Olwen Duncan
University of Edinburgh
and
Ian Thomson
University of Strathclyde
The paper is drawn from a wider research project to identify and examine the socio-economic factors that shape the development and/or adoption of cleaner technologies. The essence of the project was to develop an understanding of the decision processes involved in investing in "environmentally cleaner solutions", including; the initial drivers of the decision to invest; the influences on the type of investment and a review of the outcome of investment process. This paper concentrates on two UK cases selected because of the existence of identifiable waste accounting systems.
Cleaner technology investments are characterised as part of an organisational change process not as an individual asset purchase decision. The project focused on the investment process for evidence of change within the plant and/or organisation. Looking closely at specific investment decisions was seen to offer on opportunity to observe potential conflicts (or harmonies) between business and the environment (Gray and Mallon, 1994).
The concept of sustainability is used as a normative concept guiding change in business practice and ideology. Underpinning this paper is the recognition that western economies are currently unsustainable (e.g. Jacobs, 1991 Daly & Cobb, 1990) and that cleaner technology is a broad strategic approach away from our current unsustainability and towards sustainability.
Implicit in this paper is the recognition that no single factor is likely to shape this organisational change process. This paper makes use of the notion of an 'assemblage', a combination of different factors and "bodies of expertise" (Miller & O'Leary, 1994). Although individual factors appear more influential than others do, it is the assemblage of factors that is deemed important. Assemblages are said to be temporary in nature, and different factors are aligned through multiple relationships, where no single component has overall sway or direction.
"the temporary and fragile ensemble formed out of disparate components. It is an assemblage established by means of multiple relations between diverse practices rather than an entity in its own right. It is formed out of all those alignments by which two or more points are brought into line with each other, or alliances established between actors, agents and practices"
(Miller & O'Leary (1994)
These alignments do not necessarily fit together readily or automatically. How the components of the organisation draw upon and find balance or conflict with each other is important in analysing organisational change. Any prior evaluation of accounting in separation to other factors is not intended to imply that accounting is necessarily the single most important factor, but that accounting is one focus of inquiry.
This project employed a multi-method strategy to data collection in an attempt to gain a credible in-depth understanding of the phenomenon (Brewer and Hunter, 1989). The following sources of data were used:
The choice of case studies was determined largely by the overall project. Due to the desire for an international sectoral analysis the range of industries was restricted. A decision was taken to focus on organisation's water emissions as a proxy for environmental performance, due to the availability of 'reliable' and comparable regulatory data on this waste stream. The initial method of identifying cases was to look at firms with significant changes in their public compliance statistics. This process has a systemic bias towards firms who are doing something and should not be treated as representative a wider sample.
Once cases had been identified preliminary data was collected using the first three sources of data. A general background to the overall organisation was produced. An initial semi-structured interview was arranged. This was intended to fill in general details and ensure there was an investment process that could be investigated. Secondary interviews were carried out with those individuals identified as being relevant to the investment decision. This included interviews with the regulatory bodies, consultants and trade associations. Site visits and review of internal documents provided a valuable insight into the decision process.
Cleaner technology is generally understood to mean moving to greater energy and resource efficiency, eliminating wastes at source or using them as inputs into other processes, as opposed to end-of-pipe processing or discharge. Cleaner technology deals with inputs and outputs before they become wastes (Ecotec, 1992, DoE, 1989).
There are a number of definitions of cleaner technology (for example, (ACOST/ Department of Trade and Industry, 1992) (McMeekin & Green, 1994, Clift, 1995, p.321, UNCED, 1992, EPSRC, in Clift, 1995). These definitions share the key features of a requirement for waste minimization and resource use efficiency, but differ in their scope. This scope includes a single organization's cost savings within the current market structure, general notions of societal benefit, and full ecological and life cycle assessments.
Cleaner Technology is promoted as a 'win-win' situation, conferring economic benefits, (e.g. direct cost savings, development of innovative solutions, products, processes) and clear environmental benefits. There are many cases where these benefits can be demonstrated and where environmental improvements, far from being a hindrance to economic development, have accelerated the pace of innovation and investment. Such examples indicate that a consistent drive in the direction of greater efficiency in resource and energy use and achieving tighter environmental standards could be used to accelerate the pace of innovation and improve productivity.
Various research programs have found a reservoir of undeveloped processes and products that could and would be developed given the right external signals. Green et al (1993), for example, found a number of 'buried' technological developments in environmentally benign products and processes within firms. There is considerable evidence to support the conclusion that the UK has a poor record in investing in and developing cleaner technologies relative to the USA and other EU countries.
