has shown that impacts generally occur through very complex interactions in the biosphere, which generally cannot be determined beforehand. At best, a certain impact can - after it has occurred - be clearly linked to a certain activity or process. However, these findings are usually associated with delays between the time of initial use of the compound and discovery of impacts.

Given this situation, it seems advisable to develop another approach to planning and decision-making that could more adequately take into account these realities. Such an alternative approach would not be based on an exhaustive understanding of all variables. Rather, an alternative method could be based on the discovery, and disciplined use of, principles by which sustainability-oriented decisions -such as the selection and management of materials - are determined upfront and "upstream," or at the original point of decision of whether or not to use a particular input instead of after damage has already occurred.

In the late 1980s, a group of Swedish scientists set out to develop such an approach. This approach, called The Natural Step Framework for strategic sustainable development, has been developed and published in numerous scientifically peer-reviewed papers (e.g., Robert, 1994, 2000; Holmberg and Robert, 2000; Robert et al., 2002). It has also been applied within businesses to enable decision-makers to understand sustainability issues and begin planning based on these new insights (Bradbury and Clair, 1999; Nattrass and Altomare, 1999, 2002). This chapter describes this planning and decision-making framework and how it is developed and applied.

4.4.1 "Backcasting" from Principles of Success: Introduction to The Natural Step Framework and Approach

The Natural Step Framework is built on "backcasting" from "basic principles of success." Backcasting refers to a planning procedure by which a successful outcome of the planning is imagined in the future, followed by the question: "what was it that we did today, that allowed us to get there?" The term "basic principles of success" denotes principles that

• are general enough to cover the successful outcome (i.e., social and ecological sustainability) and to be independent of scale or field of activity;

• are concrete enough to guide problem analysis and creative solutions;

• are not overlapping, so that comprehension is supported, and so that metrics for the monitoring of progress can later be developed.

The methodology has been elaborated from "backcasting from scenarios" (Robinson, 1990), a planning approach that begins with envisioning a picture of success. This scenario approach is similar to working on a jigsaw puzzle while being guided by a specific image of the finished puzzle.

Backcasting from scenarios, however, has some disadvantages when applied to sustainable development. First, it is difficult to develop detailed scenario descriptions of a successful sustainable outcome upon which many people will agree. Secondly, there is often a resistance to making very detailed plans in the light of the ongoing technical development that may subsequently change the conditions for the planning. Finally, how do we know if a detailed description of a sustainable enterprise or society really is sustainable? Decision-makers appear to face great uncertainty.

These shortcomings, however, can be addressed by an adapted approach of 'backcasting from basic principles of success.' This approach resembles a game of chess rather than a jigsaw puzzle. It is the principles of success - such as the principle of checkmate - that guide the game. This is a dynamic way of planning, whereby each move takes the current situation of the game into account while at the same time optimizing the possibility of winning, which can come about in many different ways. One of several advantages of this method is that it is easier to agree on basic principles for success - as well as some concrete steps that can serve as flexible stepping stones in that direction - than to agree on detailed descriptions of a desirable final outcome. Finally, the two methods can be combined -scenarios can be scrutinized by basic principles of sustainability.

4.4.2 Understanding Complex Systems and Thinking Upstream: Rationale for the Principles of The Natural Step Framework

Within a framework for planning in complex systems, it is essential to keep five hierarchial levels of decision-making and not confuse them with each other (Robert, 2000) (see Fig. 4.12):

Level 1: System - articulation of how the system is constituted. Level 2: Success - setting vision and identifying desired outcomes in the system. Level 3: Strategies - to achieve vision and move purposely toward success. Level 4: Actions - concrete measures that will lead to the desired outcomes. Level 5: Toolbox - set of tools to assess, manage, and monitor the actions.

For example, the use of renewable energy belongs to the Action category (level 4), not the Success category (level 2). Changing to renewable energy is not a principle, but something that we do. While it is an important step forward, it is important to

System Science

Level1 Defining the System

How is the system itself constituted?

Level1 Defining the System

How can a successful outcome be defined (i.e., a sustainable society)?

Business Strategy

• "Backcasting"

• Creating flexible platforms

• Reinvesting

How can a successful outcome be defined (i.e., a sustainable society)?

