Waste: A Game of Snakes and Ladders? : Distribution - Case Study
Waste: a Board Game?
How does UK plc stand up to a scrutiny of its waste practices? Does industry overall recognise the substantial savings to be made by effective waste control? Does it see waste as an opportunity or a threat? The survey investigates how UK plc manages its waste problem.
The industries examined are at strikingly different stages in dealing with waste issues. Some, such as the chemical industry, are proactive in developing waste solutions that radically improve business performance; others, such as the construction industry, are still reacting to external pressures.
These external pressures - legislative, consumer, political and fiscal - all demand that the producer must pay for the full environmental impact of the product. We are at a watershed between an unsustainable society and a sustainable one that pays for the cost of goods to the environment. This includes the cost of process, use, ultimate disposal or post-consumer life of the product.
At the moment, the Government is examining the possibility of landfill and packaging levies as economic incentives to force industry to take this ethos on board. So, in the future, those companies who operate a logical waste strategy are likely to achieve tremendous commercial advantage.
However, UK plc has yet to appreciate the potential for financial gain. Knowing how much you spend is obviously the first step to knowing how much you can save or even gain. However, only 56 per cent of companies actually measure waste costs. And even then they measure only one half of the equation - the contractor cost of disposal (96 per cent) - rather than the actual purchase costs of wasted material (44 per cent).
Two-thirds (65 per cent) of companies do not see waste management playing any significant part in competitive edge and three-quarters (75 per cent) do not keep track of their competitors' waste practices.
So it is not surprising to find that UK industry does not always have the waste control strategies in place that would provide the opportunity to gain competitive edge.
Only 46 per cent of companies have a formal environmental management system in place, though this is likely to change with the proposed standard on Environmental Management Systems (BS7750) and indeed a further 58 per cent of the rest are planning such programmes.
Slightly more companies (54 per cent) had waste minimisation programmes, and of the remainder 54 per cent plan to implement them. Energy recycling is the top priority (91 per cent), followed by process change (68 per cent), package change (55 per cent) and product redesign (46 per cent). Leading edge companies are actually taking products back to the drawing board to design new products which overcome waste problems.
Waste is an indictment of all kinds of business inefficiencies. So, when companies first implement waste management programmes, there is quick return on investment, by dealing with obvious areas of energy saving, minimisation and recycling - certainly, 64 per cent of companies cite financial incentive as the, main reason to recycle. Here waste becomes a 'resource' rather than wasted material.
However, the real payback comes with developing 'beginning of pipe solutions. Working with a waste management company to internalise a waste strategy within a product design and manufacturing process is altogether more difficult, but it is here that real financial gain lies. Waste all too quickly can become a threat to business, so there is a need to maintain the waste management momentum.
UK plc will need to look further and further back down the waste stream if it is to cut the cost of waste in the face of rising costs of waste disposal.
At the moment UK industry is divided between those who believe that waste costs will rise (47 per cent) and those who think that they will fall or stay the same (53 per cent). However, 47 per cent believe that they will be able to reduce the tonnage of waste. Those with a waste minimisation policy were certainly more confident dent of their ability to reduce total costs (51 per cent) and waste output (59 per cent).
Throughout the survey, large companies were found to be more aware of waste issues and more committed to environmental and waste management practices than smaller companies. For example, large companies are more likely to have a waste minimisation programme (73 per cent) than small companies (38 per cent). This trend is confirmed by a 1993 KPMG survey of the Financial Times Top 100 UK companies, which found that 70 had an environmental policy statement and 38 had carried out an environmental audit. This is explained by the fact that larger companies are both more aware of environmental problems and have the appropriate personnel, finances and expertise to deal with the issues.
In addition, in today's climate, corporate image is influenced by the environmental policies of a company. Larger companies are best placed to gain competitive advantage from such an image and have the most to lose as a result of adverse publicity.
However, for companies of any size, effective waste management can provide tremendous financial gain. While corporate reputation might be more of an issue for large companies, Duty of Care and Take Back Liability legislation does not discriminate between small and large companies.
And yet the survey shows that UK plc has limited awareness of the potential impact of waste on the bottom line. This is confirmed by the 1993 Institute of Directors member's opinion survey which shows that only 56 per cent of companies featured environmental issues on their board agendas, and for the majority of these companies (90 per cent) it occupied less than 10 per cent of board time.
Waste is every company's unloved by-product; but with effective strategies, waste disposal costs can be cut, waste can be converted into a resource and, at best, used as an incentive to review and improve business performance. As such, waste management needs to be on the boardroom agenda of every company in the country.
MAIN FINDINGS: UK plc
- Almost half (46 per cent) of UK industry does not have a waste minimisation policy
- Over two out of five (44 per cent) of companies do not know how much they spend on waste
- Three-quarters of companies do not track the waste practices of competitors
- Money saving in the main incentive (64 per cent) to recycle
- Almost half (47 per cent) think that waste costs will rise
- Nearly two in three (65 per cent) do not realise that waste control is set to be the next frontier for competitive advantage
- UK industry is divided as to whether Take Back Liability has implications for its businesses
- Over one in ten (13 per cent) of companies still do not recycle any material