As technological solutions have been proposed to solve many problems of unsustainability (E.g. WCED, 1987; HMSO, 1994) conceptions of technology and technological development are important to sustainability. The Report of the United Nations Conference on Environment and Development (UNCED, 1992) proposed that
"Environmentally sound technologies protect the environment, are less polluting, use resources in a more sustainable manner, ....[and] widen the feasibility space for socio-economic activities and increase their levels and options."
Engineering conceptions of technology embody 'man-made' as opposed to more 'natural' conceptions. Olson (1994) states that technology can shape our society, and in turn society can shape technology. Technology is also seen to be a primary bond between society and the environment (WCED, 1987). If technology can shape (and be shaped by) society and the environment, then technology must be adopted that addresses societal and environmental aims. Schuurman (1995) argues that under technicism, the current over-arching ideology directly influencing science and economics, technology acts negatively and becomes a "destructive cultural power". If technology is a pawn, or tool, of a governing ideology then ideological changes are of more significance than the physical technological changes Laughlin (1991).
Technologies should be assessed in so far as they meet the requirement of being driven by sustainability. Some technologies may produce environmental and/or societal benefits, but if the ideology behind them is for essentially unsustainable goals then such technologies may provide short term benefits but are unlikely to shape society towards sustainability. The profit motive and current business thinking are seen to be contrary to sustainability (e.g. Dunion, 1994; Ecologist, 1992; Redclift, 1987, Cooper, 1992, Gladwin et al., 1995, Gray & Bebbington 1994). Cleaner technology conceived within the current ideology of profit and exploitation may contribute to improving eco-efficiency, but will do little to change the fundamental guiding system of values and beliefs that sustainability requires (Clayton and Radcliffe 1996).
Employing cleaner technologies to address social requirements of sustainability on their own or to complement engineering technologies is an important development opportunity. As technology is a core element in moving towards a sustainable society then both eco-justice and eco-efficiency should shape this response. Engineering, cost-effective, and practically acceptable approaches need to be supplemented by initiatives to bring about necessary values and attitudinal changes at the individual and societal levels.
The development of human capital to complement man-made capital would expand the contribution of cleaner technology. Human capital or labor is one of the most abundant yet relatively untapped resources available to society (Gladwin et al., 1995). Investment in human capital, mobilization and development of human capacity, and expansion of human talents in economic activity has been termed 'humanization' (Schumacher, 1973). Humanization is seen to favor small, human scale technologies and an increase, rather than a reduction in, levels of human capital employed (Gladwin, et al. 1995). Humanization would manifest itself in new organizations that are simultaneously labor intensive and environmentally sound (Corson, 1994). The organization will be brought back to community level accountability and involvement (Elgin, 1994; Olson, 1994). Changing employees' attitudes, behavior and organizing goals towards sustainability as part of cleaner technology can contribute to the change in values necessary for sustainability.
"It can be argued that the focus on 'technology' misses the point: the solution to environmental problems can just as often be organisational and attitudinal than technological." (McMeekin & Green, 1994)
When sustainability is the goal, technology must not be a tool of exploitation (Schuurman, 1995) but should be used to re-integrate the social and the environmental into business (Ausubel et al., 1989).
Empowering employees to participate in shaping the organization, their community and the future towards sustainability would be a massive step. Gray et al. (1995) suggests that personal values can play an important role in creating significant changes in the value base and/or goals of organizations. Cleaner human based technologies would be one avenue for personal values to permeate the organization.
There have been many calls for organisations to expand their internal and external accountings to reflect wider social and environmental factors. These new expanded accounts could provide systematic quantified data to improve decision- making and accountability (US EPA 1995, Gray et al 1993) and change the organisational discourse and create a new visibility of social and environmental factors within organisations (Gray et al 1993, Powers 1992). In common with other accountings, environmental accounting can be seen to have a technical and a social dimension. Many of the critiques of non-environmental accounting are relevant in this context (for example, Miller (1992), Munro (1994)). To separate the technical and the social aspects of environmental accounting is perhaps artificial (Munro, 1994) in that to highlight one constituent may only be telling part of the story. The manifestation of environmental accounting discussed in this paper is waste accounting. The character of waste accounting is differentiated into the technical and the social for ease of analysis, but also because many prescriptions for environmental accounting changes are couched primarily in the technical. However, the technical and social aspects will be re-integrated by attempting to analyse the waste accounting from the perspective of the local, temporary assemblage.