Business Strategy

• "Backcasting"

• Creating flexible platforms

• Reinvesting

What are the principles for constituting the system, both ecological and social?

What are the principles for sustainability?

e.g., turn to renewable energy, recycling, more resource-efficient engines.

What are the principles for sustainability?





•Transparency •Stakeholder dialogue •Support sustainability policy

•Resource productivity •Less waste

• Degradable

• Not reliant on ecosystem destruction

■Address differentiated taxes and subsidies ■Support sustainability in international agreements and legislation


■Address differentiated taxes and subsidies ■Support sustainability in international agreements and legislation e.g., turn to renewable energy, recycling, more resource-efficient engines.

Factor X



ISO 14001





Figure 4.12. Overview of the "Strategic Sustainable Development" decision-making approach (adapted from Robert et al., 2002).

Figure 4.12. Overview of the "Strategic Sustainable Development" decision-making approach (adapted from Robert et al., 2002).

note that it may lead to significant ecological alterations, such as flooding areas in generating hydropower, or deforesting lands through extensive use of biomass fuel sources. Therefore, this action is not in itself a principle for sustainability. Rather, renewable energy should be introduced in a way that will comply with principles for sustainability.

This example highlights that at the heart of planning is the Success level, which should inform strategies, actions, and the design of our tools. This level is understood through "backcasting from the principles of success," or imagining that the conditions for success are complied with and then asking: "What shall we do now to optimize our chances to reach this successful outcome?"

As detailed in Figure 4.12, in the case of sustainability, to arrive at a principle definition of Success (level 2), we must know enough about the System (level 1), which is both the biosphere and the human societies as well as the interactions and flows of materials between the two. Since the concept of sustainability (level 2) becomes relevant only as we understand the nonsustainability inherent in the current activities of society, it is logical to design principles for sustainability as restrictions that determine what human activities must not do in order to avoid destroying the interrelated ecological and social systems. CFCs, for example, were thought of as "harmless" in the relatively recent past. It is incumbent upon us to ask what compounds are perceived of as harmless today, but may be understood differently tomorrow. In what ways - expressed as principles - could we destroy the system's (of both the biosphere and society) ability to sustain us?

The negative impacts related to nonsustainability that we encounter today can -on the basic principle level - be divided into three separate mechanisms by which humans can destroy the biosphere and its ability to sustain society:

1. A systematic increase in concentration of matter that is net-introduced into the biosphere from outside sources.

2. A systematic increase in concentration of matter that is produced within the biosphere.

3. A systematic degradation by physical means.

Sustainability of society also depends on addressing human needs through the maintenance and robust functioning of social systems, including both formal institutions as well as the informal structuring of civic society at large. These issues relate not only to sustaining society, but also to complying with the three ecological constraints. Therefore, these interrelated social and ecological dynamics necessitate a fourth basic condition that takes social aspects of sustainability into account. By adding "not" before each of these mechanisms, it is possible to identify a set of basic principles for defining sustainability in the system (i.e., the biosphere and society). These four principles are articulated as system conditions in Box 4.1. Taken together, the first three system conditions define an ecological framework for any sustainable society and the fourth principle is the basic social condition.


In the sustainable society, nature is not subject to systematically increasing...

1. concentrations of substances extracted from the Earth's crust;

2. concentrations of substances produced by society;

3. degradation by physical means; and, in that society...

4. the ability of humans to meet their needs worldwide is not systematically undermined.

Correcting errors at this basic systems level (level 1), or "upstream" in cause-effect chains, is the only way to both come to grips with current problems and avoid new problems. Understanding this level - the "basic rules of the game" from a biophysical and societal perspective - makes it possible to ask the right questions and to structure all the details in a way that makes sense for decision-making. If CFCs had been scrutinized up front against these basic principles, it is obvious that they would not have passed questions related to the second principle: CFCs are made to increase in concentration in the biosphere as long as they are used on a large scale without rigorous control to hinder them from leaking out into the biosphere. Any compound that is "left over" and increases systematically as waste in the system is inherently unsustainable. Sooner or later it will pass its ecotoxic threshold and since complexity makes it impossible to foresee such thresholds, we need to solve the problem up front and on the principle level - looking through the front screen and not chasing after reality in the rear view mirror after problems and impacts have already occurred. Thousands of compounds are now increasing systematically in the system and are consequently not managed in a sustainable way.

