ANNEX: SURVEY RESPONSES

Apple Computer, Inc.
Corky Chew, EHS

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

A significant number of Apple's suppliers are from the Pacific Rim. Apple's upper management does place environmental requirements on Asian purchases in general contractual language in terms of compliance and conformance with legal requirements in their OEM agreement, an umbrella agreement with suppliers at the outset of the relationship. A new version of the OEM is in draft form and is not releasable. It sets out general guidelines for environmental activities along with technical specifications. Once there is an OEM agreement, specifications are set out for the product itself.

B. Does Apple set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

They are now primarily setting out product-specifications along the lines of ecolabels around EHS issues, rather than process specifications. For example, a monitor is specified to be TC095 compliant, or Blue Angel compliant, or MPR compliant, or it has to meet certain product-safety requirements.

Apple is looking to build a vendor/supplier scoring system. Potentially, Apple could physically audit a supplier, but this is difficult because of the number of suppliers that a computer company has and how far down into their channel you want to penetrate: whether you look at the first, second, third, or fourth tier of suppliers. The umbrella agreement that they have with their suppliers does not include lower tiers, suppliers to suppliers, because if the first tier suppliers hope to meet the OEM standards, they need to impress upon their suppliers those requirements as well. That does not mean there will not be industries such as the automobile industry that will eventually mandate it, which will force it on up the supplier chain. But the sense Apple has from the computer industry is that it is not going to be mandated, although the performance will continue to be evaluated on the score card.

The drivers of different industries to create standards for vendor/suppliers, regardless of the issue are: (a) liability and risk, (b) business interruption, and (c) cost. If you act on this premise in implementing the new standards within an organization, you have greater acceptance than if you mandate something as a requirement to do business.

C. Does Apple set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

The fifteen or sixteen largest computer companies, such as IBM, Apple, Hewlett Packard, Sun Microsystems, and Silicon Graphics, formed the Computer Industry Quality Council (CIQC) to develop standards within the industry. In the fall of 1996, they generated environmental standards for suppliers of the computer industry. CIQC members adopted those standards as part of their own industry standards.

The standards are laid out in two phases. The first phase consists of six general questions that companies can use to apply to vendors and suppliers. The questions include: Do you have an environmental policy in place? Have you set environmental standards, goals, and targets?

The second phase, which they hope will be adopted in the fall, consists of a more detailed questionnaire that focuses on handling of hazardous waste and banned and prohibited products. The goal of the two-phase questionnaire is to give computer companies a tool to assess the environmental programs and standards by which vendors and suppliers manufacture their products.

D. Does Apple have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Apple has a formal EMS for all sites. It has two ISO 14001 certified sites, an IS 310 (the Irish standard) site, and a BS7750 site. Apple could not provide a copy of the EMS but did send a summary.

Apple's two ISO 14001 certified sites are in Sacramento and Dublin, Ireland (a Claris subsidiary). They have one site in Singapore that is not certified to a recognized EMS. It is hard to say whether that site will become certified because the individual Apple sites may make their own business decision as to whether they will adopt any EMS standard.

The two sites that are currently ISO 14001 certified were already certified to a national standard. Sacramento was certified to IS 310, and the Irish facility was certified to BS7750. Within this past year both came up for renewal for their country-specific EMS and they decided to combine it with ISO 14001. If you are moving from a BS7750 or EMAS it is easy to become ISO 14001 certified because the country-specific EMS is more robust. Each site recertified under its original standard and then added ISO 14001 certification. ISO 14001 is more globally recognized than EMAS at this time, and they felt that ISO 14001 was a more likely system under which to become certified for a global market. EMAS is highly recognized in Europe, but not globally. Apple would like to see their European facilities certified to both ISO 14001 and EMAS.

Voluntary internal environmental requirements for Apple are included in their policy, which was just revised. The policy that was written in the early 1990s did not conform to ISO 14001 in terms of the issues of continual improvement and promoting pollution prevention. In 1996, Apple improved their policy to conform with ISO 14001, International Chamber of Commerce Guidelines, EMAS, and Agenda 21. They did a gap analysis on ISO 14001, but this is proprietary. In 1996, they started filling in the gaps, and they are now reviewing their standard operating procedures, guidelines, communications plan, and document control to close the gaps. They are, therefore, becoming ISO 14001 ready, and if Apple management feels it is necessary for the balance of the company to move to ISO 14001, they will be able to do so fairly quickly. The sponsor for the ISO 14001 team is the Vice President of Quality. They are now revisiting their 9002 program in an effort to combine 9002 and 14001 so that a single standard drives through Apple.

E. Other information

None provided.

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ARCO Chemical Company
John Harris, Manager EMS

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

ARCO Chemical's supply system varies. They have approximately $4 billion per year in business, with eleven facilities and 4,000 employees worldwide. Five of the manufacturing facilities are in the United States, three are in Asia, and three are in Europe. ARCO Chemical's Asian facilities are located in Anyer, Indonesia; Linwan, Taiwan; a joint venture in Japan; a research and development facility in Singapore; and a regional office in Hong Kong. They are currently exploring opportunities in mainland China and elsewhere.

In Asia, ARCO Chemical currently manufactures only one product line, polyols. ARCO Chemical supplies their Asian customers with their remaining products out of their U.S. and European facilities. The operations in Asia are "downstream" chemicals made up of their basic commodities. This is a growing area for ARCO Chemical. The Asian facilities are not autonomous; their primary raw materials are supplied from the ARCO Chemical facility in Texas. Supplemental materials are shipped from Europe and Asia. ARCO Chemical's Asian facilities have a significant presence in Asian markets.

B. Does ARCO set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

None of the ARCO Chemical facilities require EMAS or ISO 14001 certification of suppliers. They do require that the product purchased from the supplier comply qualitatively with the MSDS provided by the supplier. Therefore, ARCO Chemical's environmental requirements, at least for now, are that the quality of the product comply with the information stated in the MSDS. The product must be shipped on time and delivered according to specified procedures, which can include environmental, health, and safety (EHS) requirements. For instance, they may dictate container design, compatible materials, or certain transfer design so it is environmentally sound. They do presently have specific standardized obligations that their suppliers must meet.

ARCO Chemical's international audit unit performs formal, detailed audits of tollers (contract manufacturers), suppliers, and distributors. The audit investigates whether they are complying with regulatory obligations of their geographic area and using good management practices.

C. Does ARCO set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

See question B, above.

D. Does ARCO have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

ARCO Chemical completed an EHS policy statement the mid 1980s. In the early 1990s they began to develop a program entitled "Manufacturing Excellence" based on the Chemical Manufacturers' Association (CMA) Responsible Care(r) Codes of Management Practice.1 Manufacturing Excellence provides management systems for a broad array of EHS programs. It consists of a set of twelve corporate EHS standards that exceed regulatory obligations and are mandated to be followed worldwide. Supporting these standards are procedures which provide greater detail on how to interpret the standard. Guidelines were also developed to provide clarification for programs development by the facility. Each facility is to develop procedures that it will follow to implement the corporate standards and procedures.

ARCO Chemical did a gap analysis between their EMS standards and ISO 14001. Their standards are consistent with and are more extensive than ISO 14001, with a few minor deviations. The deviations are at a corporate level, in that their process of corporate review and goal-setting is less formal than that described in ISO 14001.

ARCO Chemical would consider ISO 14001 registration if their customers require it. To date none have, worldwide. In addition, if the government were to recognize how companies can use management systems to enhance environmental performance and eliminated unnecessary and costly regulatory requirements, ARCO Chemical would consider becoming ISO 14001 certified.

ARCO Chemical is not suggesting self-regulation. Rather, it proposes a system similar to that of the Netherlands, which is an alternative regulatory process based on EMAS. ARCO Chemical believes this is the best example in the world of how management systems can advance environmental performance and allow the environmental regulatory process to be flexible in achieving enhanced performance.

The system in the Netherlands works as follows: Companies go through the EMAS process and define a series of priorities based on impact analysis. They then negotiate a multimedia permit for a specified period of time, during which the company is given milestones that must be achieved. Companies must report annually to the government and the public to certify that they are meeting their obligations. A third-party auditor analyzes the facility systems and the annual performance report.

ARCO's EMS manager believes that companies outside of industry programs such as CMA's Responsible Care(r) would benefit from becoming ISO 14001 certified, because it would force them to look at their systems and explore where they can improve their internal processes. In most cases, the chemical industry has already achieved elements of what ISO 14001 requires through different approaches.

ARCO Chemical's standards include the evaluation of environmental aspects as presented in both ISO 14001 and EMAS. They have established guidelines that are technically specific and designed for use worldwide. These include specific air-quality models to evaluate emissions for a fence-line determination for a specific list of chemicals related to specific criteria independent of compliance obligations. Waste water effluent is reviewed according to three criteria-biodegradation, bioaccumulation, and toxicity-that go beyond those required in the international standards. They also include on-site and off-site waste management practices. Based on these findings, ARCO Chemical will set priorities for efforts in pollution prevention.

ARCO Chemical is reviewing this approach with other companies at CMA. They plan to design a program later this year that will integrate these risk-based evaluations with environmental cost accounting to further advance the basis for prioritizing waste-minimization efforts.

The respondent believes they are behind some companies on environmental cost accounting but ahead of the majority in seeing how this can be applied. Historically, they have conducted such studies on programs such as remediation and capital projects. They would like to follow the contemporary trend by looking at a more activity-based cost-accounting process to capture all substantive costs that are tangible and relate them back to specific products. This will provide the management of the respective business team with a better understanding of the total environmental cost of the company's products. Presently they only account for the obvious cost of building a production unit or off-site disposal of a waste. Many of the environmental costs of a product are currently hidden in overhead costs. The respondent would like management to have a greater understanding of how environmental costs should be considered.

E. Other information

The respondent stated that the chemical industry focuses on the Responsible Care(r) codes and expects suppliers to be in compliance with them. Responsible Care(r) codes of practice are broader than ISO 14001 because they include environmental, health, and safety issues, but they are less detailed. ARCO Chemical's EHS standards, which are based on the Responsible Care(r) codes, include greater detail for programs implementation.

An ARCO Chemical facility in the Netherlands was the first facility in that country to be certified to EMAS. Prior to the third-party audit they conducted an internal audit, which identified several areas requiring further development. The third-party audit found a deficiency in only one area. It appeared that the focus of the auditor was more on documentation than implementation.

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BankAmerica
Richard Morrison, Sr. Vice President, Environmental Policies and Programs

An extensive interview was conducted in which the following questions were discussed fully with BankAmerica's representative. However, only the statements below were authorized for quotation and publication.

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

No details were provided.

B. Does BankAmerica set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

BankAmerica's procedure for purchase RFPs (requests for proposals) includes a question of whether the supplier is, or is planning to become ISO 14001. In The respondent's opinion, ISO 14001 ". . . has become pretty watered down, but nevertheless, it is better than no system at all."

C. Does BankAmerica set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

The respondent stated:

What BankAmerica is trying to do is to send a signal to them that, at some point we may have a policy that says we will give preference to a supplier that is ISO 14001 certified."

The respondent also cited the computer industry's apparent leadership in environmental responsibility.

D. Does BankAmerica have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

The respondent stated:

I am not sure a bank needs an elaborate system as long as you are paying attention to your major impacts. . . . [A financial institution] has two direct impacts on the environment: (a) its energy consumption, and perhaps the water consumption as well, and (b) the paper it consumes. If you have evaluated those as your major impacts and you are trying to be environmentally responsible, it leads you to "reduce, reuse and recycle" and purchase recycled paper.

Regarding ISO 14001 certification:

It sounds like it is a lot of trouble, and who cares? People ask if you are going to do it, but nobody says, "if you do it you will get this or that."

Regarding customer requirements for certification:

That is the key. If somebody that is important to us starts asking us [whether we will become ISO 14001 certified], then that becomes a reason to think about it. So far no one has asked.

E. Other information

None provided.