Studies in the US suggest businesses operating a waste accounting system are more likely to adopt a cleaner technological solution, (INFORM 1985, INFORM 1992, US EPA 1995). Gray et al (1993) clearly identify 'waste' as a business matter to be managed as any other business resource. There is a growing body of evidence that suggests UK companies' waste management practices are in need of radical reform (see for example Johnston, N. (1994) Rendan and Kruger (1994)) Better information and visibility on waste issues would highlight the economic and environmental irrationality of most organisation's waste management practices. Often companies' effluent includes sellable product discharged due to sloppy operational procedures. A waste minimisation consultant interviewed during this project boasted that he could walk into any UK firm and immediately suggest actions that would reduce waste by at least 10% on a low or no cost basis.
The technical development of a waste accounting system is relatively straightforward because 'waste' can be easily articulated in conventional accounting terms and clear financial advantages can be demonstrated. The justification and legitimisation of waste minimisation decisions is based on re-defined private costs / benefits to the organisation. If this type of waste accounting was viewed as a cleaner technology, then it is conceived within the current market ideology and may provide short term environmental and/or societal benefits, but will do little to change the fundamental values and beliefs that sustainability requires.
One important factor in assessing the 'cleanness' of this technology would be the parameters of the cost definition used by the organization. Does it include current private costs, or does it extend to future costs likely to be incurred by the organization or does it extend to societal costs or to ecological costs. The narrower the definition of costs the less effective the new accounting will be at moving towards sustainability.
The fundamental problems associated with sustainability are unlikely to be resolved within the current socio-economic paradigms and cannot be solved by technical and scientific methods (Clayton and Radcliffe, 1996). The move towards sustainability requires consideration of social processes. It is on this level that Power (1992) recognises the potential of accounting for environmental issues:
changes in accounting may shift the terms of organisational discourse and from this point of view the accounting entity can be regarded as a flexible horizon of cognitive possibility. We can speculate that new language of waste and sustainability can effect a new moral environment within the organization. A new universe of facts for old behavior, rather than an existing behavior in the existing universe of facts. (Powers 1992)
This ability of accounting to define or construct the reality of the firm and the parameters of the decision context is powerful (Hines 1988) and potentially a major agent of change. The social and cultural processes of the firm could be affected by the replacement of conventional accounting as the hegemonic and partial definer of the problem to be solved. A strategic issue in developing environmental accounting is to consider whether this new accounting should be incorporated within the formal systematic accounting process to change that system from within, or whether it should be developed as a parallel system operating independently of the formal accounting system. This parallel system would provide an alternative 'reality' and require the integration of these two views at a higher level. It is hypothesised that the latter dialectical approach will be more powerful, if the goal is to radically change the organisation towards adopting sustainable objectives.
This dialectic process requires an evaluation of accountings at the assemblage level, especially as the assemblage is conceived of as a dynamic coalition of competing bodies of expertise. Evidence from this project suggests that accounting is not the only negative and dissenting discourse opposing organisation's desire to become sustainable. Very few other disciplines are further advanced in considering the full implications of sustainability. Different disciplines have their own values, methods of evaluating a situation of concern and solutions and sustainability poses a significant threat to their current modes of operating. 'Waste accountants' may suggest a more sustainable course of action than chemical engineers, marketing executives or public relations managers.
Observations in the wider project identified a wide range of factors influencing the implementation of cleaner technology interacting in a complex and dynamic fashion. It is useful to classify these factors in two, non-mutually exclusive ways: internal and external and drivers and shapers. The classification of internal and external is relatively static, whereas drivers and shapers vary from case to case. The factors identified are;
Drivers were the factors that actually initiated the process to consider investing in cleaner technology. These factors were powerful in that they disrupted the status quo and led to a process of change, however, these drivers did not dictate the eventual outcome. The cleanness of the technology chosen to respond to the drivers was shaped by other factors in the assemblage.
The classification of internal and external illustrates the lack of homogeniety in organisational response and the existence of competing and conflicting views within an organisation. Interesting temporary coalitions can be formed for example between regulators and local management to force change in head office. It should be noted that internal and external factors are not necessarily always in conflict. Rather it can be hypothesised that it is when these different factors are in alignment that effective change takes place, allowing limited penetration of the organisational membrane (LLewlyn 1994). For example, when regulatory pressure on emission reduction coincides with a waste accounting system, following bad publicity, a technical breakthrough and an increase in cost of raw materials.