4.4.3 Applying The Natural Step Framework: A Strategic Sustainable Development Decision-Making Process

The Natural Step has placed these principles into a framework for sustainable development, which is used in conjunction with "backcasting" techniques. Actions are launched, step by step, in a strategic way to serve as viable "stepping stones" towards compliance with the sustainability principles. The framework is systematized as an approach to facilitate the brainstorming sessions and team-planning that is presented in the "A,B,C,D" methodology.

The process begins with phase A, in which the framework (with the system conditions shown in Box 4.1) is explained to offer a shared mental model for "community building" among the participants of a planning process. This step enables the group to play the "chess game" of sustainable development by the same rules.

The second phase, phase B, includes conducting an assessment of where an organization is today in terms of sustainability. This task is done by developing a set of diagrams, lists, and analyses of all current flows and practices that are critical from a sustainability perspective. At the same time, the group considers all of the assets that are in place to deal with the problems.

Thirdly, phase C, is the creation of solutions and visions of tomorrow, including applying the constraints of the system conditions to decision-making processes in order to spark creativity and both list and scrutinize suggested solutions. This process is undertaken in a type of brainstorming session where top management should be actively engaged. At this point, no significant constraints are applied, other than what is theoretically feasible.

Finally, the fourth phase, phase D, is making priorities from the list developed in the previous step and launching concrete programs for change. This step provides the framework with its strategic component. Suggestions from the list generated in the C phase are prioritized to be launched relatively early on - to serve as stepping stones for further improvements - based on responses to the following three questions.

1. Does this measure move in the right direction as regards all system conditions? Sometimes a measure represents a trade-off, moving in the right direction as regards one of the system conditions, but at the expense of some of the others. Asking this question enables decision-makers to see the full picture and find complementary measures that may be needed to take all system conditions into account. Consequently, this question often leads to increasing the lists of opportunities and potential solutions.

2. Does this measure provide a stepping stone for future improvements? It is important that investments can be further elaborated or completed in line with the system conditions, so that they do not lead into dead ends. For example, it would be unwise to invest heavily in a technology that will cause fewer impacts in nature in the short term, but would be difficult to later adapt, or move away from, to achieve ultimate and complete compliance with the system conditions.

3. Is this measure likely to produce good return on investment soon enough to fertilize the further process for future improvements?

It is the combination of "yes" to all three questions that provides the strategic element of the framework. Each suggested investment is scrutinized as regards its potential to reduce impacts, develop further towards sustainability, and allow for funding of ongoing work, particularly within a business context. Each individual organization must draw its own conclusions from these basic principles as regards problems, solutions, goals, and objectives. However, the framework provides a systematic way of guiding this intellectual process, through an "A,B,C,D" process.

4.4.4 Integrating Sustainability Thinking into Action: The Dynamics of Dematerializations and Substitutions

To consider how the principles of sustainability may be put into action, let us consider the future sustainable management of materials. Complying with the system conditions requires combined dematerializations and substitutions (transmateriali-zations) (Robert et al., 2002). These actions mean that when society is managing materials in a sustainable way, all compounds will have ceased to systematically increase in the biosphere, not only the ones that are currently causing identified impacts. This include matters that are net-introduced from the Earth crust (system condition 1), such as metals and minerals, as well as substances produced by society (system condition 2), such as chemical products and unintentionally produced emissions and releases from the entire product lifecycle.

Furthermore, managing materials sustainably also requires that the biosphere not be degraded by physical means (system condition 3). Thus, renewable materials will not be overharvested and/or purchased from poorly managed ecosystems or from companies that are failing to restore ecosystem. In addition, infrastructure for transport will not be growing systematically and erode the landmass of productive ecosystems.

Finally, to comply with system condition 4, materials will not wasted and/or made unaccessible by other means to people in less affluent areas of the society. Nor does the extracting, manufacturing, transporting, warehousing, distributing, and marketing of any items contribute to social behavior or abuses that undermine people's capacity to address their human needs and to live a fulfilling life.