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Bristol Myers Squibb
George Nagle, Director, Environmental, Health and Safety

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

The medical group of Bristol Myers Squibb (BMS) medical group has facilities in Japan, Indonesia, and Australia that supply medicines worldwide. BMS' medical devices group has facilities in Japan and China that manufacture artificial limbs and joints. Their nutritional group, which supplies infant formula and other nutritional products, has facilities in Taiwan, the Philippines, Thailand, Singapore, Malaysia, Australia and China.

These facilities receive many of their supplies and raw materials from the Asian market. A few proprietary ingredients might be shipped from the United States, but on the whole, most cardboard, vials, and raw products are obtained locally.

B. Does Bristol Myers Squibb set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

The same conditions that are put on supplies in the United States are placed on supplies purchased locally elsewhere. They have global, company-wide standards. They have a corporate EHS policy that includes sixteen codes of practice that BMS uses to implement their policy. One specific code of practice states that each facility will encourage suppliers and contractors to adopt EHS policies and practices that are consistent with BMS' and demonstrate a commitment to environmentally responsible products, services, and management. This is formalized when BMS initially establishes a contractual relationship with a supplier.

A company-wide purchasing guideline for all materials supports EHS and requires purchasing staff to ask questions such as whether the supplier can use less material whether they can use recycled rather than virgin products. These questions are integrated into a single manufacturer agreement. The purchasing and quality control staff check for compliance with all aspects of this agreement, including the EHS provisions. They conduct comprehensive audits of some third-party suppliers of sensitive raw materials.

BMS requires that suppliers comply with specific rules and regulations and product quality specifications, and they monitor the EHS systems of the vendor with respect to their own. They support those vendors that go beyond compliance. BMS believes that all aspects of a vendor's product-including price, quality, and environmental aspects-are interrelated; they do not just look at price. This is included in their EMS. The respondent believes BMS' standards are consistent with those used by other reputable companies.

As to environmental production requirements, their evaluation of a vendor includes ascertaining that the vendor has the appropriate permits and is in compliance with regulations. They are interested also in supplier reliability and take steps to ensure that a supplier source is not shut down because of compliance problems. BMS believes that the day-to-day operation of the vendor's production is the vendor's responsibility, but they want to be sure that the vendor's program complies with the law as well as with BMS' own standards.

C. Does Bristol Myers Squibb set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

BMS wants its suppliers to have policies that are consistent with their own, although they are not at this time requiring that they become ISO 14001 certified. They are not simply interested in compliance; rather, they expect that their suppliers have a relatively mature EHS management system in place and that their performance goes beyond compliance. Therefore, they encourage their suppliers to engage in a dialogue with their neighbors and local officials. Emergency preparedness and prevention is extremely important to BMS from both an environmental and a supply-continuity point of view, and they particularly encourage their suppliers to go beyond compliance in this area.

D. Does Bristol Myers Squibb have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

BMS' goal was to become the first larger global company to become ISO 14001 certified. In June, 1997, when they self-declared that their entire EHS management system worldwide was consistent with ISO 14001, they were told they were the first larger global company to do so. The self-declaration was confirmed by an external auditing body. Four BMS sites-in England, Connecticut, Mexico, and the Netherlands-have been third-party certified.

BMS believes that in certain parts of the world it is a competitive advantage to become certified. Consequently, they leave the certification decision to the discretion of the individual facility.

Before becoming ISO 14001 certified, BMS had a relatively mature management system for several years. They found that ISO 14001 certification required only minor adjustments to the EMS. Because this happened only recently, they have not as yet seen improvement in their product quality. However, they anticipate that it will be meaningful to their customers, their employees, the facility neighbors, and local regulators. The respondent stated: "We looked at ISO 14001 certification as a win-win situation: a win for the environment and a win for our business." It is not required by their customers, but they are trying to anticipate what they will require.

The respondent thinks participation in ISO 14001 by other companies will vary according to the part of the world in which they do business and the type of business they are in.

E. Other information

Going Beyond Compliance

BMS assumes voluntary environmental responsibilities beyond those required by law. Examples include contract stipulations that vendors comply with their country's regulations and standards, and sharing information on EHS standards with vendors. The amount of information that BMS makes public goes well beyond compliance, and they encourage their vendors to do the same. The information available on the company's new Web site (www.bms.com) includes discussion of their policy and activities with respect to ISO 14001.

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Canon
Glenn Impal, Manager, Canon U.S.A., Inc.

NOTE: Answers were supplied by Canon's Product Environment Administration Department located in Japan.

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Because Canon believes that a purchasing company must indirectly take responsibility for managing suppliers, Canon established Green purchase of environmentally conscious materials, parts, and products in environmental policy, which is applied to Canon Group sites worldwide.

In Asia, Canon has manufacturing companies in Taiwan, China, Malaysia, and Thailand, as well as in Japan. Each company procures from all over the world, including Asia.

Canon manufacturing facilities in Virginia and California procure some parts from Asia.

B. Does Canon set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Canon established original environmental product requirements (twenty-five items in eight fields) for suppliers. They include the limitations on the use of hazardous substances such as PBDPE and PBB.

Compliance to the standard is confirmed by written assurance.

Canon is establishing a total procurement ECO evaluate system which includes standards for environmental products, environmental process, and EMS standard described below.

C. Does Canon set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Canon establishes original environmental process requirements, including EMS (twenty items in five fields), for suppliers. These include limitations on the use of hazardous substances, including ozone depleting substances, and compliance with the law. We only contract with suppliers who obey regulations.

Compliance to the standard is confirmed by written assurances and audit every two years for suppliers who are considered to have significant environmental impacts.

D. Does Canon have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Almost all Canon group sites have been certified according to ISO 14001 (twenty-five sites as of July 1997). Sites that have not been certified yet follow Canon's original EMS and have plans to be officially certified in the near future. Canon's original EMS standard includes all requirements of ISO 14001, plus regulation and internal performance criteria.

Canon has been certified according to ISO 14001 for the purpose of pollution prevention and green procurement (e.g. bids for government and municipal offices).

Canon established an original EMS for suppliers, which is a simplified ISO 14001. The purpose is green procurement of environmentally conscious materials, parts, and products described in Canon's environmental policy.

E. Other information

Obstacles to Greening the Supply Chain

Canon purchases many kinds of products from suppliers worldwide. It saves time and effort to confirm that they comply with Canon's standard.

Effect for this survey

This survey will be helpful for companies in the United States that intend to expand their business in Asia or supply products for Asian companies.

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Compaq Computer Corporation
Walt Rosenberg, Corporate Director of Environmental Affairs

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Compaq has Asian manufacturing operations in Singapore and China. They require all manufacturing operations to meet the same standards on a worldwide basis. Their documented, formalized EMS is a comprehensive management system with compliance requirements in excess of any required standard in the U.S. or elsewhere. The EMS clearly defines goals, objectives, targets, and performance expectations. Compaq did not provide a copy for the survey.

Some plants make supplier purchases in Asia, such as office equipment components. Supplier environmental requirements include both product requirements and management system requirements. Part of their supplier selection process consists of a series of requirements that they must meet: (a) documented environmental policy, (b) waste minimization program with specific goals, objectives, and measurements, (c) evaluation of compliance records, (d) a level of expectations equal to Compaq's, and (e) no chlorofluorocarbons.

B. Does Compaq Computer Corporation set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Product environmental standards in this industry vary and are unique to the big players. In general, companies will place some requirements on suppliers, or they may put requirements on certain suppliers, but there is a lot of variability. Most large companies do not put requirements on all suppliers.

Confirmation that the standards are met occurs through an audit process via Compaq's materials organization and is paid for by Compaq.

Compaq sets specific production environmental requirements: there must be no chlorofluorocarbons (CFCs), and the supplier must have a waste-minimization program. These requirements vary within the industry, and a program as comprehensive as Compaq's is rare. During the supplier selection process, suppliers complete an evaluation form indicating the extent to which they think they meet Compaq's standards. Compaq tends to audit all suppliers, but the evaluation results drive the timing of the audit: those that score poorly are audited sooner. Compaq pays for the audit and uses their own personnel.

C. Does Compaq Computer Corporation set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does Compaq Computer Corporation have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Compaq has a formal, customized EMS that does not include ISO 14001. Their system was in place long before ISO 14001 came about, and their comprehensive management system is more complicated and performance-oriented than ISO.

For us, if you look at the ISO process, it is actually a step backward rather than a step forward. Our system is much more detailed than ISO. ISO is very general and there are no specific goals and measurements toward performance.

They are considering ISO 14001 certification but do not think it will improve their performance. Compaq does not require ISO 14001 certification of its suppliers. Some suppliers could benefit from it, depending on how they used it.

One problem with ISO 14001, just the same with ISO 9000, it does not mean that quality will be improved. ISO 9000 does not mean that you will improve quality. ISO 14001 does not mean that you will improve environmental protection. All it means is that what you will do, you will do in a consistent, documented process. It doesn't mean that it is better, it does not mean that it is good, it just means that you will be consistent.

E. Other information

Comparing EMS with ISO 14001

Compaq conducted an environmental survey, which consisted of a gap analysis of their current EMS compared with ISO 14001, at each of their manufacturing sites worldwide. The results are proprietary, but Compaq can say that their management system was in place long before ISO 14001 and was never meant to be in ISO 14001 form. In its current form, Compaq's EMS is not ISO 14001 certifiable.

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Digital
John Burkitt, Corporate Environmental Manager

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Digital does have Asian suppliers.

B. Does Digital set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Digital may require in the future that its suppliers become ISO 14001 certified, depending in part upon the interest of customers and consumers.

C. Does Digital set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No information available.

D. Does Digital have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Certain divisions within Digital are becoming certified. However, the company as a whole is not certified under ISO 14001 and does not intend to be certified.

E. Other information

Obstacles to Greening the Supply Chain

There is a lack of interest on the part of consumers and customers.

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DuPont
A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

DuPont is a long-standing member of the Chemical Manufacturers Association and has committed to the CMA's Responsible Care(r) program. In combination with Responsible Care(r), the DuPont Commitment-Safety, Health, and the Environment forms the basis of DuPont's environmental policy. The DuPont Commitment includes a section that states that DuPont will "work with our suppliers, carriers, distributors and customers to achieve similar product stewardship, and we will provide information and assistance to support their efforts to do so."

Additionally, the Responsible Care(r) Product Stewardship Code of Management Practice "requires suppliers to provide appropriate health, safety and environmental information and guidance on their products. This factors adherence to sound health, safety, and environmental principles, such as those contained in Responsible Care(r) into procurement decisions." As an example, in Asia we purchase nitric acid. We have reviewed the supplier's ship loading and movement of the material to our facility. For companies who do contract manufacturing, or toll work, we conduct on-site environmental audits. Finally, as an indicator of environmental performance we monitor community reaction around many of our larger suppliers because the communities can be very demanding and react to the slightest concern.

B. Does DuPont set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

DuPont is currently working to understand the status of environmental management systems used by our suppliers.

C. Does DuPont set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

DuPont establishes environmental requirements for toll manufacturers in Asia. These requirements are spelled out in the contract with these companies. Audits to ensure that these requirements are met are conducted by DuPont.

D. Does DuPont have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

DuPont's Responsible Care(r) program is the EMS for the corporation. Additionally, many facilities are either certified to or are working toward certification to ISO 14001. This includes our facilities in Asia. In Europe, facilities are certifying to ISO 14001 and EMAS. The decision regarding certification is voluntary and is made by the business or site.

DuPont's environmental policy and annual report are available on the Internet at www.DuPont.com. The annual report includes DuPont's progress toward voluntary environmental goals and targets which the corporation has established for itself.

E. Other information

None provided.

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Eastman Kodak
Dick Poduska,Director of Health, Safety and Environmental Affairs

for World Wide Manufacturing

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

A major portion of the supply system of Kodak is internal. They are a highly integrated company in the sense that they start with some very basic materials, and they tend to make everything upward from that point for the various supply chains. They receive the basic materials from outside their company, but not from Asia. For instance, Eastman Chemical, which was part of Kodak but is now a separate company, buys wood pulp from suppliers that is converted into cellulose acetate and put into a pellet form that is shipped to Kodak plants and made into a film. Photographic materials are coated on top of the film.

The same is true of many of the dyes, couplers, and chemicals that are in film. They also make their own photographic paper. They buy the pulp from U.S. and Canadian companies and make the paper in Rochester.

