Aspects Impact Your Bottom Line

Image credit: THAM YUAN YUAN via Pixabay By thinking of our environmental aspects and impacts as part of inventory, each with its embedded cost, asset and liability, we can get a clearer picture of their effect on our triple bottom line. As we start a production job, we pull certain items out of inventory – metal, paper, components, hardware, etc. – and we also are ‘pulling’ power, lubricants, perhaps air or water pollution, and waste, just to name a few. Those also have a cost, and a residual effect on Planet Earth (no matter what one believes about climate change). Where do those come from, how could we track them and can we reduce them? That’s really what environmental Aspects, Impacts and management are talking about (see related post, “Getting Credit for Being Green”).

For generations, manufacturers ignored these costs, and built up an environmental debt or ‘inventory outage,’ underscored when the Cuyahoga River caught fire in Cleveland OH, June 22, 1969. The river had been an open sewer for multiple manufacturers, and that event became the focus of national attention and was part of the germination of the EPA. According to Smithsonian magazine, the river had caught fire at least eight times before! Gradually, the public and government began to think about the total costs of producing goods – – and this is how an environmental management system also encourages us to begin thinking.

Why are the environment and safety like inventory? ISO 14001 starts off by asking us to measure our aspects and our impacts as well as our compliance obligations. Aspects are the elements of our daily activities that could have an environmental impact. Impacts are how those elements could affect the environment. Compliance obligations are given to us by regulatory bodies, such as OSHA and EPA, about how we should control our aspects to prevent impacts. So, for instance, our company might use a certain amount of electricity every day, and the generation of that electricity has a direct cost plus an effect on the environment. We might use a certain amount of metal and lubricating fluids to produce parts; the scrap that is left over, and the waste lubricating fluid are all part of production, just like the metal itself. ISO 14001 gives guidelines for how to measure each of those and set up programs to control and, in time, reduce them. Again, if we think of all these aspects – not just the raw materials —as inventory items with costs, we may get a clearer picture.

Cleaning materials are more critical than we might think, and so are residues of other chemicals used in production if they get washed down the drain along with mop water, causing water pollution – and possible fines and worse! So those materials are not only on the inventory shelf, they are an Aspect on the environmental inventory.

Similarly, the wear and tear on the bodies of our employees could be recognized as an Aspect, and as an inventory item with its own cost and liabilities. The Impact of loud sounds, or lack of adequate ventilation in Welding, or littered floor surfaces, can all raise true costs. Slip-and-fall injuries, back or shoulder or hand injuries are all common and nearly all are preventable, using tools ‘in inventory’ that we already have in place like PPE and machine guards. Many of these are compliance obligations, but are often left ‘on the shelf’ either by non-compliance or by not mandating them to employees in those areas.

Employee turnover is another Aspect that can create an ‘inventory outage’ or ‘line down,’ and it comes from culture – some of which is about safety and all of it is led by management. The psycho-social environment can either add value to the company or be a hidden inventory cost as well as a product cost. How do you measure that Aspect? How are employee concerns and suggestions treated? Are there incentives for participating in improvement projects? There are many experts who can speak to you about that, but we recommend looking at it. As you look around in your firm, what ‘environmental inventory items’ could you begin to measure? What is their impact on your costs, your employees, the environment? What are you already using to control them, and are the controls working? Is there another way to consider the aspect that would yield better results? What would an outsider think of your impact on the environment? Would your neighbors and your city be pleased to find out you are actively controlling pollution, waste, energy and water use, and employee safety? If so you can consider certification to ISO 14001 – ask us how to get started!