Role of the Environmental Manager in US and Canadian SMEs

1. Role of the Environmental Manager in US and Canadian SMEs Professor Scott B. Wolcott, PE Rochester Institute of Technology Bocconi University June 8 and 9, 2009 Bocconi

2. Workshop Overview • US and Canadian definitions of Small and Medium-sized Enterprises (SME) • Who is the Environmental Manager around here? • Options for the SME Environmental Manager in North America • Strategic options for Italian SMEs Bocconi

3. SME = SB (US) = SME (Canada) • United States - Small Business (SB): • < 500 employees for manufacturing facilities • < $7M annual receipts for non-manufacturing facilities • 99.7% of all employer jobs • Many exceptions: e.g. Florida SB < 100 employees • 98% of businesses in Florida are SB • Private, non-farm SB contribute to 50% of US Gross Domestic Product (GDP) Bocconi

4. US continued: 16 Small Business Sectors% contribution of Small Business towards Sector GDP (2002) • 20% Information • 23% Utilities • 33% Mining and manufacturing • 40% Finance and insurance • 41% Transportation and warehousing • 44% Holding companies • 49% Trade • 49% Waste management services • 50% Education services • 56% Health services • 58% Accommodation and food services • 70% Professional and technical services • 75% Arts and entertainment • 79% real estate and Leasing • 85% Construction • 85% Other Services Bocconi

5. SME = SB (US) = SME (Canada) • Canada - SME • SME is an organization with < 500 employees • Small business < 100 employees • Medium business is between 100 and 499 employees • 99.8% of Canadian companies are SMEs • SMEs account for 45% of Canadian GDP • Small businesses with < 50 employees account for 26% of Canadian GDP Bocconi

6. SME = SB (US) = SME (Canada) • Individual economic and environmental impact is tiny • Collectively, SMEs are contribute ~50% of US and Canadian GDP • Collectively, SMEs are estimated to be responsible for: • 60% of all carbon dioxide emissions and • 70% of all pollution • 73% of Canadian SMEs have not heard of ISO 14001 Bocconi

7. Who is the Environmental Manager? • No one! • Everyone? • The activities performed by an environmental manager in a large organization are performed by one or more people at an SME. • Owner, general manager, facility manager, production manager, line employees, etc… Bocconi

8. Roles for the “Environmental Managers” • Purchasing • Develop controls for materials purchases • Human Resources • Employee training, rewards • Maintenance • Preventive maintenance programs, ID environmental aspects • Accounting • Track environmental costs, budgets, economic feasibility • Engineering • ID pollution prevention opportunities, consider environmental impacts of products & processes • Top Management • Communicate importance of activities, provide resources, review progress • Line workers • Provide 1st hand knowledge of environmental aspects, mentor new employees Bocconi

9. Role of the “Environmental Manager” • Strategic choices in the environmental context • External pressures • Governmental agencies • Federal, state, and municipal • Competitors • Community Associations Bocconi

10. Strategic choicesfor the SME “Environmental Manager” Proactive Reactive or resistant Actions Maintain status quo Solo protective measures Reactive Risk Management • Actions • Cooptation • NBAA (Northwest Baltimore Automotive Association) • Resource Sharing • Laundry service • Environmental Enacting Bocconi

11. Strategic choicesfor the SME “Environmental Manager” Proactive Reactive or resistant Outcomes Sustained external threats Forced closings • Outcomes • Greater eco-literacy • Enhanced environmental performance • Better financial performance Bocconi

12. Options for the Proactive “Environmental Manager” • Environmental Initiatives (i.e. Low hanging fruit) • Environmental Management Plan • Actions of an organization with regard to environment, regulatory compliance, establishing and meeting goals and targets • Environmental Management System • Incorporates quality improvement principles • “Plan-Do-Check-Act” • Does not have to include ISO 14001 certification Bocconi

13. Incentives and Barriers facing the“Environmental Manager” Incentives/Advantages Barriers/Disadvantages Lack of resources (e.g. time) Delays development Maintain plan Lack of resources (e.g. staff) Implementation  review Promotion of environmental activities to employees Starting fresh (w/o previous exp. ISO 9001) • Enhanced compliance • Improved documentation • Competitive advantage • Cost savings • SME employees multi-task • SME Less complex hierarchy • Starting fresh (no EM plan to replace) Bocconi

14. Summary of the Italian SMEs “Environmental Manager” • Current Business Structure of SMEs • Very small, < 50 employees • Family owned and generational succession • Not always a straightforward succession • Unlikely to learn about innovative ideas w/o economic driver • Often connected to each other • Part of the same supply chain • Districts Bocconi

15. Summary of the Italian SMEs “Environmental Manager” • Current Regulatory Environment of SMEs • Lots of regulation • Inconsistent enforcement of regulations • Culture of interpreting laws and regulations at all levels • Little neighborhood influence on SMEs • Slow judicial system • Large bureaucracy system Bocconi

16. Strategic Options of the Italian SME “Environmental Manager” • What to do? • Reactive: Address external threats as SME group • Initially for economic reasons • Later, environmental compliance • Strategic, proactive initiatives • Lobbying financial sector • Environmental competitive advantage Bocconi