The possibility of this and other alignments and conjunctions will now be discussed in the context of the two case studies.
Case 1 relates to the decision to install a wastewater treatment plant in a petro-chemical plant. The plant is part of a major multi-national company operating in an environmentally damaging sector. The company has published its environmental strategy and produces annual environmental reports. The company is subject to intense scrutiny by environmental pressure groups. The sector is extremely competitive; the current margins are very tight and in 1996 the group announced plans to close up to 30% of it's processing capacity. Further restructuring of the industry is likely.
The plant is perceived as a significant environmental threat, the production process is complex and produces high levels of pollutants. The plant had a poor environmental performance; e.g. 1991/92-compliance rate with consent levels was 17%;
"... the discharge which was going out of the plant ... from our perspective, and I think from most of the group's perspective, stood out like a sore thumb as being one of our highest quantity discharge which we were making anywhere " .
The plant was treating its effluent, but it was "far from the state-of-the-art" as claimed by the company's publicity material. The new environmental policy, new tighter consent levels from the regulator, combined with a new legal framework of environmental regulations led to a realisation that action had to be taken to deal with plant emissions.
Whilst the company was and still is subject to environmental campaigning, the plant had not experienced any sustained protests or campaigns. The actions of environmental pressure groups were not felt to have directly initiated this decision process, nevertheless their presence did indirectly shape the type of treatment plant installed,
There was no direct pressure from consumers for this plant to improve its environmental performance. The high profile of the company and the fact that they market their products under one brand name creates an incentive to avoid adverse publicity arising from poor environmental practices on any single site. Consequently, the company was keen that the plant should be brought up to standard quickly.
There was no evidence of sustained pressure from the local community, The plant is a strategic component in the local economy. It is the major employer in the region and central to a range of ancillary industries. There is a long association with this industrial sector and the local area. There have been processing plants on site for over 100 years. Many employees at the plant live locally, and support environmental improvements
"... most of us live near to our plants or facilities ... We wish to see a good clean environment so therefore there is pressure from the local employees."
The plant is large, complex and very capital intensive. The inter-connected nature of processing and the economic requirement for continuous production is felt by staff to negate the possibility of many incremental changes. There are possibilities to implement cleaner technology, however, it is believed that this would be a slow and expensive process. The company has a highly centralised and structured capital expenditure planning system based on 10 year financial projections, detailed three year rolling budgets and annual capital budgets. Capital projects are categorised as either:
Any project has to be justified in terms of meeting the Group's strategic aims and requires full costing and evidence of commercial viability. Stay-in-business projects are exempt from satisfying the commercial viability criteria.
New environmental regulations have resulted in the majority of capital funds being allocated to 'stay in business' projects. This has left a large number of projects competing for a small residual capital budget, with infrastructure projects considered a higher priority than commercial projects. Legislated stay-in-business projects are favoured because there is no uncertainty about their need
"It's stay in business, or you're out of the game... There are no incremental returns on where your current level of performance is, it's staying where you are. If you don't invest you're out of that market"
The capital investment appraisal system clearly stresses the importance of environmental considerations within the company, but environmental issues are defined by regulations. In some cases, this can have a systematic bias against cleaner technology projects. The company has developed a very comprehensive waste accounting system, waste costs and physical quantities are integrated with budget reports, product design, site planning, process development and staff appraisal systems. Their waste accounting system highlights the physical quantity of waste and its associated costs to the organisation and is traced to the manager of the activities that generated the waste. The notion that waste is a business issue is accepted at all levels of the organisation. The incorporation of waste into the formal management accounts has redefined waste as a commercial rather than an environmental issue. In this context, they can be regarded as a model of best practice in techniques of waste accounting.
In the normal course of events, the company's accounting system would be expected to at least identify the business-environment 'win-win' courses of action. However, this was not observed to always be the case. In particular, waste minimisation projects were designated as commercial projects with little chance of attracting central funding, especially when they were not related to a specific change in regulations or went beyond minimum compliance.
The approved plan involved a combination of up-stream waste minimisation work and a wastewater treatment plant. However, much of the waste minimisation work was not carried out, staff recognised that this was not the cleanest or the cheapest approach.