They buy office supplies locally for their offices in Asia, but the primary materials that they use for their manufacturing operations are imported. The only plants that they have near Asia are in India and Australia. Once again, they ship the primary materials to them, such as the paper, film base, chemicals, and so on.

B. Does Eastman Kodak set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

To the extent that they are able to confirm it, the pulp is from forests that are operated in a sustainable fashion. They confirm this by an active interaction at the purchasing level. This entails working with suppliers, knowing their program, and talking with them. Therefore, they are very different from companies that only assemble their product. Almost all the manufacturing of those materials takes place in their operations in the United States and Europe.

Kodak places no particular environmental requirements, such as ISO 14001 certification, on suppliers. In the last year, as part of the purchasing interaction with suppliers, they introduced a survey that includes key questions on health, safety, and environmental issues.

Examples of questions on the survey are: Does your company have an environmental program? Does your company have written environmental procedures? Has a summary of legal requirements applicable to your operation been compiled? Do you have environmental goals? Do you have a pollution prevention program? Do you have an emergency response plan? Has an environmental audit been conducted in the last three years? Has an environmental assessment been conducted in the last three years? Has the company made a determination of whether any environmental approvals or permits may be required by law or regulations?

Kodak uses the responses to these questions internally to assess whether there is any reason, on the basis of any of the categories (including health, safety, and the environment), that the company should not be a Kodak supplier. Currently the survey is being used with Kodak's most critical suppliers. This may be extended to a broader range of suppliers in the future.

Materials that they might buy from external suppliers would, then, be items other than what is incorporated into the product. They do not place environmental requirements on those suppliers.

Although Kodak asks the company if they have conducted an environmental audit, they do not require one. In most cases, Kodak has not set standards for suppliers or transferred its internal environmental requirements to them, it is just asking them questions.

In a number of cases Kodak places requirements on suppliers for environmentally related products such as packaging. For example, packaging inks must not contain any intentionally added cadmium or lead, because some states in the U.S. and some countries have guidelines prohibiting these elements in products or packaging. Kodak buys tremendous quantities of packaging materials, so this is of concern. Kodak does not consider this a guideline for the supplier's performance or system, but a criterion for product quality.

Specific production environmental requirements of suppliers, once again, depend upon the product supplied, such as packaging. However, Kodak does not put any requirement on the actual production process. They do want to deal with reputable suppliers, and in doing this, they expect that company is performing responsibly. The two go hand in hand.

C. Does Eastman Kodak set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Kodak buys basic raw materials such as simple solvents and small organic compounds. They do the organic chemistry at the Kodak plant to make the more exotic compounds that they use. For instance, commodity products such as sulfuric and nitric acid are bought in tank-car or railroad-car loads from a number of suppliers around the world. Kodak does not require suppliers to demonstrate that their manufacturing operation meets specific environmental criteria. If there are multiple suppliers available and the market is open, they would not, at this point, give the supplier the questionnaire.

In the case of materials that are of critical importance to the company and for which there is a single supplier, Kodak would want to have a more comprehensive understanding of the supplier's health, safety, and environmental program. If the supplier were put out of business because of a weak environmental program, it could affect Kodak significantly.

D. Does Eastman Kodak have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Kodak has a formal, customized EMS. One of their performance standards is the same as ISO 14001. The performance criterion of ISO 14001 is built into Kodak's health, safety, and environmental system, so it extends the impact of IS 14001 beyond the environment.

Kodak's approach to becoming ISO 14001 certified as a company, approved by senior management in August, 1995, was for all of their major facilities to be ready for ISO 14001 certification by year-end 1998, within two years of the publication of the standards. The decision to become certified is left to the individual facility; it is not required by the corporation. It depends on whether the facility or the businesses that they serve believe it is of value.

Kodak's standards are common within the photographic industry, which has only a small number of major players. Kodak, Fuji, and Agfa are the three largest. Therefore, the comparison sets are small, and most have high environmental standards. Kodak believes their EMS is better because it is a very structured program from a number of perspectives. It incorporates all of the basic components, such as a corporate health, safety, and environmental policy. It also contains varying degrees of corporate-level materials that give substance to the policy, including a full set of guiding principles and twenty-seven specific performance standards. These standards are all contained in the annual environmental report.

Kodak's corporate health, safety, and environment committee is chaired by one of the three members of the CEO department. All senior managers have a portion of their pay at risk based on their environmental performance. A corporate audit program reviews their facilities on a regular basis, and the result of the audit goes into the scoring that accounts for the manager's pay and for the performance of those facilities. There is an active follow-up program, so that any performance gaps are addressed in a timely manner.

E. Other information

Suppliers and ISO 14001

At this point Kodak is not requiring its suppliers to become ISO 14001 certified, and they do not foresee it in the near future because their basic supplier relationship is internal. For external suppliers, they work with vendors that are as reliable as possible and look at their environmental performance when selecting them. Kodak communicates its standards to its suppliers, and they indirectly impose their criteria when they select the supplier.

Kodak does not plan to require its suppliers to become ISO 14001 certified. From an internal point of view it might improve the health, safety, and environmental program of some units at the local level, but Kodak thinks their internal program is so strong that any gaps will be closed anyway. They do not see it as an internal benefit.

From an external point of view, they have received some inquiries from customers in Europe asking whether Kodak is certified, because Europe is more focused on whether a company is certified to EMAS or 14001. However, there have been very few inquiries.

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General Motors
David M. Aldorfer

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

No information provided.

B. Does GM set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Environmental requirements for some products and materials procured from outside suppliers do exist. Examples include restrictions on VOC content of surface coatings and of sulfur and ash content in fossil fuels, keyed to maintain consistent compliance with legal requirements applicable to GM facilities using such materials. Vendors are obligated to supply accurate information on relevant characteristics of their products. GM units may at any time take samples for analysis to verify vendor-supplied information. Another highly successful initiative that is being globalized is the introduction of Chemical Management programs at manufacturing sites, under which a primary vendor is selected for a defined set of high-usage chemicals and is compensated to optimize, not maximize, chemical usage, with periodic improvement goals part of the program. This generates direct environmental and economic benefits.

C. Does GM set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Current supplier initiatives focus primarily on performance improvement. Some examples include promoting use of returnable shipping containers in lieu of single-use, disposable ones; demonstrating to suppliers through workshops how to identify and reduce material and energy wastage in their manufacturing operations as integral elements of GM's PICOS program; continuing to communicate GM's guidelines for designing for recyclability and broadly disseminating its list of restricted or reportable chemicals; and communicating success stories to the supplier community as examples of what can be done.

GM recently participated in a multi-industry benchmarking study to learn about additional methods and practices to promote improved supplier environmental performance and evaluating the results. Decisions about integrating any additional approaches will be made after concluding this evaluation, and proposals regarding those that show the most potential to add value to the existing initiatives will be developed and discussed.

D. Does GM have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

GM is in the process of formalizing its EMS, under which success in meeting certain performance improvement goals will depend in part on contributions from our suppliers, wherever they operate. GM has certain environmental performance improvement initiatives underway now with suppliers and is evaluating a variety of other possibilities.

GM believes that ISO 14001 is a sound, practical model for a structured EMS-a model that an organization can implement beneficially as is, or a foundation to which additional elements can be added. In GM's case, an example of such an additional element is our Environmental, Health, and Safety Report, published annually, consistent with our corporate commitment to public accountability and our mutual endorsement with CERES (the Coalition of Environmentally Responsible Economies) of each others' environmental principles.

At this time, GM is developing its global EMS template with ISO 14001 conformance as an integral element for its business units. Pending finalization of the GM global EMS model, some business units have proceeded to implement ISO 14001 and received certification, primarily in European countries; and several of our vehicle assembly/powertrain manufacturing sites within GM Europe have been certified to EMAS. Presently, GM is in the position of encouraging suppliers to evaluate the benefits of implementing structure environmental management, with ISO 14001 as one model, but not requiring it.

GM has certain internal environmental performance objectives that its business units are expected to meet in the absence of more stringent legal requirements. Currently, these address process and sanitary wastewater management, solid and hazardous waste management, facility design considerations to minimize likelihood of future soil or groundwater contamination, and management of remediation projects to address contaminated industrial sites.

E. Other information

None provided.

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Georgia-Pacific Corporation
Dr. Sergio F. Galeano

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Purchases of products or raw materials from Asia are limited to wood products or wood raw materials. They never constitute a significant portion of our supplies and they have decreased in the last year for nonenvironmental reasons. Suppliers for these purchases, which I would characterize as sporadic, were required to provide certification or evidence of sustainable forestry management practices and programs. No other environmental requirements were made.

B. Does GP set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Presently, GP does not have specific, uniform environmental product requirements, but there are different requirements apart or aside from the purchasing specifications that are environmentally-based. Examples are provisions for the absence of ozone-depleting substances and the limitations in concentration on seven heavy metals for packaging materials and their components (inks, glues, and so forth). In some purchases, we specify recycled content.

These requirements are familiar to the rest of the industry. Perhaps we have a few more than others. We depend on written assurances for the most part. In the United States, they are legally binding instruments and so far we do not feel the need for further control mechanisms.

C. Does GP set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

On production environmental requirements, no, we do not. As explained, besides the wood fiber raw materials, the remaining materials are make-up chemicals utilized in different processes and at another level of consumption, ancillary materials that aid in but are not an integral part of the specific manufacturing process.

My understanding is that the industry does not impose specific environmental standards on these suppliers besides those product-related characteristics.

D. Does GP have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

GP does have a very formalized EMS. In the material sent by mail, there is information about the policy and elements of the management system. This system, which also includes a performance and compliance auditing system, has been substantially improved in the last five years. When ISO 14001, the EMS, was in the process of termination (1995-1996), we began a "gap" study to find out the areas where we were either not compatible or incomplete.

Our EMS, because of the auditing component, is more advanced than ISO 14001. At the same time, ISO 14001 is site specific while ours is corporate-wide. Even if its principles and practices apply to all locations, such verification takes more time.

Our approach to EMS is simply, fill in any gap of our EMS with ISO 14001. We will not delete "willy-nilly" any additional requirement present in ours, because they did have a good reason originally. ISO 14001 accepts additional, nonconflicting requirements. We will verify it is uniformly implemented in all locations. In the case of any customer's insistence on such standard certification, we will arrive at a decision on certifying or not.

E. Other information

Elemental Chlorine Free

On Elemental Chlorine Free (ECF) and TCF, the topic of unwanted traces of dioxin led to the mentioning of the two in-vogue new bleaching processes. GP voluntarily, and perhaps at a faster rate than other companies, instituted bleaching process changes that eliminated chlorine as a bleaching agent. The replacement chemical is chlorine dioxide. Today, most of our bleaching pulp mills do have the capability of 100 ECF pulps.

Forest Management

In the area of forest management, the information I am supplying you covers both the FP forestry management programs and our compliance with the industry-wide Sustainable Forestry Initiative programs. Again, there you will find enough information about our commitments in this area, our performance, and so forth. My mentioning of "corridors" as one practice for protection of wildlife, so the traveling animals can use them in their search for food, was just an example of the many practices we, and others, use in this respect. "Forest for the Future," included in your packet, provides more detailed information on our eleven-point strategy in sustainable forestry management.

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ITT
Usha Wright, Vice President and Director, ESH

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

ITT does have several Asian suppliers.

B. Does ITT set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

No response provided.

C. Does ITT set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

In the future, ITT may require ISO 14001 certification of suppliers.

D. Does ITT have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

While ITT as a whole is not ISO 14001 certified, separate divisions are becoming certified.

E. Other information

Obstacles to Greening the Supply Chain

There is no priority given to greening the supply chain.

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John Deere
Mike McGuire, Environmental Control

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

John Deere does have Asian suppliers, but the respondent did not know which ones. However, they put the same requirements on all suppliers, and a few of the requirements are environmental. Their evaluation of suppliers looks at specific environmental issues. Each individual factory categorizes suppliers, and if they think there might be some CERCLA liability the supplier is evaluated. The evaluation, which is not as extensive as an audit, consists of a six-page questionnaire that is completed during an inspection. The purpose of the evaluation is to determine whether there would be an exposure to CERCLA, such as with suppliers that do painting or electroplating or other processes that may create a chemical waste. Some factories have hired third parties to do the evaluation, while in other cases it is conducted by supply managers or factory environmental specialists.

