To maintain its image as a premier company that produces high quality products, San Miguel Corporation (SMC) has invested in a philosophy of profit with honor. The company implements a variety of social development and environmental projects in the communities where it operates, thereby fostering relationships that support its long-term business objectives. San Miguel is also committed to improving the environmental performance of its manufacturing facilities and operational units.

Top management at SMC has taken on a leadership role in promoting a corporate-level environmental management system. A Corporate Policy on the Environment was issued by the CEO and COO in 1995, and an Environmental Update booklet was distributed at the 1996 stockholders meeting to inform the company s stakeholders of its environmental vision and the concrete activities it has undertaken to improve its environmental performance. As part of its ongoing efforts to improve total quality management throughout the company, SMC is helping all of its facilities and subsidiaries to incorporate pollution prevention initiatives into their plant- based management systems.

SMC s focus on environmental management is not a response to environmental regulations, which are weakly enforced in most of the countries where the firm operates. SMC s incentive is to maintain its image as a quality company and good corporate citizen and to increase production efficiency by implementing pollution prevention technologies.

Quality has been the overriding goal of the company since the turn of the century, when its board of directors decided the firm would focus on quality above everything else. That early commitment has transformed a small brewery founded in 1890 into a world-class company that generates about 4 percent of the Philippines gross domestic product and is its largest private employer. SMC has production facilities in the Philippines, China, Vietnam, Indonesia, Hong Kong, and Taiwan. Its flagship product is San Miguel beer, which dominates the Philippine beer market and is exported around the world. Other products include soft drinks, milk, juice, and liquor; chicken, pork, and dairy products; and packaging material, such as metal closures and bottles. Recently, SMC also established a real estate company in the Philippines.

In the 1980s, SMC began actively focusing on quality and efficiency improvements to increase its competitiveness. Many of the solutions that resulted also have positive environmental impacts. For example, using the waste from one business unit as an input to another is increasing revenues by P16 million (US$610,000) per year in two poultry processing plants. Chicken waste, such as entrails, blood, and feathers, which used to be buried in an unsanitary landfill, is ground into poultry meal and used as an ingredient for livestock feed.

Reducing water consumption has been the source of large cost savings for San Miguel. An ice cream plant north of Manila reduced its water intake by 60 percent by reusing and recycling water. This has translated into a cost savings of at least P3 million (US$114,500) per year in the purchase and pretreatment of water. The impetus for this change was a need to increase the capacity of the facility s wastewater treatment plant to meet higher production goals. Instead of spending about P20 million (US$763,000) on a new treatment plant, the firm segregated the wastewater streams so that clean water would get reused, instead of mixing it with dirty water and passing it through the treatment plant. The new system has also reduced the volume of sludge and fees for hauling it away.

Although SMC is the undisputed leader in the Philippine beer market, it used to lag behind its competitors in its water-use efficiency. The industry standard is to use nine bottles of water to wash one beer bottle before it is reused. San Miguel s rate used to be eleven. After several years of sustained effort, the number has been reduced to an impressive four to five.

SMC achieved these efficiency improvements at the plant level as part of its quality initiatives. In 1996 top management decided to integrate these efforts into a corporate-level environmental management system. The task has been assigned to the Corporate Quality, Productivity, Environment, and Safety office, which is headed by Senior Assistant Vice President Ramon Da Costa. SMC has adopted the internationally recognized Malcolm Baldridge quality management award criteria as its organizing principles for quality management. Many of the Baldridge award criteria can be related to environmental performance. Burt Hamner, an environmental consultant based at the Asian Institute of Management, is now working with SMC to develop a management framework that integrates the Baldridge criteria, ISO 14,000 Environmental Management System standard elements, and principles of Total Quality Environmental Management (TQEM). This framework will become the basis for full integration of environmental protection, quality management, and increased productivity at SMC.

The next focus in the training programs will be the integrated framework. After plant staff have been trained, each facility can decide whether it will use the framework to become ISO 14,000 certified. This will depend on whether it becomes a requirement for exporting products to target markets. Most of the company s facilities already have ISO 9,000 certification, which will facilitate certification to ISO 14,000.

As part of its commitment to profit with honor, SMC invests in many social development and environmental projects in the communities where it operates. It publishes information booklets on social development and environment every two years to inform its stockholders and other interested stakeholders of the company s work in these areas. Highlighted activities include a clean air program that prohibits smoke-belching vehicles from entering SMC compounds, reforesting watersheds that supply water to SMC facilities, and livelihood projects that involve local farmers in making fertilizer from chicken waste.

The environment booklet features SMC s corporate policy on the environment, which was issued in October 1995. The policy pledges the company to:

• Use environmentally friendly manufacturing processes, products, and packaging
• Develop innovative techniques to manage environmental issues related to its businesses
• Support and implement programs that promote the sustainable use of resources, waste management, and pollution prevention
• Meet or exceed environmental standards and become a role model in regulatory compliance
• Share this policy with SMC s stakeholders to influence their own environmental responsibility positively.

In addition to its own projects, SMC is an active member of Philippine Business for Social Progress and of Philippine Business for the Environment, two highly respected groups that undertake environmental projects and disseminate information to the general public.

SMC s environmental logo (see graphic) was designed to maintain a high level of environmental awareness among the company s employees and stakeholders. An employee in the corporate affairs office, Yett Aguado, came up with the idea after visiting the United States on a US- AEP sponsored fellowship. During her visit, she met with staff of the U.S. Environmental Protection Agency (USEPA) and several media and nongovernmental organizations involved in environmental reporting. Aguado is also spearheading the company s green office initiative (see box), working on a government ozone reduction project and distributing information from the USEPA s Green Lights program to SMC s real estate company on how to design energy- efficient buildings.

To help other companies learn how to design wastewater treatment systems, SMC allowed participants in a US-AEP sponsored training course to tour its brewery in Mandaue City, Cebu. The site visit took place on March 22, the last day of the four-day training seminar, which covered the selection, operations, and maintenance of water supply and wastewater treatment technologies. In turn, US-AEP is assisting SMC s Monterey meat-processing plant in Cavite, Philippines, to access U.S. wastewater treatment technology needed to upgrade the plant s treatment facility. Future collaboration between SMC and US-AEP includes sending SMC staff to the 1997 International Exposition for Food Processors in Las Vegas, Nevada, in October.