"In an ideal world you'd have done all the up-front stuff and you'd have done all your waste minimisation and installed, if appropriate, clean technologies before you got to this stage. Our first choice would be to identify where the stuff is coming from and see what we can do to either eliminate it or at least reduce the discharge at source. It's cheaper. It's more effective. I think we probably could have saved between 5 and 10% of the cost of the plant and scaled down the size of it by something like 20%"
This size and cost reduction of the plant was not seen to be a critical factor in the decision assemblage. Before this plan was finalised a number of options had been rejected. A comprehensive waste minimisation programme was rejected early in the decision process. This project cost less than half of the eventual treatment plant and paid back within four years, due to improvements in plant operating efficiency. Other cheaper treatment plants had also been rejected.
"we don't want to be seen to be putting in a cheap and nasty plant"
"[a cheaper alternative plant] would have performed at least as well as what we've got now ... but I think they wanted to be seen ... to be investing in good technology and they wanted to be seen as a leader"
"on the basis that it would be regarded as perhaps not 'the best technology' and we made a very deliberate decision to go for a more expensive activated sludge system."
The predictability of the effectiveness of the treatment process was a key factor in the decision-making process. Another important factor was how quickly measurable improvements could be seen and reported. The plant decision makers adopted a safety first approach and the outcome was a £30 million treatment plant, £10 million spent on up-stream work and an increase in annual running cost of £2 million.
By investing in a large expensive treatment plant they were visibly showing in size and money their commitment to environmental improvement.
"There is a seductive attraction about big projects that can be hyped up by the PR function - the big leap forward, the feel-good factor, solve-at-a-stroke and so on. Often, however, they do not measure up as well against the multiplicity of smaller incremental projects that can be targeted more precisely against the real need of the company"
This publicity value is important to the company. The company spends considerable time and effort actively managing external relations at all levels of the organisation. Including publicising their environmental policy, producing environmental reports, maintaining local goodwill of the communities; open days; community meetings; involvement with schools and so on.
Insecurity over the plant's future also affected the decision process, attracting high levels of investment to the plant was felt to make the site less likely to be closed. The investment was perceived by staff as a gesture of support to their future. In this situation, there was a clear incentive for plant staff to tend towards a big, visible, expensive, stay-in-business project. A program of waste minimization that was less visible, cheaper, unlikely to attract central funds and weakened the plant's future prospects.
The idea of cleaner technology in the petro-chemical industry is paradoxical. It is an industry that depletes a non-renewable resource and whose products are the major contemporary pollutants. However, accepting the integral nature of this industry in today's society, production should embody the principles of cleaner technology to ensure all raw materials are converted into useful products with the least possible waste. In this case circumstances have combined that result in the company investing a considerable amount in an end-of-pipe treatment plant, which can be used to demonstrate its environmental concern. Inherently cleaner options would have been more difficult and taken longer to implement throughout the plant by the painstaking identification and elimination of leaks throughout the system. The treatment plant was the simplest way to produce results in a shorter time period.
The capital allocation system and the waste accounting system within the assemblage of other factors present during the decision process actively worked against the apparently rational cleaner technology solution. Waste accounting information clearly demonstrated the environmental and business advantages of a cleaner technology approach, however this information had little power in the wider assemblage of techniques and expertise. The financial arrangements were good for the environment in that they encourage spending on environmental projects, but are not ideal in that they can act against sustainable waste minimisation projects.
Case 2 describes how a cheese manufacturer rejected an end-of-pipe treatment plant and adopted a policy of waste minimization. The company is part of an international food group, tightly controlled and managed using traditional management control techniques. The company is not regarded as environmentally damaging. The group do not have an environmental policy, however they place importance on the notion of good corporate citizenship and require all sites to comply with all regulations.
The company discharge their liquid effluent into the sewage system and are regulated by the Local Authority Water and Drainage Department. They do not require an Integrated Pollution Control license, however they are subject to food safety regulations. Occasionally these other regulations conflict with environmental management activities, e.g. regulations on cleaning frequencies and practices versus the desire to recycle and reduce the amount of water used.
The main effluents are whey, fat and cleaning agents; approximately 90% of raw material input end up as effluent. Until recently the company made no attempts to minimise the volume or nature of their discharge. Effluent charges are relatively trivial, moreover the effluent problem was not visible, everything simply went "down the drain" and caused no obvious problems. Environment issues had a low priority. Regulators were not considered a threat because of the local economic/political situation.
"We were certainly under a lot of pressure at that time from the water and drainage department. They certainly weren't turning a blind eye to what was happening but I think they felt a degree powerless in that we were a reasonable sized employer in the area and obviously appreciated that any improvements we needed to make could cost a lot of money."