John Deere has factories worldwide. Within the last month they signed a joint venture for a factory in China.

B. Does John Deere set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

With regard to environmental product requirements, they do limit certain chemicals coming into their facilities such as chlorinated solvents and CFCs. This is standard in most companies in the industry. They try to limit lead, but some is still necessary. They do not use citrus-based solvents.

They do not put process environmental requirements on their suppliers, but they do place them on themselves. They have a list of guidelines, such as eliminating lead and chrome from paints, and they are working on eliminating chrome from all processes. These are voluntary environmental efforts on their part and are not required by regulations. Public perception drove them to implement these efforts, primarily in the case of lead.

John Deere does not ask suppliers to implement voluntary environmental initiatives.

A John Deere facility in Zweibrucken, Germany recently became certified under ISO 14001. However, John Deere as a company is not ISO 14001 certified. They do not perceive any value in becoming ISO 14001 certified, because their customers are not yet asking for it.

They do not require their suppliers to become ISO 14001 certified at this time, and it is unlikely that this will change in the future. The respondent assumed, however, that, as with ISO 9000, customers will eventually request it. Consequently, they are moving toward being ISO 14001 ready.

We are preparing for it. That is one of the reasons for putting the written Environmental Management System together, so that they modify everything to fit ISO 14001. At some point, if factories want to become ISO 14001 certified, they can.

As they become ISO 14001 ready, the respondent does not expect to see any changes or improved quality in their products, although it is too early to tell. They have had many systems in place over the years, which they are now modifying to meet the ISO 14001 model.

It is a matter of getting things written down. We had a lot of environmental systems in place, but we haven't had written systems for documenting them.

C. Does John Deere set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

The respondent believes that the environmental requirements they place on vendors are unique in their industry because he does not know of many other companies that are doing vendor evaluations such as those conducted by John Deere.

D. Does John Deere have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

John Deere does have a formal corporate EMS. It exists in draft form and is in the process of being finalized. They have certain standards and guidelines, and they are currently writing a standard for an EMS. They have had a policy for a number of years, and the standards are now being written to fit the policy.

E. Other information

None provided.

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Kimberly Clark
Jim Wohlford, Environmental Control Team Leader

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Kimberly Clark does have Asian suppliers. The respondent did not know how many.

B. Does Kimberly Clark set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

No response provided.

C. Does Kimberly Clark set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

In the future, perhaps Kimberly Clark will require ISO 14001 certification of their suppliers. As of now, the company does not make it a requirement.

D. Does Kimberly Clark have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Kimberly Clark is not certified company-wide under ISO 14001, although some divisions are certified. The company may become certified in the future.

E. Other information

Obstacles to Greening the Supply Chain

The respondent stated:

Environmental performance is already an important criterion in supplier selection. ISO 14001 may be useful in future vendor selections depending on how the ISO certification process develops.

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Korea Special Chemical Machinery Co., Ltd.
Ha Gyong Hong, President

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

KSCM has no Asian suppliers.

B. Does KSCM set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

In the future, KSCM intends to require ISO 14001 certification of their suppliers.

C. Does KSCM set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does KSCM have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

KSCM is not presently ISO 14001 certified, but it intends to become certified in the future.

E. Other information

None provided.

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Lockheed Martin Corporation
John Wiggin, Director, Central ESH Services,Corporate Environment, Safety and Health

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Lockheed Martin Corporation is highly diversified and decentralized. They have over sixty autonomous operating companies, all of which have individual profit and loss responsibilities. They have few corporate guidelines. They have no divisions or companies located in Asia, but they do have some contracts and people operating in the region who would make purchases from the Asian market.

B. Does Lockheed Martin Corporation set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Lockheed may in certain instances put environmental requirements on products that they purchase. They have done a tremendous amount of solvent elimination and substitution. They have eliminated trichloroethylene and other chlorinated solvents and substituted a variety of aqueous, semi-aqueous, and low-emission materials and processes. They do have some recycling requirements for product purchases consistent with executive order 12873 (for example, paper), but there is no corporate-wide requirement. Procurement people at the largest companies put a limited number of environmental requirements on products, because all they do is set up nationwide procurement contracts.

Lockheed conducts extensive inspections of their hazardous-waste vendors and the hazardous-waste sites. They audit their sites and make sure that the vendors have good management systems, although they do not require ISO 14001 systems. They physically inspect the sites, and Lockheed pays for the audit.

The respondent believes that what they are doing is standard in the aerospace business, and it probably is not a lot. The other companies may be doing other things, but it is all probably similar. "Our customers and the global marketplace would drive us to change."

Lockheed does not get involved in production environmental requirements of their suppliers, except for critical components. They are in a low-bid environment, and they believe that supplier compliance is the responsibility of the supplier and Lockheed compliance is the responsibility of Lockheed. They are more involved in the case of certain critical components for which the vendor is the sole source, because if that vendor had an environmental failure it would cause Lockheed to fail in its contractual obligations. They would send a questionnaire to the vendor, and they occasionally check suppliers for some of their Department of Defense (DOD) contracts. The checking is actually driven by the customer. This is standard in their industry.

C. Does Lockheed Martin Corporation set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Senior corporate management of Lockheed does not as yet put specific environmental conditions on vendor purchases, but they may in the future. "It is a maturing issue." Lockheed is a contractor, not an owner, and if their client, particularly their government customers, required them to put environmental conditions on these purchases, they would. The respondent believes that the DOD at some point will require them to green the supply chain, and at that point they will do it as long as the client will pay for it. There does seem to be some movement, not from their vendors, but from USAID's peers. They are not willing to pay for ISO certification, but they want them to have management systems similar to ISO 14001. The respondent thinks the same thing will happen at DOD in NASA, where Lockheed is the largest contractor. The respondent believes that Lockheed is being greened, not that Lockheed is greening the supply chain. At this point Lockheed is not required to push the greening down the supply chain, but they may be required to do so in the future.

D. Does Lockheed Martin Corporation have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Lockheed has a corporate-wide policy that outlines the broad structure of their environmental management system plus a functional procedure. Each company within Lockheed is then required to build its own EMS out of the broad overall elements. The corporate-wide policy does not currently include ISO 14001, but it matches up to ISO 14001. They are currently modifying it to integrate the ISO 14001 objectives as well as safety and health objectives. At the end of the year they will have an ISO-like corporate policy, not so much to make them ready for ISO 14001 third party certification, but to be ISO compatible. They find some elements of ISO 14001 unclear, such as ESH "aspects". Lockheed has hired consultants Chris Bell and Joe Cascio to assist them in building their internal business management system and convert ISO 14001 into "plain English." The respondent believes that the term "aspects" was negotiated into a meaningless concept. They are turning it into something that they can use, such as compliance and ESH hazards. "Things like water and electricity use are environmental issues which we wish to force sites to address."

Lockheed as a corporation does not intend to become ISO 14001 certified. However, they have five separate companies that are ISO 14001 certified, which is 25 percent of the national total. These companies chose to become certified based on their assessment of future markets and international business climate, a desire to be leaders in markets such as Taiwan, and a perception that ISO 14001 is required in the international sales market.

Lockheed's electronics sector has decided to become ISO 14001 certified by mid-1998, which is a massive commitment. The respondent believes this decision resulted from either a perceived customer requirement or pressure from competitors who may be ISO 14001 certified or moving toward certification. The electronic sector's customers are the U.S. government, foreign governments, and a small number of commercial clients. The sector includes twenty-one companies and currently accounts for approximately 10 to 15 percent of total company sales.

Lockheed's electronics sector has no plans at the present to require its suppliers to become ISO 14001 certified.

The respondent believes that many more companies in the U.S. will become ISO 14001 certified and that ISO 14001-like management systems for ESH will improve all companies. As with the promulgation of ISO 9000, where quality became integrated into production operations rather than handled separately, ISO 14001 will motivate industry to do what it should have done anyway: make environmental matters part of the overall management of the operation of a company versus something done by another group. The respondent believes environmental management is an operational matter and should be treated as one.

E. Other information

China recently passed a law requiring all of its government contractors to be ISO 14001 certified. Lockheed does business in China, and they may be greened because of that. If so, they will have to pass it on.

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Microsoft
Mike Negrin, Operations Development Manager

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Microsoft separates its supply chain into three silos: Far East (Asia); Central (Europe, Africa, and the Middle East), and West (the Americas). Within each of those they have outsourced suppliers that manufacture and distribute products based on their specifications. The actual writing of the programs, the actual product, is all done internally and is not outsourced. Microsoft outsources everything that is not a Microsoft core competence, including: (a) telemarketing, (b) order fulfillment, (c) order processing, (d) assembly, (e) registration, (f) billing, and (g) distribution.

These outsource suppliers are recommended by their local subsidiaries, and Microsoft sends out Requests for Information (RFIs) to potential suppliers. Microsoft then evaluates the suppliers on site. The list is narrowed to no less than two outsource suppliers in each of the silos for any given operations process. Worldwide they have a minimum of six to eight suppliers in each silo. This outsource review process has eliminated suppliers based on Microsoft evaluations.

B. Does Microsoft set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

When Microsoft inspects the outsource suppliers on site, they use a forty- to fifty-page check list that includes items from order entry through distribution, such as: system requirements, employee training, business interruption plans, employee turnover ratios, executive and management turnover, systems capabilities, spending on systems, whether they own or lease their facility, and the amount of local talent they use compared to the talent they bring in from the outside.

Microsoft does not place environmental requirements on these outsource suppliers. It does, however, require an acceptable level of recycled content in their manufacturing process. Microsoft requires a maximum of 10 percent recycled material in registration cards, 30 percent recycled content in manual paper, and 20 percent recycled content in packaging. They encourage recycling but limit it to maintain a quality standard that is driven by customer demand. Some recycled paper is not as strong as unrecycled, and therefore, the recycled content of packaging must not exceed 30 percent to maintain its strength. Inks also bleed on paper that contains more than 30 percent recycled content, and the seams come out of manuals made with such paper. Therefore, while Microsoft encourages the use of recycled paper products, it limits the recycled content.

The respondent is not aware of any pressure being put on the pulp and paper industry to increase the quality of recycled paper so that a higher recycled content can be used in their paper products.

They are putting all of their printed material on CDs. As users around the world have more advanced technology in their computers, and as the technical learning curve of the customer rises, Microsoft is able to give their customers a better learning experience on a screen rather than in a printed, paper manual.

In Asia, for example, only 20 percent of Microsoft's printed materials were on CD without manuals four years ago. This year in Asia 76 percent were on CD without manuals; worldwide this figure will reach 80 percent. The driver for this is technology. People began wanting additional content, and it was easier to put it on a CD that houses 660 megabytes of information than a floppy disc that houses 44 megabytes. Instead of shipping forty to fifty discs, they now ship one CD. The CD houses the product and all of the content: documentation, intellectual property license, help, and so on.

Microsoft has conducted an extensive marketing and sales campaign over the last three to four years to move businesses from purchasing a packaged product or a product with manuals to licensing their products. When the business houses the product on a server at a central location, based on their payment to Microsoft, the business is allowed to copy software onto their desktops. This requires only a license.

For example, if a business has 100 computers, it needs to buy only one package, which consists of a CD which is put on a server. Microsoft sends them only one piece of paper that says all 100 are licensed product. Once the business has the authorization number, it can download the program from its internal server onto each of those computers. Four years ago, licensing represented about 15 percent of their business. This year [1997] it will be 55 percent.

This is an economic benefit for Microsoft and a waste-stream benefit for their customers. They pass along these savings by lowering prices from 5 to 20 percent, depending on volume, to businesses that opt for this approach. Some customers are aware of it, and some are not.

The drivers for this are: (a) end user demand, and (b) shortened time necessary to produce the product and to get material, so it is a faster time to market. The company with 100 users does not have to buy a product for the next computer it purchases, it only needs to purchase one more license. This reduces prices for the end user and allows the company to have the same software on all of the machines without worrying about buying a different package with different bits in it.