In turn, from an industrial perspective, this future will require the following:

• Dematerializations, by means of higher resource productivity and less waste. Such dematerializations, such as recycling or improvements of design, will allow for higher material performance per unit of service. These actions will avoid accumulation of waste (system condition 1 and system condition 2) and reduce the physical pressure on productive ecosystems (system condition 3). In addition, these actions will increase resource productivity and reduce waste, which will feed into the possibility of sufficient resources for people on the global scale (system condition 4).

• Substitutions will also be needed, as many of the currently used materials and management routines are so problematic from a sustainability perspective that they will be too expensive to safeguard within the constraints provided by the system conditions. Consequently, dematerializations will not be enough to reach sustainability. Examples of such needed substitutions include:

• heavy metals that are normally very scarce in ecosystems (e.g., cadmium; Azar et al., 1995) (system condition 1);

• chemicals that are relatively persistent and foreign to nature (e.g., bromine organic antiflammables) (system condition 2); and

• materials that are extracted in ways that do not restore natural systems (e.g., strip-mining and timber from poorly managed ecosystems) (system condition 3).

Such flows should not only be dematerialized - which is necessary during a transition period - but in the end should be phased out and substituted with other materials and practices.

New materials should be selected in a way that maximizes the benefits for a global society and presents opportunities for future generations that will be easier to adapt within the constraints of the system conditions. This means that the flows of certain other materials may not be dematerialized, but will be increased in relation to current uses in order to arrive at a sustainable society. Other materials may be scarce and foreign to nature, and yet their respective flows may be essential for sustainability and, consequently, need to be increased in a sustainable way (i.e., safeguarded by extraordinary societal means and "closed-loop" processes). Examples could be scarce metals in thoroughly recycled photovoltaic cells.

The practices of dematerialization and substitution are not only important independently, but are also interrelated in a dynamic way that should be utilized for planning. For example, the less degradable a material is, the more it must be safeguarded and/or dematerialized within the "techno-sphere," or industrial systems, particularly if it is relatively scarce in natural systems. For scarce metals the assimilation is slow and occurs as sedimentation and biomineralization. For chemicals that are relatively persistent and foreign to nature, assimilation occurs also as degradation with relatively long half-lifetimes.

Finally, it is essential to note that there are economic relationships between dematerialization and substitution. For example, when very profound demateriali-zations are not sufficient for sustainability goals - perhaps because materials are so relatively nondegradable and/or impact levels in natural systems are already trespassed (e.g., CFCs or PCBs) - then substitutions may be relatively expensive early on. This cost ratio is a function of the early production volumes of the substitutes, which are likely to be relatively small in the initial stages of a transition. Furthermore, these changes will often require investments in new infrastructure. One example is the development of new coolants in refrigerators, in the shift away from CFCs, and requiring new refrigerators to fit those new coolants. Making the substitutions affordable and the implementation of new technologies is often made possible through various kinds of dematerializations, such as higher resource productivity and less waste within the new and more expensive production lines and products (Holmberg and Robert, 2000; Robert et al., 2002). In short, demater-ializations support substitutions, and substitutions will prompt dematerializations.

4.4.5 Industry Example: PVC Production at Hydro Polymers

PVC has been the target for serious attacks from NGOs during at least two decades. It is often perceived as inherently nonsustainable due mainly to pollution throughout the whole lifecycle of the material, but also as regards its contribution to the greenhouse effect. Top management of Hydro Polymers, one of the leading manufacturers of PVC in Europe, decided to take on the intellectual challenge of scrutinizing PVC from a sustainability perspective. They are now pioneering a major sustainable development programme for the plastics industry using The Natural Step Framework.

The B and C analyses in the A,B,C,D methodology displayed a very wide window of opportunities. On the one hand, PVC has currently a number of positive qualities from a sustainability perspective, the most important of which are its long lifetime, lightness, weather resistance, low flammability, and the fact that it requires little maintenance and is easy to mold and color. On the other hand, those aspects are built on the chlorine and the additives that make PVC currently the subject of heated debate. Backcasting from compliance with the system conditions made Hydro Polymers endorse the following challenges:

• The industry should commit itself long term to becoming carbon neutral (system condition 1 - plastics are currently produced with petroleum and natural gas as raw materials which amount to around 3 percent of the total use of these fossil raw materials).

• The industry should commit itself long term to a closed-loop system of PVC waste management (system conditions 1 to 4 - in relation to a back-casting perspective, today's use of PVC in society is highly wasteful, with around 50 percent ending up on land deposits).