However, a combination of events led to a change in this position. Over a period of time the quantity of effluent grew dramatically, rapid plant expansion, lack of adequate waste storage and treatment facilities led to a continual series of small accidental spills and two major pollution events. In one case a tanker crashed into a whey storage silo and hundreds of thousands litres of whey poured into the sewer. After this incident the regulators threatened prosecution unless there was an improvement. In addition to the effect of prosecution on the business from environmental groups, local community and customers, local managers were concerned about their own future, as it was company policy to sack managers who brought the firm into public disrepute.
Plant management approached waste disposal consultants who recommended an end-of-pipe solid removal system. A funding proposal was submitted to the management board, however this was rejected on cost grounds. The board instructed local management to come back with a proposal that met regulations and was considerably cheaper.
The second review, carried out by plant managers, identified a major flaw in the consultant's solution. While the treatment plant would reduce effluent levels to the sewer and sewage charges, it did not reduce waste. The treatment plant created a new problem of solid waste disposal. Analysis of the plant's waste streams discovered that the 'effluent' contained 3% of the total cheese production. The plant was putting valuable products not waste down the drain. Whey, the main effluent, also had a resale value as a pig food. Rather than paying for a contractor to take the whey away, they found a pig breeder who would buy the 'waste'.
This realisation that the effluent was not in fact 'waste' led to a change in waste management strategy. Coincidentally, the regulators had recently changed their approach to dealing with effluent. Instead of external policing of discharge limits they were embarking on a proactive waste minimisation strategy. The regulators advised on a range of waste minimisation measures offered constructive advice and through an on-going dialogue put in place of programme designed to ensure compliance with regulatory levels and which would save the company money. From this dialogue and recognition that measures were in fact financially beneficial, management embraced a new plant wide attitude towards waste minimisation. Examples of the measures undertaken are contained in table 1.
|
Table 1 WASTE MINIMISATION CHANGES |
New weighing and packaging procedures to minimise cheese loss from 3% to 0.03%. |
Building walls round silos and sewer outlets to contain spillage |
Creating spillage recovery areas, recovered material sold for fertiliser |
Re-calibrating machines and production processes |
Pre-planned cleaning of effluent tanks recovered sludge used for fertiliser production. |
Filters on drains |
Water use reduction and energy conservation measures |
'Red bins system' to collect all organic waste to sell as pig food. |
New whey pumps installed to prevent tank overflows |
Catchment trays installed in spillage areas. |
Manual processes to divert whey flows when tanks are full |
Performance in waste minimisation included in the staff appraisals |
Waste measurement procedures introduced throughout the production process |
Feedback systems established to inform employees of waste disposal quantities. |
The effects of the programme have not been restricted to the original problem of dealing with liquid waste. The plant is increasingly closing the loop on their production cycle. Re-covered by-products, previously seen as worthless even costly to dispose of, are now sold as pig food or agricultural fertiliser. Within a period of two years, the company has changed from being threatened with prosecution to a best practice exemplar on the regulator's publicity leaflets.
At the time of the threatened prosecution the company had no idea what waste was being produced or its financial impact. The funding process within the group inhibited major expenditure on environmental improvements. However, the waste minimisation activities did not require large amounts of expenditure. The initial waste minimisation projects were funded from the local engineering budget. It is estimated that total expenditure was £10,000 with annual savings of £200,000. Their experience in waste minimisation has enabled local management to develop a waste accounting system. This system quantifies the financial benefits of the waste minimisation activities to the group.
The starting point of this process was recognising that waste cost is not just the annual sewage charge. A fuller account of costs associated with waste was recognised, thus giving more potential for future cost savings. Some of these costs are easy to calculate: less saleable product, less staff time spent cleaning up waste, saving in water charges, saving in energy costs, and Saving in sewage charges.
Although these costs include a reduction in sewage charges, this was a trivial amount. Local management recognise that their 'costs' only tells part of the financial story. There are a range of other important costs / benefits, including improved employee satisfaction, marketing potential as a green company, improved relations with the regulator, external social and environmental improvement. These are regarded as 'soft' costs/ benefits and are not quantified. Other managers within the group do not currently accept these costs as legitimate. Plant managers have concentrated on improving the accuracy of the 'hard costing' system, to allow them to track 'legitimised' savings achieved through waste minimisation.