This new system will never be 100 percent of their business. Microsoft sees it as being somewhere between seventy-five and 80 percent in the next three years. Users will always want something physical, like a CD, not a printed manual. There are a certain number of end users who do not have the capability to download from servers, and they will need a CD. However, as time goes on, fewer people will need documentation. Also, with the advent of the Internet, the ability of Microsoft to help its customers will increase. Those who have questions or need help can get instant help on the Internet.

Therefore, technology and learning advances are helping to green the supply chain much more than demands on suppliers. Microsoft works with the end users to make them more aware, and that greens the planet much faster than making suppliers conform. Therefore, Microsoft does not have a large EMS department. Instead, it has people that work on orchestrating the movement of products and making customers aware of options that do not require excessive amounts of resources. An equal benefit is that this system is more practical. End users receive the product more quickly and there is less waste. It benefits everyone to have it in the supply chain, and the end user benefits most of all. That greens the planet faster than anything else.

Their suppliers provide telemarketing capabilities, not manufacturing facilities. For example, they contact end users to encourage them to shift their buying pattern. Instead of "hands people," Microsoft is more apt to look for and work with "brains people." They are not manufacturing a widget, they are transferring information, awareness of their technology, and capability for simplicity. Microsoft does not say that it is greening the planet, but the end result is that the end user finds it easier to do business with them, which greens the planet automatically.

In terms of volume, licensing has decreased their packaging needs by around 3.8 million packages over the last year. In terms of the product that still comes in packages, in the last twelve months they shipped about 3.5 million packages that had manuals on CD rather than on paper. The package itself has changed: they use fewer packaging materials, the packages are smaller, and they don't need as much structure inside because a CD is lighter than a paper manual.

There are no other environmental requirements of their suppliers.

The environmental impacts of this new way to provide their products were not the reason for the change, but Microsoft is pleased with the tremendous benefits. In the last twelve months they saved $400 to $500 million by promoting licensing and CDs. The respondent does not know the benefit of the recycled paper, and this estimate does not take into consideration the indirect savings of the energy used to get the product to the end user.

C. Does Microsoft set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does Microsoft have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

They do not have a formal EMS. They have not considered becoming ISO 14001 certified. It does not appear that they will, although they are reviewing it. Since they have no formal EMS group, the decision to become ISO 14001 certified would be made in the individual silos; there is no central organization for them to consult on this matter. The respondent is not aware of any discussion of certification in the event that a country where they are doing business requires it.

E. Other information

Obstacles to Greening the Supply Chain

The respondent thinks that there is currently attention being paid to the electronics industry because there are so many parts of the world that make electronic products. It is his belief that they are very hesitant to use anything that is recycled, because the buying public does not believe that they are getting a quality product when they buy a rebuilt electronic part. The respondent does not know whether this is correct. However, there have been a tremendous number of lawsuits across the country against companies that have used rebuilt parts, and these companies have been told by attorneys general in many states that the practice must be discontinued. It could be that there is an increased liability exposure.

The largest obstacle to greening the supply chain is end-user awareness, a huge stumbling block. Customers, the businesses or end users that buy products, do not fully understand the benefits of greening the planet and how they need to do their fair share. They are also not aware that when they buy software they don't need forty or fifty discs, they don't need a manual, and they are able to use the software even more efficiently by doing everything on their screen. Some people just want a physical item to hold in their hand, and it is difficult to make them aware that it is not that hard. The end-user audience is much bigger than the companies, and therefore, their lack of awareness is the largest obstacle. Companies cannot force things onto people. The first stage in the purchasing process is awareness, and you can't get people to buy anything until they are aware. That is the biggest barrier to greening Asia or anywhere else.

A marketing division, however, cannot say, as a primary message, that they are greening the planet and that they have reduced the price by 20 percent. This is a secondary message. The primary message must be that this is a quality product, and this is why the customer must buy it. End users' intake of different messages is problematic. When you give them mixed or multiple messages it delays purchasing.

Governments around the world evaluate manufacturing at, for instance, a 1 to 2 percent improvement in performance. They do not evaluate businesses on the basis that they have eliminated manufacturing, so they have done an even better job when the company has turned "hands" into "brains." They only look for the 1 to 1.5 percent decrease in manufacturing resources or recycling. They never look for the people that cut it out completely.

Microsoft has 22,000 employees. These new processes are increasing the number of employees. As their "brain capability" increases, they are able to sell more products to more people.

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Monsanto
Garth Fort

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Generally, Monsanto does not require suppliers to become ISO 14001 certified, and they have not made a decision to certify under ISO 14001 themselves. They have completed one BS7750 pilot at a plant in the United Kingdom and another pilot on ISO 14001 in a plant in Texas to determine costs and benefits. They may do it in the future. However they feel that they already have quality management systems in place and that from an internal standpoint 14001 may not add much value. Externally, their customers and others, such as regulators, are not demanding ISO 14001 certification at this time. They have not seen the demand from their stakeholders. Therefore, they do not perceive an internal or an external value for 14001. It is the same thing for their suppliers; they have not seen a need yet for asking them to certify under 14001.

If Monsanto did become certified under ISO 14001, they do not feel that it would improve the quality for their facilities because they feel they already have quality environmental management systems in place. For their suppliers it might improve their EMS if they do not have a good EMS in place, and adopting an ISO 14001 EMS would improve the quality of the management. Monsanto has a separate evaluation and approval process for their toll manufacturers.

The respondent believes that a quality management system creates a culture within the corporation that impacts everything they do, not just EHS, and this ultimately increases productivity, quality, communications, and training and improves the overall capability of the facility. Some suppliers already have good EMSs in place, and that would suffice.

ISO 14001 specifically deals with environmental management, but it introduces a culture that I think will impact everything, including quality.

B. Does Monsanto set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

The respondent stated:

If somebody can buy inspect-quality benzene from Taiwan at a dollar or ten cents a gallon cheaper, today the reality is that the price and quality of the product is more dominant in decision making than whether the person that made benzene in Taiwan emitted so many pounds of air pollution per pound of benzene produced versus somebody in Singapore that's producing it. I don't know a major company that will make major decisions at this point to cut off suppliers. If somebody knows an intrinsically bad process and you can't count on it from a reliability standpoint, that is a business decision. That is not an environmental decision. Yes, over time hopefully that will change.

C. Does Monsanto set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Monsanto has small manufacturing units on mainland China, but the respondent is not familiar with the materials or quantities of material that Monsanto buys in Asia. The respondent will try to obtain this information for U.S. while confirming this interview.

As to any requirement from upper management to consider environmental requirements on Asian purchases of raw materials, they look mainly at their MSDS and their quality specifications. The raw material must meet the specifications in their purchase orders and have the qualities in the Material Specification Sheets. They have not yet incorporated "cradle-to-grave" product stewardship, but they plan to in the future and will look at certain processes more closely than others. They do not consider the environmental aspects of how the product was produced or the environmental aspects of the product itself. They do not require that their suppliers meet any environmental standard such as ISO 14001. In the long term, there may be an international standard that states a company is blackballed if it does not have a standard on its products; however, there is no such standard today.

Monsanto has very strong standards on emission controls and pollution reduction for meeting their internal standard. The requirement placed on their suppliers is whether they are reliable so there is no disruption of critical materials. They are not at the stage of totally evaluating whether the supplier has a quality EMS in place.

The respondent believes that Monsanto is ahead of the average in their industry. They are about three-quarters of the way into requiring an EMS of their U.S. suppliers. They are not there yet, but they are moving in that direction, particularly in the U.S. "It is not demanding, it is not 'we won't buy from you if you are not ISO 14001.' It is not close to that." However, if they know the general management system of a supplier, they do not require anything in addition of the supplier. If someone is going to be a toll manufacturer for them, they spend more time on the systems of that company than the companies from whom they are buying raw materials. Ideally, they would like to say that they would not buy from a company that has a poor EMS system. Today, they have contract safety standards that are fairly stringent.

D. Does Monsanto have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Right now they are piloting an ISO 14001 project in one of their plants in Texas looking at the incremental cost to get ISO 14001 certification over Responsible Care(r). They will determine whether either will add intrinsic value to their system. If they discovered that a new management technique added value to their company, independent of customer demand, they would do it. And if their customers demanded that they become ISO 14001 certified, they would do it. However, the respondent knows of no customer in the world that is requiring Monsanto to meet ISO 14001 requirements. Several major corporations that have looked more closely at ISO 14001 have questioned the added value of becoming certified. One major company stated that it cost them $250,000 to become ISO 14001 certified, and the company does not see added value to their business after the certification was completed. If Monsanto is not requiring ISO 14001 of itself, the respondent does not think it is fair to require it of their suppliers.

There is honest skepticism as to who is driving ISO 14001: that it is those who are running the system-the consultants and those who will be conducting the audits.

E. Other information

Obstacles to Greening the Supply Chain

The respondent stated:

People make what customers want and will pay for, and they pass on the cost of the production. You can buy a barbecue grill in southern California, and because of the Los Angeles air pollution restrictions, it costs significantly more than a grill in St. Louis where the air pollution control regulations are not so strict. It is hard to say that I, as an individual, am going to pay 20 percent more for that grill that looks just like the one next to it and has the same function when nobody is telling me that I have to.

I think the obstacle to greening the supply chain lies in economic conditions and nonenlightened lobbyists, nonenlightened segments of society, that have not looked at the total value chain. A single interest group that sells something might be put out of business and may have high, sunk capital invested, and it frequently takes seven years to make a profit. If it has just built a new plant and somebody comes up with a greener technology that makes the new plant obsolete, then, if it is not an acute problem, there will be sunk capital making products that do perform a function, but not the greenest. There will be a tendency for people to hold on to these plants and their old ways just because of the return on capital unless the public doesn't accept it and the trade association says to stop it.

If a government really wanted to do something, they could give incentives-investment tax credits to companies and accelerated depreciation rates on older plants. It all has to fit into the economics. If a country that has starvation and they don't have the benefits that come from high gross national product per capita, then those people may be fighting for the right to develop their resources and factories in the out-dated ways that the western world did that caused pollution. Economic prosperity will bring with it an improvement in quality and so it is a socioeconomic issue in play here that is bigger.

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Motorola
Craig Liska

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

No response provided.

B. Does Motorola set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

For Motorola, better relations with their suppliers is key, and they are working on this. They don't currently impose environmental performance specifications. They do have a list of banned substances, e.g. PCBs and CFCs, which is circulated to suppliers because the products have to comply with laws in the country of destination. But EMSs are not imposed.

The automotive division, after a request from Rover to show an EMS in place, has started to consider how to impose environmental conditions down the supply chain. They have at this point created a questionnaire for suppliers. One of the questions is: "Are you moving towards EMS implementation with EMAS, ISO 14001, or BS 7750?" This questionnaire may be used by other divisions.

C. Does Motorola set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

The respondent stated that Rover is the only customer that has set EMS standards for Motorola. As of September 1997, there have been no other requests. Ford and Chrysler have mentioned it, but they haven't asked.

They do not currently set environmental performance standards, although as mentioned, these are under consideration. Their European customers do occasionally ask for environmental performance assurances and the make-up of products or parts they get from Motorola. They have had to do this for British Telecom in the United Kingdom and for Deutsche Telekom in Germany, who ask for materials specifications. In order to answer this they had to go back through their own supplier chains. This is very hard for them and their suppliers. They had only done this when asked. However, some divisions anticipate seeing more of these requests and have started surveying their suppliers voluntarily.

There is also a question of the liability issues in imposing environmental specifications on customers. For example, if Motorola set the environmental criteria, would it be responsible for their enforcement? If there was a problem later, would Motorola be liable for damages caused because the supplier infringed its environmental assurances? The respondent stated:

We have been concerned with supplier management from a more general perspective, though, and this has environmental consequences. Currently we have an internal process to harness internal creativity for organizational improvements, using quality circles. Improvement suggestions come up, in order, in the areas of quality, cost savings and environmental improvements. We have a competition between teams for the best ideas. We are now taking this process to our suppliers. We will host a competition between teams from our Asian suppliers, using the same model, in Kuala Lumpur in October 1997. The idea is educational, and the results could bring environmental value to the organization.