• The industry should commit to ensuring that releases (emissions) of metals and persistent organic compounds from the whole lifecycle do not result in systematic increases in concentration in nature (system condition 2).

• The industry should review the use of stabilizers and additives consistent with attaining full sustainability, and especially commit to phasing out, long term, substances that can accumulate in nature, or where there is reasonable doubt regarding toxic effects (system condition 1, as such compounds include heavy metals as stabilizers, and system condition 2, as a number of organic additives are persistent in the environment and foreign to nature).

• The industry should commit to the raising of awareness about sustainable development across the industry, and the inclusion of all participants in its achievement.

The D part of the analysis, that is, some early flexible stepping stones, can be exemplified by a number of "low-hanging fruit" that are already picked and related to the long-term goal:

1. Education of personnel throughout the Hydro factories in Europe, making A,B,C,D analyses part of the education and training, as well as a source of new ideas to top management.

2. Dematerializations of flows, for instance making exothermic processes endothermic and utilizing scrap as raw materials.

3. Hydro is actively working to develop a new paste process involving a particle distribution that means less plasticizer needs to be added, and in which new types of plasticizers can be used (flexible platform). Hydro is also involved in international research on new PVC production methods and the development of new PVC materials.

Over the past few years, Hydro Polymers and the PVC processing industry have, in cooperation with stabilizer manufacturers, developed new, modern calcium/zinc stabilizers. A few product areas, such as cables, have already changed from using lead stabilizers to using calcium/zinc ones. In the long run, as revealed by a backcasting analysis, zinc is also a doubtful stabilizer because it is relatively sparse in ecosystems in comparison to the societal flows of the metal. This is a particular issue since zinc is purposely used by society in a dissipative way to protect iron from oxidizing, that is, 'not contributing to materials from the Earth's crust increasing in the Biosphere' has made Hydro consider the calcium/zinc stabilizers as a platform for other solutions.

4.4.6 Discussion and Conclusion

The Natural Step Framework and approach are elaborated from the constraints determined by basic principles of sustainability. Backcasting from basic principles of sustainability is a framework that covers relevant aspects of how to plan ahead in a complex system, such as for societies within the biosphere. The approach brings a sustainability perspective to analyses of current practices and materials, suggested solutions and visions, and the strategic evaluation of various solutions and paths to arrive at sustainability. And it brings this new perspective in with opportunities for improved economic outcomes.

A framework for sustainable development is neither an alternative to scientific studies and facts, nor specific concepts and tools to deal with such facts and inform actions. All these elements are essential. Rather, a framework stitches it all together, creates comprehension, and provides direction to the planning. Without a full systems-based approach and framework, it is difficult to:

• ensure that all aspects of sustainable use of materials are considered from a full systems perspective;

• enable decision-makers to assess current data and information on sustainabil-ity in a structure that is relevant for strategic decisions;

• discover areas where more information is necessary - or unnecessary - for making relevant decisions;

• focus problem-solving upstream at the source of problems, in order to design problems out of the system;

• evaluate alternative materials solutions and visions from a strategic point of view, so that blind alleys can be avoided;

• deal with trade-offs in a strategic way;

• build creative assessment and problem-solving communities through shared mental models;

• involve all aspects of business in a cohesive manner, including leadership, management, programs of activities, product-development, choice of materials, indicators, and so on.

Sometimes there are many possible choices that fit the presented framework and can serve as a strategic stepping stone towards consonance with the system conditions. How can a decision-maker determine priorities among various options? Is it do-able to come up with checklists or manuals to support decisions beyond the overall framework with its guidelines for dematerializations and substitutions throughout the lifecycle of materials? Given that complete compliance with the system conditions is the ultimate goal, on what grounds can trade-offs during the transition be managed? How are uncertainties as regards compliance with the principles addressed?

From other complex systems, such as chess, a couple of essential conclusions can be drawn in this respect. First, once basic rules are clear, the individual's potential to deal with trade-offs and to optimize chances in multidimensional and complex situations is very large. Secondly, one of the most essential elements to utilize this potential of the individual, and to become professional, is learning and getting more and more experienced. And, finally, beyond a certain level of specificity, checklists confuse more than they help.