An alternative accounting system is in operation, not based on operations or function, but on point in the production process where waste is produced. This system integrates physical areas and processes producing waste and the associated costs. This locally developed system provides physical and financial justification for any proposed waste minimisation measures. As part of this accounting system, information on key waste minimisation goals is collected daily and fed back to all levels of staff. Waste performance scores and costs are published weekly.
A monthly benefit report is produced for group managers on the current waste minimisation programme. Local managers emphasise they have to articulate waste minimisation to the group via financial measures as any other measure would not be deemed important. The group is concerned about waste minimisation if it improves the financial 'bottom line'.
Local managers identified the initial motivators for waste minimisation as
Experience over the last four years has modified this,
There was evidence of a personal commitment by local management to general environment improvement. This has helped shape and drive forward the waste minimisation activities in a positive way. It is this commitment that mangers want their employees to 'buy into'. Through the medium of cost savings and explicit messages of job security, management and shop floor workers are able to create a new climate to work in,
". . we felt that a lot of the savings could be achieved through better practice, so we felt that what we needed to do was to start to get the workforce informed of what is the cost of waste. At the end of the day everyone would benefit because in a small way improved profitability, improved waste, improved loss from the point of view of waste would result in bigger profits, we could reduce the price of our product, get more business, more job security, bigger pay rise, all of these things are possibilities. And we felt that we needed to educate people and convince them that this was all possible and then the thing began to gather even more momentum. "
Easier problems were tackled first, staff achieved positive results, from there bigger problems were tackled. Waste minimisation is set in a very positive 'feel good' context. Constantly setting targets and seeing them met gave employees a feeling of participation, ability to make a difference, and responsibility in a job where previously there was very little motivation except for the pay packet. There is a considerable improvement in working conditions, previously staff used to continually slop around in smelly, sour milk with the floor covered with fat and grease. The staff used to spend a lot of time cleaning up this mess. This no longer happens and the plant is clean and staff like and want to keep it that way.
This change process did not require significant capital expenditure and was accomplished without requiring group authorisation. It is extremely unlikely that without evidencing a positive financial account of activities to the group, they would have been able to continue waste minimisation activities.
Prior to accidents and threatened prosecution environmental problems were not recognised as being important. The perception of the environmental problem and solutions has changed as a result of the waste minimisation programme. The idea of waste has been reconceived, albeit within restrictive financial boundaries, and made visible to all employees, both physically and financially. Originally the effluent problem was negatively perceived, now waste is positively managed. An integrated approach working at all levels of the plant have been successfully implemented. This clean culture which permeates the plant is not driven by policy guidance from the parent group rather from self development and values held by plant employees
"although motivation is primarily a financial one, the environment is a concern, and probably subconsciously a bigger concern than may be articulated."
Increasing regulatory pressures and a constructive dialogue with the regulators, who were willing to relax pressures where non end-of-pipe solutions to problems are adopted, has encouraged waste minimisation activities. This has led to management voluntarily reducing their consent levels and a reduction of 50% in all site emissions.
The case studies illustrate the factors involved in the investment decision processes into "environmentally cleaner solutions". The initial drivers of the process and influences on the type of investment were identified along with a review of the outcome.
In both cases waste accounting was not a driver of change. It had a shaping role but not necessarily in the direction of cleaner technology. Implementing a waste accounting system is unlikely to be sufficient to initiate organisational change towards eco-efficiency. Waste accounting could be seen to be an internal factor with its impact on the decision process dependent on its alignment within an assemblage.
The two waste accounting systems are well developed technically (see Table 2), in many respects similar, yet their influence on the decision was very different. Paradoxically the accounting appraisal in case 1 correctly identified the cleaner approach as the better option for the company and eco-system, yet this was rejected. In case 2, the waste minimisation programme was initiated based on assurances from the regulator that it would save money. A waste accounting system subsequently confirmed and legitimised this leap of faith, and now supports an evolving cleaner technology programme.