D. Does Motorola have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Motorola has an international management system in place and produces an environmental report.

Motorola has approximately eighty sites, of which two are currently ISO 14001 certified. Those sites do not pass these requirements on to suppliers.

They perceive no customer demand for certification. "We are reluctant to get certification because there is virtually no customer interest." Therefore, they have little interest in certification or in imposing EMSs or certification on their suppliers.

They are getting ready for ISO in case this becomes more of a customer requirement. Most of the 14001 requirements are in place (80 to 90 percent) from their existing EMS. The document control part of ISO 14001 is onerous and they haven't got that completely. Certifying all their sites would be very expensive. Later this year they will once again review ISO 14001 to see what parts of it could add value to Motorola's EMS.

Japan represents a unique case. They do not hear of customer requests in Japan, yet there is such momentum towards ISO 14001 certification, based on a sense that it is a condition for entry into the European market, that their semiconductor business there may feel pressure to certify. This is speculative and not an official Motorola position. Certification to any EMS standard is currently at the discretion of the site, not corporate-wide. The respondent stated:

If we were interested in implementing ISO 14001, we would be interested in a system for self-certification as we have with ISO 9001, with trained internal auditors. This is more cost effective for us. As things stand, we have only a small number of sites interested in certification and so it still makes sense to use external auditors.

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NEC Corporation
Kenji Takubo, Senior Manager, Environmental Management Division

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

NEC has manufacturing subsidiaries around the world and the purchasing system depends on each subsidiary. If QDCD conditions of local suppliers in the Asian market meet their requirements, they will make local purchase. Regarding the specific environmental requirement on Asian purchases, the top management of NEC announces the prohibited chemical substances for purchasing to all subsidiaries, and each subsidiary shall follow the announcement.

Examples as the prohibited chemical substances as trichloroethylene, tetrachloroethylene, freon, mercury, PCB, PBBE, PBB, and so on.

Yes, we have plants in North America that make supplier purchase from Asia.

B. Does NEC set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Yes, NEC established purchasing guidelines of specific environmental product for our suppliers, such as environmentally conscious stationery (started in June 1997), parts for manufacturing products (to begin in October 1997), and products without PCB or PBB. However, the guidelines are only for in-house use.

Recently environmental standards are becoming common in the electronics industry.

As for purchasing environmentally conscious stationery, we sent the questionnaire to the suppliers and we assessed if their products meet our requirements. For the products parts, we are assessing them through a process assessment system, and we are now preparing for the questionnaire to evaluate the parts to start the environmentally conscious parts (products) purchasing system.

C. Does NEC set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does NEC have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Yes, NEC has a customized EMS. It includes ISO 14001. We are now producing our Environmental Annual Report for 1997.

NEC doesn't set EMS standards for suppliers. However, we check their environmental activities through annual environmental audits.

NEC set voluntary environmental standards which are more stringent than national and local authority regulations.

E. Other information

Obstacles to Greening the Supply Chain

The problem is cost. The products with environmentally conscious design are still expensive here in Japan, so we need to cooperate with citizens to raise environmental awareness, especially toward environmentally conscious products and to lower their cost.

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Nissan
Gina Pasco, Manager

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Nissan does have Asian suppliers.

B. Does Nissan set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

Nissan will require ISO 14001 certification of suppliers.

C. Does Nissan set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

None provided.

D. Does Nissan have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Nissan Corporation, as a whole, is not certified under ISO 14001 but does intend to become certified. Divisions and separate facilities are certified under ISO 14001

E. Other information

Obstacles to Greening the Supply Chain

Getting all other manufacturers on board.

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Occidental Petroleum Corporation
Carl Wirdak, Director of Environmental Affairs

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Occidental is comprised of three segments: a natural gas subsidiary that transports natural gas in the United States, which would not apply to this survey; Occidental Chemical, which manufactures and markets chemicals worldwide; and Occidental Oil and Gas, which explores for and produces oil and gas worldwide. Each are autonomous divisions with headquarters in the United States. The exploration and production business is by its nature transient, going wherever in the world the resources are. There are some exploration activities going on in Asia. OxyChem has plants in locations around the world, including two joint ventures in Asia. In these ventures (Thailand and Singapore) OxyChem holds an interest of 50 percent or less.

B. Does Occidental set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

OxyChem does not set specific environmental product requirements for domestic or international suppliers anywhere in the world. This is also true for the two Asian ventures. Typically, there is language in purchase agreements (for both plant and corporate-wide purchasing contracts) that references the CMA Responsible Care(r) initiative. Environmental issues are considered when making purchases, but for major raw materials and supplies, other factors such as product purity, availability, price, and so on must also be considered. Within the chemical industry, there is little differentiation along environmental attributes for basic raw materials. Molecular composition and the physical characteristics of the chemical feedstock are the critical defining parameters.

OxyChem does set specific production environmental requirements for suppliers addressing such areas as pollution prevention and the proper disposal of wastes. For the case where a supplier is a CMA member company, conformance with Responsible Care(r) satisfies the OxyChem requirements. If a supplier is not a CMA member, OxyChem sends auditors to the supplier's plant to assess compliance with OxyChem's environmental provisions. The audits are coordinated by OxyChem's corporate purchasing department and typically include experts from selected disciplines, including environmental. This program is a Responsible Care(r) initiative and OxyChem pays for the audit. At this time, the program is new and not all supplier plants have been audited.

C. Does Occidental set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does Occidental have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

No response provided.

E. Other information

As to self-imposed or voluntary environmental requirements, Occidental Petroleum Corporation has a code of ten principles that apply to all three divisions. The principles cover conservation, management systems, energy use, remediation of sites, dealing openly with the public, communicating with regulators and stakeholders, keeping the Board of Directors informed about issues, reducing releases of pollutants, reducing waste, and responsible disposal methods.

Regarding the use of a management systems approach to environmental management, all three divisions of Occidental have such systems in place. For example, OxyChem's environmental management system is deeper and broader in scope than ISO 14001.2 As part of this system OxyChem establishes voluntary environmental standards. An example of this is participation in the EPA 33/50 program for reducing the releases of seventeen chemicals reported under the U.S. EPA Toxic Release Inventory. The OxyChem commitment of a 50 percent reduction (EPA's goal for the program) was based on 1988 releases and transfers of 4.5 million pounds, all of which were permitted releases. At the conclusion of the program OxyChem achieved an aggregate reduction of over 90 percent to just 0.4 million pounds. The incremental 40 percent reduction was the result of how OxyChem chose to meet its commitment. OxyChem found it more effective to virtually eliminate releases and transfers of certain key chemicals than to reduce releases and transfers of all seventeen target compounds to the 50 percent level.

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PPE
Renato M. Ladera, Manager, Engineering, Environment, Health and Safety

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Yes, PPE does have Asian suppliers. There are five of them.

B. Does PPE set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

No response provided.

C. Does PPE set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

In the future, PPE may require its suppliers to become ISO 14001 certified.

D. Does PPE have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

PPE is not certified under ISO 14001, but the company does intend to become certified.

E. Other information

Obstacles to Greening the Supply Chain

Small suppliers basically with lower prices might not have enough logistics to conform. This could potentially make them noncompetitive globally.

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Premier Group
Thomas P. Cheatham, Jr., Managing Director

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

The supply system for raw materials, special equipment, and/or services varies among the several companies. We make local purchases from the Asian market and in particular from sources within Thailand, often from our own sources. For example the customized shrimp feed for our intensive shrimp farms is supplied by our own fish/shrimp feed mills. In the manufacture of construction materials, we try to source locally and when warranted we operate our own borrow pits for sand, gravel, and so on.

Generally, corporate policy is to emphasize quality of both product and service and to be clearly ahead of the competition.

Most infrastructure programs or projects require a certain percent of barter trade. Premier accomplishes this through its Premier International Company (PI). Premier does not have any operating plants in North America at this time.

B. Does Premier set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

On major infrastructure projects, we frequently have to apply special conditions for operation in the tropic zone with regard to temperature and humidity that are then reflected in more stringent requirements of efficiency and emission to avoid the creation of acid rain.

Product environmental standards are not common but are growing in importance and application, mostly as a result of the injection of technology, life-cycle costs, and environmental standards by off-shore joint-venture partners.

Confirmation of product standards is a process that varies with the importance of the products. We run the full gamut of in-home lab tests, on-site plant visits, and third-party lab tests. Generally the supplier pays for the audit where a contract is involved but on a joint venture where the manufacture or use of a material is involved, Premier will assume audit responsibility in their own self-interest.

Voluntary environmental product goals are generally assessed on a cost/benefit basis. As infrastructure programs or projects tend more and more toward privatization, factors other than cost (life-cycle, environmental, low operation and maintenance, and so on) start to rise in importance as they have over the past five years.

C. Does Premier set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Consideration is being given to environmental process requirements for suppliers but is not yet in place. Generally this is a responsibility that falls on our joint-venture partner due to his greater range of experience in operation and maintenance.

Environmental process standards are not common in Thailand-- except to some extent in the food industry.

D. Does Premier have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

At the moment the Premier Group does not set specific standards nor does it have a formal EMS that is customized. Awareness and support of growth through quality products, services, and systems is almost a credo for the Premier Group. The front cover of its annual reports states: "Premier Group, A Foremost Conglomerate Growing and Achieving Quality."

E. Other information

Premier included a brief background statement on the status of the environmental polices, procedures, and practices in Thailand at the domestic and industrial levels. It is necessary to realize that there is very little evidence in Southeast Asia and Thailand of the existence of voluntary environmental standards, the deliberate enforcement of a "greening" of the supply chain, or a strengthening of industrial/environmental extension systems beyond what is now required by law (Pollution Control Act of 1992) or economic pressure from the world market and global investment community (World Bank Standards, and so on).

General Background

The Pollution Control Act and Factory Act of 1992 set relatively severe penalties for failure to meet air and effluent wastewater emissions/discharges from industrial and domestic sources. However, Bangkok is a city of some ten to eleven million residents and visitors and today still operates essentially on a septic tank system for wastewater treatment with a growing number of small- to medium-sized batched AS systems (up to 3,000 p.e. for condominiums, shopping malls, and so on). Three centralized wastewater collections and treatment systems are under construction, handling on the average some 500,000 p.e. Eventually there will be ten of these large scale systems in operation, with another ten of medium size (100,000 to 200,000 p.e.) being planned. By the year 2000, Bangkok will be generating 10,000 tons per day of MSW; the current pick-up of 6,000 tons per day is disposed of in land-fills that are as yet nonsanitary. The MWA supplies some four million cubic meters of potable water per day to Bangkok; the current requirement is for some seven million cubic meters per day. The Chao Phyra River, which is the primary source, has about reached its limit for extraction, and other sources are being sought.

Pollution control laws and appropriate standards are in place, but until there are sufficient facilities and systems to take the end-of-the-pipe pollutants, there is little rationale, in the Thai sense of Kriengjai, to impose the laws or penalties too severely.

The basic environmental infrastructure is being designed, constructed and financed but it will take time. Both the private sector, in the form of the Federation of Thai Industries (FTI), and the nongovernmental organizations, in the form of the Thai Environmental Institute (TEI), have responded with policy studies and information/data guidelines.

Within this construct of working responsibly with both the Government and the FTI, the Premier Group of Companies would consider itself in the forefront of Thai and global Asian Companies in the support of high quality standards for products, services, and systems. To be effective, however, Thai companies cannot get too far ahead of the pack. Much is being done despite the fact that Thailand is a land of patronage and close networking.

Premier Group of Companies

The Premier Group is a Thai multinational conglomerate of some forty-three companies organized into eight business groups as follows:

1. Trade and services: motor car sales and leasing

2. Consumer products

3. Construction material/environmental products/systems and service

4. Construction: civil/M&E

5. Real estate development

6. Electrical and electronic products/systems

7. Financial services

8. Infrastructure systems/facilities development (transportation, power and energy, communications, and environmental systems).

Centralized environmental systems as part of Thailand's infrastructure is the responsibility of the eighth business group, which is headed by the Premier Infrastructure Development Co., Ltd., (PID). A brief overview of the Premier Group, its history and evolving lines of business, including PID as the most recent addition, was attached to the survey response.