Therefore, it is unlikely that very detailed checklists or manuals can replace any of the time-consuming training it takes to be a professional planner in a complex system. The reason is that when decision-makers choose between various strategic options for sustainable development, there are so many categories of criteria that are simultaneously in play and that present themselves as gray areas, which results in each situation having a tendency to be unique. Or in other words - attempts to come up with very detailed hands-on manuals that are layered on top of a framework of basic principles and their respective guidelines have a tendency to result in so many feedback loops and footnotes and exceptions to the rule that they risk confusing more than they help.

The conclusion is clear. It is not possible to create up-front comprehensible and easy-to-handle and very detailed checklists or manuals for the detailed management of complex systems. Problems are generally multidimensional, and each dimension presents itself as gray areas. Instead, the overall recommendation would be to make principles for success very clear up front, as well as create smart overall strategies and guidelines to approach those principles (i.e., to apply a framework for decisions as a shared mental model among team members), and then to get on with the learning and playing the game. This process allows for deep experience in seeing the large picture of the goal and selecting stepping stones in that direction.

Finally, as the process unfolds - and the marginal costs in relation to utility and profit decrease, as more and more "low hanging fruit is picked" - it is likely that a need for more sophisticated tools will evolve, including, ISO 14001, lifecycle assessments (LCA), tools for product development, purchase manuals, and so on. To ensure, however, that all efforts are continuing to move in the same direction, all of these tools should be informed by the same framework as is informing the business program - backcasting from basic principles of success.


Catherine Greener

Rocky Mountain Institute

4.5.1 What is Natural Capitalism?

Natural and capital are two words that are not usually found together. Capital is typically defined as the money or financial assets and machinery that are needed to produce goods and services needed to create wealth. Capitalism is the organization of society supporting capital as the central driver for material acquisition necessary to produce large-scale wealth and economic growth with no end. It is an economic system in which the means of production and distribution of goods are privately or corporately owned and distribution is proportionate to the accumulation and reinvestment of profits gained in a free market. With profits defined from the distribution of goods, economists consider manufactured capital - money, factories, and so on - the principal factor, and perceived natural capital as a marginal contributor. The exclusion of natural capital from balance sheets was an understandable omission. There was so much of it, it did not seem worth counting. Nature seemed free, or a gift to be used for the creation of wealth. The success of the industrial revolution reinforced and popularized the existing model of capitalism and economics, but nature suffered.

The Industrial Revolution enabled people to be vastly more productive at a time when previously the per capita output was limited by time, technology, process, but not limited by the vastly abundant natural world. Beginning with the Industrial Revolution the raw materials used by the chemical industry existed in the form "natural capital": coal, crude oil, natural gas, sulfur and other materials that resulted from millions of years of natural processes. The Industrial Revolution turned those raw materials - in massive quantities - into refined fuels, new materials, medicines, explosives for war, mining, and construction; plastics for air-crafts and automobiles, buttons, and toys; medicines to cure the wounded or the ailing; textile dyes for fabrics, inexpensive clothing; and fertilizers to increase food production for nations.

Despite the successes of the Industrial Revolution and the growth of the chemical industry, the conventional economic theories that were the foundation for growth and prosperity had a serious flaw. Natural capital, the asset that was the cornerstone of the industrial machine, was left off the balance sheet and has resulted in significant environmental consequences. Most financial and business systems account and manage for physical and financial capital - the assets that have represented wealth. But there have been other forms of capital that have been ignored in the decision-making and managerial algorithms as well: natural, human, and social capital. The sustainability framework, Natural Capitalism addresses this omission.

Companies are beginning to evaluate and account for nature and the true environmental costs and risks associated with chemical refining and manufacturing, the impact to natural capitalism. Natural capital refers to all of the resources used and consumed by humans (water, trees, fish, soil, air, animals, and so on) and extends to the ecosystems that support these resources: wetlands, rivers, coral reefs, prairies, forests, jungles, oceans, mountain ranges, deserts - the entire Earth. Human capital refers to the skills, innovation, and unbounded human potential that we are capable of realizing given the appropriate system and culture. Social capital refers shared culture, norms, stories, and experiences that support the generation of wealth and well-being. These services are of immense economic value, and many are priceless, as there is no known substitute. These companies recognize that we are entering into a period of a new industrial revolution, a sustainable industrial evolution. This sequel to our industrial success is a response to the changing pattern of scarcity and recognition of the lasting ecological degradation, extraction, and liquidation. Natural capital will be the limiting factor to future economic growth. A hundred years ago, who would have envisioned a world constrained by the quality of water needed for industrial processes?