Table 2- Characteristics of Waste Accounting Systems
|
Case 1 |
Case 2 |
|
|
Identify waste management and disposal costs in the formal accounting system |
? |
? |
|
Identify of other 'hidden' waste costs in the formal accounting system |
? |
? |
|
Develop a non-financial waste accounting and tracking system |
? |
? |
Develop a stand-alone financial waste accounting system |
? |
? |
|
Develop an Activity Based Management System e.g. Costing waste to products |
? |
? |
Integrate these measures into the formal accounting system |
? |
? |
Recognise strategic and investment implications of waste |
? |
? |
Consider an internal taxation of waste |
? |
? |
Performance appraisal / reward system recognises waste issues |
? |
? |
Include 'Externalities' in the Valuation Process |
? |
? |
Forecasts take notice of changing 'terms of trade' on waste |
? |
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The main difference between the systems relates to the level of formalisation. Case 1 illustrates the commercial capture of environmental issues when waste accounting was incorporated into the formal accounting system. In this case, commercialisation effectively silenced wider environmental issues, allowing environment concerns to be defined by regulators, and encouraged a strategy of conspicuous compliance. It is difficult to conclude that an alternative waste accounting system would have changed the decision, but it is possible to speculate that a separate waste accounting system would have changed the nature of the debate. The institutionalising of waste accounting limited its power as an alternative or dissenting voice in the decision process. Case 1 illustrated a technological, engineering solution to the effluent problem, embedded within technism (Schuurman 1995). The accounting 'solution' was cleaner and less unsustainable than the solution adopted.
In the second case, the waste accounting system was developed locally to legitimise and support management actions. It was not part of the formal accounting control system. It constructed an alternative reality (Hines, 1988) to create space for local management to pursue their programme and challenge the existing company approach to environmental issues. There was evidence of a dialectic process with the waste accounting system describing and evaluating actions not accounted for in the formal accounting controls. Local managers did not want to pollute, create waste and destroy the local environment, but they saw themselves as limited in their ability to respond, due to central financial pressures. Their waste accounting system appeared to give them the opportunity to legitimise their local actions within the existing ideology of the company. As the system is 'home-grown' it is not perceived as a technical accounting system, The system does not have to conform to general accounting conventions, which allows a greater degree of flexibility and innovation. For example, they can construct their own environmental cost concepts and include the so-called 'soft' costs.
The plant's response was largely non-technical, investments were mainly buckets and pumps. What made it effective was the change in operations and staff attitudes (Green & McMeekin 1993). In this respect it is less technist and more humanist than case 1, and consequently less unsustainable.
In both cases, waste costs are defined in terms of current internal costs located within the ideology of profit, limiting their potential to signal decisions in terms of sustainability. In case 1 the system seems to have experienced capture and closure, whereas the waste accounting system in case 2 has not been captured and exhibits potential for further development, this waste accounting system can be seen as a cleaner technology.
A 'technist' waste accounting approach is not necessarily wholly ineffective. Waste accounting has the potential to reduce firms' environmental impact. If, without this information, a firm wastes resources and needlessly pollutes the eco-system, it has some value, regardless of motivation. This accounting does not challenge existing company paradigms and will not move the organisation beyond profitable waste minimisation. This level of waste accounting will not solve the fundamental problems posed by our current unsustainable situation. In both cases the quantification of waste costs did not incorporate societal or ecological costs. The decisions were clearly made in the firms' best interests, but still significantly reduced their impact on the eco-system.
There is evidence to support the proposition that 'new' accountings can effect the organisational discourses (Hines 1988, Powers 1992). Both cases demonstrate a greater awareness of waste in terms of its environmental and business impact. Process emissions and waste are included in operational decision making and performance measurement. The change in discourse is more marked in case 2 where the waste accounting system initially developed to change the level and nature of discourse in relation to waste issues. This social / communicative role is an integral feature of the system. The local discourse has changed and appears to have changed local attitudes and values. There is no evidence to suggest that this local discourse on its own will break through into the wider company, due to the conventional managerial hegemony at group level.
This observation reinforces the view that waste accounting cannot be evaluated in isolation. An understanding of the assemblage and its temporal alignments is required. The complex relationships in these two cases make it difficult to prescribe the appropriate technical or social construction of waste accounting. However, implementing a waste accounting system will not necessarily result in cleaner decisions or necessarily damage the environment. While case 1 provides an example of business colonisation of waste, it also demonstrates a temporary lack of power of accounting. In case 2, improved knowledge of the waste issue led to management voluntarily tightening the official consent levels of their effluent. The existence of a waste accounting system and greater subsequent knowledge of waste issues could reduce management resistance to tightening environmental regulations.
Whilst not rejecting the possibility that the reason for this observed difference is due to the degree of integration of the two accounting systems, it is felt that is the wrong level of resolution to evaluate this problem. It is inappropriate and ineffective to evaluate an environmental accounting system in isolation. The appropriate level of analysis is the assemblage, describing the range of diverse factors, drivers, shapers, internal, external, and their changing power alignments provides more credible insight, as it this system that will ultimately determine the organisational response either towards or away from sustainability.