The eight business groups all have a concern with environmental matters regarding health, safety, quality and compliance with standards, and pollution control. Environmental issues are of particular concern for business groups 2, 3, 4, and 8, above. The managing directors of these business groups, in addition to the International Quality Assurance Laboratory (IQA), are identified as Premier's financial/technical/social/management nature with regard to environmental programs, projects, trends, and requirements.

Certification to ISO 9000 and ISO 14001 has been relatively slow but is gaining momentum. As of March 1997, only nine Thai companies had been certified for ISO 14001 (three by Thailand's Standards Institute, TISI, and six by foreign institutes). TISI is now processing approximately sixteen additional applications. The picture is a bit more dynamic with regard to ISO 9001 and 9002. Three companies have been certified for ISO 9001 and ninety for ISO 9002.

Pertinent activities f the Premier Group are as follows: IQA has been certified by TISI for ISO/IEC Guide 25, and Premier Products has been certified by TISI for ISO/9002 for batched AS Wastewater.

In the area of product manufacture, Sanyo (a joint venture partner) has been certified by TISI for ISO 9002 for consumer products; TDO does research on nonpolluting renewable energy sources such as photo-voltaic cells and conversion of solar energy into AC for surplus (stored-credit) supply to transmission grid. Premier Group is pursuing research projects on processing of food waste for extraction of by-products for food industries.

Obstacles to Greening the Supply Chain

The major obstacle is time for the basics of an environmental management system for water, wastewater, MSW, Power, Industrial Waste products to be implemented so that more sophisticated levels of management can be imposed that are understood, appreciated and therefore cost-effective.

One primary area where all companies, and global companies in particular, can be most effective is to include a statement of environmental policy and progress in the annual report. The Premier Group's Annual Report does this in a special section that ends with this paragraph:

Premier Group will continue to expand its environmental business into the more critical areas of environmental protection, which needs integrated system management, innovative technology, high efficiency, the collection, treatment and disposal of industrial hazardous waste and infectious waste from hospitals and medical clinics to mention a focus of top priorities. The total management system of all industrial wastes, waste water, garbage, toxic waste, air and noise pollution, including all aspects from consultancy, design, construction, improvement, training, operation and management to monitoring industrial estates' operation, are established in order to meet the quality management standard of ISO 9000 and ISO 14001.

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Rockwell International
Dr. R. Reisenweber, Vice President, EHS

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

No response provided.

B. Does Rockwell set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

The respondent is not in the area that would design and require procedures, such as a questionnaire, for how Rockwell chooses suppliers.

C. Does Rockwell set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does Rockwell have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Rockwell has a formal EMS and is becoming certified under ISO 14001 location-by-location. Seven locations are certified. In October 1996, a Rockwell automation site in Twinsburg, Ohio, received the distinction of being the first ISO 14001 certification certificate in the United States. They now have six automation locations ISO 14001 certified and are working business-by-business to become ISO 14001 certified company-wide. The six certified locations are Twinsburg, Ohio, which was certified in October; Dublin, Georgia; Eau Claire, Wisconsin; Highland Heights, Ohio; Mayfield Heights, Ohio; and Dayfield Village, Ohio. One site in their automotive business, located in Birmingham, England, is also BS7750 certified. At this point, no site in Asia is ISO 14001 certified.

Rockwell decided to become ISO 14001 certified company wide, "Because it is a management tool to make sure that our facilities have processes in place to achieve a proactive environmental program. Corporations that are going to become ISO 14001 certified will have a competitive advantage."

The respondent has heard that Rockwell's customers in Europe are beginning to demand ISO 14001 certification, but he does not have the type of interface with customers to know whether they are getting similar demands from customers in the U.S. or Asia. However, it was not customer demand that led them to seek ISO 14001 certification. Rather, Rockwell made a corporate decision to be proactive and at the forefront of major initiatives such as this. They were ISO 9000 certified, and ISO 14001 was the next wave. They are decentralized, so each of Rockwell's major businesses conducted a gap analysis to gauge what should be added to their EMS to become certified.

E. Other information

ISO 14001 Certification of Suppliers

At this point in time, Rockwell will not require ISO 14001 certification of their suppliers. They have not considered this issue, and the respondent does not know whether they have gotten a request from customers for supplier certification.

Obstacles to Greening the Supply Chain

The respondent believes that the technology is there for greening the supply chain, but that there is an economic barrier. "If you have the capital, you can get the technology." He also thinks that some additional regulations would help green the supply chain. For instance, regulations eliminated the ozone depleting compounds. Before the regulation came out, Rockwell did demand that their suppliers not use chlorofluorocarbons in their cleaning processes; they had the option of labeling their products to state that chlorofluorocarbons had been used in the manufacturing process, but they chose not to. The respondent does not know whether that increased the price of the product; however, the demand was for no CFCs and that was met. The respondent does not know how it was verified whether or not CFCs were used.

The respondent believes that regulations would green the supply chain more easily than voluntary initiatives. Voluntary initiatives work better for greening your own company, but they have not tried asking their suppliers to develop them. Rockwell has reduced its emissions by 97 percent through material changes and process changes. An example of a material change is substitution of isopropyl alcohol for various chlorinated compounds. For a process change, they have substituted degreasing with chlorinated solvents in their cleaning process for a "fine-clean system" using carbon dioxide. They have provided the EPA with information on the processes that they have used.

Rockwell was one of the first companies to sign up for the EPA's 33/50 program initiated by the Bush Administration in the late 1980s. This program asked companies to voluntarily reduce emissions of seventeen specific compounds 33 percent by 1992 and 50 percent by 1995. Rockwell achieved 50 percent by 1992 and 84 percent by 1995, and by the end of 1996 they had achieved 97 percent. The respondent does not interface with suppliers and does not know what regulations may control those in Asia.

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Tenneco
Kim D. Kramer, Environmental Manager

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Tenneco Packaging produces an extensive offering of corrugated, paperboard, molded fiber, plastic, and aluminum packaging products. As input to their manufacturing operations, they utilize timber from Tenneco-managed forests (in the United States only). They purchase timber, mill rolls, recycled fiber, plastic resin, recycled plastic material, and aluminum coils from suppliers. In the management of their U.S. forest lands, they require that logging contractors follow the Sustainable Forestry Initiative (SFI) and they specify proper environmental handling and disposal requirements in their pesticide application contracts.

Internationally, they do not manage their own forest lands and therefore expect suppliers to assume responsibility for following proper environmental practices based on the specific needs of the countries in which they operate. In general, Tenneco purchases from suppliers based on quality, service, and overall value. In Asia, they purchase some raw materials from the United States and some raw materials from the Asian market through agents. Tenneco purchases from reputable firms that follow good industry practice and that they believe comply with all applicable, safety, health and environmental regulations. Therefore, they do not impose additional environmental requirements on international suppliers.

They do not currently purchase raw materials from Asia.

B. Does Tenneco set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

No response provided.

C. Does Tenneco set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

Tenneco has no current plans to set supplier EMS standards.

D. Does Tenneco have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Tenneco Packaging does have formal Environmental Management Systems (EMSs). Tenneco Packaging was formed through the acquisition of the assets of a number of different packaging companies such as Packaging Corporation of America, E-Z Foil, Mobil Chemical's Plastics Division, Amoco Foam, and others. Each of these previous companies had an EMS, and Tenneco is currently in the process of developing a unique EMS by combining the best aspects of each of these systems. They are considering ISO principles as they develop this system. The new EMS is a "work in process" and is proprietary at the moment.

E. Other information

None provided.

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Texas Instruments
John Shepard, Corporate Environment, Safety and Health

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Texas Instruments (TI) has two divisions in Asia that would buy raw products such as metals and packaging materials from the Asian market locally. These are their semiconductor division and metals and controls division. The products that these divisions manufacture are for sale in the country where they are manufactured as well as globally. Each division has its own purchasing group, which works with the specific manufacturing within its division.

B. Does Texas Instruments set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

From a company standpoint, they do not put specific environmental requirements on their vendors that supply them with raw materials, but individual sites might do so. Their sites in Taiwan and in the Philippines are ISO 14001 certified. They have also a site in Germany that is ISO 14001 and EMAS certified, their only division that is certified in more than one standard. They have seven sites in Asia that are not ISO 14001 certified, including Japan. The two Asian sites that are ISO 14001 certified do put environmental requirements on their suppliers, although the respondent is not familiar with the specific requirements. Both of these sites manufacture integrated circuits, break them down into discrete components, connect them electrically, package them in plastic, and ship them around the world.

C. Does Texas Instruments set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

If TI's customers could start requiring that it put environmental requirements on its suppliers, it would. Their customers in Europe and Asia are asking questions and sending them surveys asking what they use to manufacture their parts, what their parts contain, and what the packaging material is. Therefore, the respondent knows there is a movement toward supplier environmental requirements, but they have not decided to push it upstream to their suppliers, even for a critical supplier.

The respondent believes that this is standard in their industry, but it varies by region. They have received questionnaires from companies in Europe and Asia, but not the United States. Toshiba, in Japan, asks fewer questions than Ericsson, from Europe. The questions ask whether they have an environmental program, whether they are certified, and whether they ask their suppliers environmental questions.

The respondent does not know whether any of TI's companies in Asia put voluntary initiatives on their suppliers.

The only process environmental requirements Asian TI companies would have is the composition of the product they buy and the composition of the packaging material. For example, the products that they buy cannot contain any ozone-depleting chemicals or any of the banned chemicals. This would be handled at the local site and may be part of the original contract made with the supplier during the initial phase of doing business.

D. Does Texas Instruments have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

TI has a corporate EMS that is voluntary for the different divisions, which are not required to have their own EMS. The corporate office wrote a template for EMS and offered it to the sites for their use. About half of their sites have chosen to use it, including the sites that have ISO 14001. Three other sites that are working toward ISO 14001: Kuala Lumpur, Malaysia; Pourto, Portugal; and Aguas Calientes, Mexico.

Corporate-wide, TI does not intend to become ISO 14001 certified at this time; the decision is left to the individual divisions. The respondent sees slow movement toward ISO 14001 certification in Europe and Asia, but not in Japan and or the United States.

TI has corporate environmental standards that are not voluntary. For example, there are spill control requirements around bulk chemicals and requirements concerning how to handle certain chemicals. If a site chose to meet only the standards of TI, they would not meet U.S. regulatory standards, but they would probably exceed most of the Asian requirements. They have not imposed many of the record keeping and documentation requirements required by the EPA on their facilities outside of the U.S. because they do not believe that the paper work is beneficial. The respondent thinks that the paper work only makes it easier for the EPA or the Occupational Safety and Health Administration to enforce their regulations, instead of protecting the environment.

E. Other information

Obstacles to Greening the Supply Chain

The respondent sees economics as an obstacle to greening the supply chain:

As long as a company becoming green adds cost to the product, then it is less likely that we will buy their product. Cost is still a driving part of that. . . . Technology is also an obstacle to greening the supply chain. If greening the supply chain means don't use PVC, then you have to have the technology to make products or packaging materials that do not contain PVC. Polyvinyl chloride is probably in 90 percent of the packaging; it is a very common, inexpensive plastic."

To remove the economic obstacle, the respondent would suggest tax credits for greening a business from a regulatory or government standpoint. He has also seen in Singapore:

When a company works toward being green and establishes a relationship with the government, the government is more likely to grant requests for building permits, and so on, and this creates a positive economic incentive that is nebulous and hard to document, but there all the same.

This particular plant had gone beyond what the Singapore government required in treating its waste water and exhaust. There is not much to green with a computer chip except how you make it. Since they have done that and have established a relationship with the Singapore government, the cycle time in getting permits is shortened.

The site's reason for greening in the first place was: (a) to be a good neighbor, and (b) to protect their own interests. For example, if you are discharging corrosive exhaust, you are corroding your own assets as well as those of your neighbor.