Companies that adopt these principles will do very well, while those that do not won't be a problem, since ultimately they won't be around.

- Edgar Woolard, former Chair ofDuPont 4.5.2 Four Principles of Natural Capitalism

Four principles construct a planning and design framework in an effort to value natural capital and consider true environmental impact.1 Each of these four principles is powerful enough alone to impact an organization's progression toward sustainability, but the greatest impact is when these principles are adopted as a complete framework. Additionally, the principles will be presented linearly, but are best used as a circuitous framework, similar to the quality improvement framework of the Deming Cycle: Plan, Do, Check, Act.2

Principle 1 (P1): Radically Increase the Productivity of Resource Use - creating a lot more with far fewer resources.

Principle 2 (P2): Biomimicry - what would Nature do here?

Principle 3 (P3): Migrating Business Models from Products to Services - give the customer what they want, when they want it, not the product.

1The phrase, natural capitalism alone may appear paradoxical, bringing to mind the atrocities foisted on the natural world by capitalists in the name of profits. In 1997, an article by Paul Hawken appeared in the March issue of Mother Jones titled "Natural Capitalism: We can create new jobs, restore our environment, and promote social stability." Some say that it was the first time that the word capitalism appeared in the magazine in a positive light. The collaboration and thinking continued and, in 1999, with Amory Lovins and Hunter Lovins as co-authors with Paul Hawkin, the book Natural Capitalism was published, and a framework towards approaching a new model for capitalism, in a sustainable world emerged.

2The Deming cycle is a set of activities that fall into the categories of Plan, Do, Check, Act that are designed to drive continuous improvement and innovation. The continuous improvement activities were first developed by Walter Shewhart, but are commonly called the Deming cycle, or the PDCA cycle. The Deming cycle was initially implemented in manufacturing environments, but has broad applicability.

Principle 4 (P4): Re-invest in Natural and Human Capital - good capitalists always invest in what will provide the best return over the long run.

The first principle, Radical Resource Productivity, provides a problem-solving lens and offers a basic challenge: how can we do much more with much less? Through fundamental changes in production design and technology, natural resources can be stretched five, ten, even hundreds times further than before. The resulting savings in operational costs, capital, and time quickly pay for themselves, and in many cases, the changes can reduce initial capital investments. The second principle, Biomimi-cry, is a shift to biologically inspired production with closed loops, no waste, and no toxicity. Natural Capitalism seeks not merely to reduce waste but also to eliminate the concept altogether. Closed-loop production systems, modeled on nature's designs, return every output harmlessly to the ecosystem or create valuable inputs for other manufacturing processes. Industrial processes that emulate nature's benign chemistry reduce dependence on nonrenewable inputs, eliminate waste and toxicity, and often allow more efficient production. The third principle, Product to Service, is the shifting of the business model away from the making and selling of "things" to providing the service that the "thing" delivers to the customer. The business model of traditional manufacturing rests on the sporadic sale of goods. The Natural Capitalism model delivers value as a continuous flow of services - leasing an illumination service, for example, rather than selling light bulbs. This shift rewards both provider and consumer for delivering the desired service in ever cheaper, more efficient, and more durable ways. The final principle, Reinvest in Natural and Human Capital, allows for the restoration and investment of future resources. Any good capitalist reinvests in productive capital. Businesses are finding an exciting range of new cost-effective ways to restore and expand the natural capital directly required for operations and indirectly required to sustain the supply system and customer base.

4.5.3 The Natural Capitalism Framework Principle 1: Radically Increase the Productivity of Resource Use. The simplest definition of P1 is doing significantly more with significantly less. P1 can be applied to feedstocks, processing, or to the resource and utility streams that support manufacturing. This principle is the most widely adopted principle of the framework. It is where most organizations transitioning from unsustainable practices to sustainable futures find the most traction. Waste is also very expensive. Implementation of P1 has also gained some nicknames such as "free money," or "hidden assets.

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