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Union Camp
Dwane W. Marshall, Director, Corporate Office of Environmental Affairs

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Union Camp manufacturing operations in the United States have very little reliance upon Asian suppliers. Our Chemical Products Division does, on occasion, import gum rosin, with Asia as one of several potential sources. This commodity, however, is a very small fraction of our rosin raw material supply, purchased on a very irregular basis and only used on those occasions because of its desirable attributes for meeting the specifications for certain products. The purchase is not conditioned on the supplier meeting any environmental requirements, nor is it likely that we would have the leverage to do so.

A majority-owned subsidiary, Bush Boake Allen (BBA), does operate plants worldwide, including a number of operations in Asia. Within the organization, environmental management is largely decentralized in order to better respond to diverse local situations. Because of its decentralized character, corporate level environmental staffing is limited. Union Camp augments BBA corporate environmental staffing by providing a number of typical corporate environmental administrative services under a services agreement. Corporate environmental policies largely parallel those of Union Camp.

BBA international operations are typically small and, due to the nature of their flavor and fragrance business, have only nominal environmental exposure. BBA reportedly sets no specific environmental requirements on suppliers to its international plants. ISO 14001 certification has not been sought at any location. I am informed that there has been isolated inquiry about ISO 14001 intent from some Canadian customers, but the level of interest has not given impetus to considering certification. I might speculate that ISO 14001 could be thrust upon them in the future if third world governments promote ISO certification as a matter of national environmental policy.

B. Does Union Camp set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

As I am sure is the case with many manufacturers, Union Camp has sought to leverage the volume of its purchases through the competitive selection of an exclusive supplier or preferred suppliers of goods and services. A systematic process for doing so has been instituted over the last year or so to address, on a prioritized basis, the most significant corporate-wide purchases. Candidate suppliers are requested to submit business proposals with the recognition that their environmental stewardship will be among the factors that will be considered in weighing their qualifications. Each candidate supplier is invited by a selection team to make a presentation which would include information on his environmental performance. Specific environmental standards are not set by Union Camp, nor is there a checklist against which to gauge expected performance. Verification of supplier claims is largely limited to information obtained in an independent vendor financial review which typically benchmarks environmental fines and liabilities.

Implicit in your question are Union Camp's interests in making environmental performance a factor in the review and a supplier's interest in responding to it. In response, I offer the following observations:

* In granting a supplier an exclusive or nearly exclusive contract to provide Union Camp with goods and/or services, the company must assure itself that the vendor will be a reliable supplier. That condition will not be met if poor environmental performance threatens supply reliability or if associated financial liabilities undermine his financial stability.

* In designating preferred suppliers, Union Camp is, in some respects, aligning itself with the reputation of the suppliers. As the old adage goes: "You are known by the company that you keep." You have been kind enough to acknowledge that Union Camp enjoys a positive environmental reputation. We value that and would not want that reputation diminished by alliance with a major supplier who was perceived as environmentally irresponsible.

* A corollary question is what would motivate a supplier to want to offer environmental performance as a competitive factor in seeking business. Most simply put, environmental performance is a factor that may distinguish him from other competitors seeking the business of a large volume customer. It is an adjunct to but not a substitute for reliable service, product quality, and competitive price.

C. Does Union Camp set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

No response provided.

D. Does Union Camp have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

There is a tendency, an inappropriate one in my belief, to consider environmental management systems and a certifiable ISO 14001 program as being synonymous. I cannot imagine that any manufacturer in the United States could sustain compliance with the myriad of regulations that govern our environmental conduct without some form of EMS.

Union Camp's environmental management "culture" has evolved over two decades and led to a collection of practices which we would characterize as our environmental management system. In many respects, that system parallels some features of the ISO 14001 standard. In 1995, we wanted to be sure that we could respond should ISO 14001 gain significant momentum. At that time, Union Camp commissioned a consultant to determine if aspects of the way we manage environment in Union Camp posed any structural barriers to our meeting the intent of ISO 14001 Overall, it was concluded that our corporation showed no significant gaps or missing program elements when compared with the ISO 14001 model. What was lacking was the more rigorous documentation, record keeping, and written procedures. Addressing those features imposes a significant cost that is disproportionate with environmental improvement likely to result from having done so.

It is conceivable that ISO 14001 could become a competitive feature in the marketplace. We have reason to suspect that some firms with whom we compete in the U.S. marketplace are moving toward certifying selected U.S. mills with a dominant customer base in Europe. That reflects a judgment that ISO 14001 certification, or equivalent, will be an exception for doing business in Europe. If that is the case, anyone seeking to engage that market will have to conform.

Our experience would suggest that there is not yet a significant customer pull ISO 14001 certification in the United States. I attribute this, in part, to that fact that U.S. manufacturers are intensely regulated, are required to implement the most demanding of environmental control technologies, and are subject to rigorous enforcement. Thus there is likely a well deserved perception that the added administrative burden of ISO 14001 contributes little to environmental gain. The situation may be different in some third-world countries where environmental regulation and institutional structures are embryonic. There it is conceivable that ISO 14001 may provide a vehicle for addressing localized environmental concerns without the burden of sustaining a costly bureaucracy to develop and enforce expansive regulations. That choice, however, should be solely the discretion of the country in question.

The potential for opportunity in ISO 14001, however, has not been lost on U.S. regulatory agencies. Some states have suggested that they might relax administrative requirements and enforcement burdens on firms that secure ISO 14001 certification. The enforcement culture of the U.S. EPA, however, seems adverse to such incentives. That is not to say that they would not welcome the authority to exercise greater control over how a facility manages its environmental affairs, either directly or indirectly. For now, our laws simply do not give them that latitude. It is conceivable that the Agency could induce a facility to seek ISO 14001 certification as a condition of resolving an enforcement action or, for that matter, a facility might even offer to do so in the interest of enforcement penalty mitigation. I am not aware of any instance where that has been done, however.

I do not want to leave the impression that Union Camp is entirely dismissive of all ISO 14001 features. Procedures-based approaches to environmental management apart from ISO certification do have a place. We believe them to be of some value for smaller facilities which lack full time professional environmental staffing and may experience high rates of personnel turnover. Even at our larger facilities, we are pursuing some ISO 14001 elements which we believe may bring value to the way we do our environmental work.

To go the whole gamut at one of our paper mills, however, would require the labor of five people working for an entire year. Maintaining the documentation system would pose a continuing additional burden. What would motivate U.S. to go that distance? A decision to go forward may hinge on a critical customer's expectation, the expectations of a country where we may want to do business, or changing regulatory norms here or abroad. Would we require the same of our suppliers? Only if one of the aforementioned circumstances warranted U.S. doing so. We would not otherwise seek to impose upon a supplier an ISO system requirement that we ourselves believe to be overly instructive, expensive, and of little inherent environmental benefit.

For now, customers are not asking for it, environmental groups are suspicious of it, regulators cannot decide how to incorporate it into our traditional command and control system, there is little or no competitive advantage, and the benefits do not justify the costs. In the interim, we will incorporate the "smart elements" into our management approaches and track the changing interests of customers, agencies, and other stakeholders.

E. Other information

In summary, I would think that like Union Camp, most multinational firms are environmentally conscious and responsible. In addition, most would not knowingly align their business relationships with firms which were indifferent to those values. The environmental conduct of businesses world-wide bears the scrutiny of numerous nongovernmental organizations. Their command of cyberspace provides a timely source of information which can be drawn upon to inform the business decisions of U.S. firms that draw upon the Asian supply chain. Rather than injecting itself into the structure of commercial relationships, the U.S. government and its agencies would do better to focus on the development of an infrastructure better able to handle the inevitable wastes generated by a growing third-world industrial economy.

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Weyerhaeuser
Rodney Proctor, Director, Environmental Audits

A. Could you provide a general idea of your supply system for Asian suppliers to Asian affiliates and your U.S. operation(s)?

Weyerhaeuser has no Asian plants. The respondent does not know if they have any suppliers in Asia.

B. Does Weyerhaeuser set any product-specific or production/process environmental requirements for your suppliers? What are these? How do you check that the standards are met?

They do not have a requirement that a supplier be ISO 14001 certified. However, Weyerhaeuser has environmental language in every contract with contractors and suppliers. They have a company environmental policy that says that they as a company will comply with environmental laws and regulations and do things to reuse, reclaim, and minimize waste, and those company expectations are passed on to contractors and suppliers. Weyerhaeuser expects that their suppliers and contractors will comply with the same standards as well. Each project manager in charge of a contract is expected to monitor performance and compliance on all aspects of the contract, but the respondent expects that only the most conscientious project managers actually do this. There is no formal or centralized audit process for contractors and vendors, but this is one of the things they will be trying to develop over the next several years.

To date, they have not had centralized purchasing, nor a requirement that all purchasing go through one department, and each group has been doing its own purchasing. The respondent does not know whether they go through the legal department and contain all of the language that is expected. There is, however, an expectation from senior management, though the performance may not always meet the expectation. This is one of the reasons why they are looking at putting in place some vendor contractor audit processes and more centralized purchasing processes.

Environmental product requirements are also decentralized and handled by the individual manager.

Most companies in the industry have a similar program as Weyerhaeuser, and some of these other programs are probably more loosely structured than the Weyerhaeuser program.

Therefore, when there are standards put in the contract, there is no corporate-wide procedure in place to confirm whether or not those procedures are followed, although an individual manager or unit may have a procedure in place.

This is the same for any production environmental requirements.

C. Does Weyerhaeuser set standards for the EMS of the supplier? Please provide some details of what kind of EMS and how this benefits your firm.

The respondent knows of no current procedure to require suppliers to become ISO 14001 certified because they question the value of certification for Weyerhaeuser. While individual sites may pursue certification, the corporation as a whole will not. This position is based on Weyerhaeuser's view that certification does not necessarily mean a company's performance is good and their concerns about the qualifications of some of the consultants who are certifying companies.

D. Does Weyerhaeuser have a formal EMS? Please describe it and explain whether and how your firm is reacting to ISO 14001.

Weyerhaeuser does not have a formal EMS, because they have not completely documented the processes and procedures that they follow. They are currently in the process of defining the corporate EMS, and senior management is directing each business to develop a documented, business-wide EMS. Weyerhaeuser expects that it will take two to three years to get one formal, uniform EMS throughout the company.

Weyerhaeuser's view is that they have developed a program that goes beyond the requirements of ISO 14001. They have looked at the EMAS scheme, 7750, EPA audit policy, and the Department of Justice guidelines and have taken the common elements of what everyone agrees is an acceptable and preferable EMS. Any business within the company can use the final system for getting certified under ISO 14001 if they choose. Each business will base its decision on marketing: if their customers ask for it, they want to be in the position to offer it.

Some of their sites are reluctant to go out and get ISO 14001 certification in and of itself. Given the high cost of ISO 9000 certification, there are real concerns as to whether there was any market advantage in doing that. No company that the respondent has talked to wants to become ISO 14001 certified unless there is a market advantage in becoming certified. There is also a significant cost in becoming certified.

Weyerhaeuser questions whether their environmental management system will be any better after a third party comes in and verifies at a high cost to the company what it is already doing. They do not believe that ISO 9000 certification had any impact in the market place or improved their operations substantially; because they were already doing what the standard required.

ISO [certification] does not make us more responsible. What makes us responsible is that we have environmental policies within our company and whether or not we set up processes and procedures to adhere to that policy, whether we are [certified] under ISO 14001 or not.

E. Other information

None provided.

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NOTES

¹The Chemical Manufacturer's Association (CMA) Responsible Care(r) Initiative is a voluntary effort of the members to foster continuous improvement in the areas of health, environment and safety. In 1988, the CMA launched Responsible Care to respond to public concerns about the manufacture and use of chemicals. Responsible Care requires member companies to: (a) improve performance in health, environment and safety, (b) listen and respond to public concerns, (c)assist each other to achieve optimum performance and (d) report their progress to the public. The key elements in Responsible Care are Guiding Principles and Codes of Management Practice, which focus on management practices in six specific areas. The Codes are: Community Awareness and Emergency Response, Pollution Prevention, Process Safety, Distribution, Employee Health and Safety, and Product Stewardship.

²Just recently, OxyChem successfully completed an external review of its implementation of Responsible Care(r). This management systems verification validated the integration of the OxyChem environmental management system with other business processes and with the Responsible Care(r) principles.