Environmental-Sustainability Performance and Improvement in Its Processes - Essay Example

 Environmental audit, according to International Chamber of Commerce, has been defined as “a management tool comprising a systematic, documented, periodic and objective evaluation of how well environmental organization, management and equipment are performing with the aim of helping to safeguard the environment" (Vinten, 1996). This implies that management must have control over environmental protection and meet all the regulatory requirements. Hence there must be a management system in place to provide information of environmental performance against predetermined targets and ensuring that those targets are met. Environmental audit demonstrates a firm’s commitment to environment improvement. Companies may adopt environmental audit under direct or indirect pressure. Direct pressures are those that encourage the introduction of environmental audit while the indirect pressures come from the range of threats and oppurtunities presented by environmental awareness among customers, competitors and legislators (Maltby, 1995). Environmental performance has to be checked regularly as it also helps to assess whether systems are in place to manage environmental responsibilities. An audit is simpler than an assessment or inspection which offers an opinion primarily based on professional judgment (Welford, 1994). It has to be a methodological examination of the procedures which verifies the legal requirements and whether internal policies are being met. Audit has to be repeated periodically and it should also develop in terms of sophistication and scope over time. An effective audit system would help the company to anticipate environmental damage and therefore prevent it from happening. Welford (1994) elaborates the aims and objectives of environmental audit. The overall aim of environmental audit is not only to enable environmental improvement within the organization but to safeguard the environment and minimize the risks to human health. Environmental audits involve gathering information, analyzing that information, making objective judgments which should be based on evidence and knowledge of the industry and of the environmental standards and legislation, and finally reporting to the senior management with recommendations and possible strategies for the implementation of the findings. Hence an audit should have three stages. The first or the pre-audit stage is basically the planning state where the nature and scope of the audit is ascertained and a framework devised. It also entails selecting members of the audit team and allocating resources to these strategies and policies. It is also essential to understand the industry and the company to be audited. The second stage is the on-site audit which includes an inspection of the records maintained by the company like certificates of compliance, discharge consents and waste licenses. It also examines the company’s process in the event of spills and accidents. Internal control measures have to be assessed. The third and the final stage involves confirming that there is sufficient evidence on which to base and justify the findings. The audit findings then have to be reported in written form and then develop an action plan to address any deficiencies. In the case of Smithfield Food Inc. (SFI) it is not possible to carry out on-site audit and hence the audit is being based on the findings and as reported by the company. They have more than 50 brands of pork and turkey products and more than 200 gourmet foods but their mission is to be ethical food industry leaders while setting industry standards. The company’s mission does not categorically state maintaining the environmental regulations. They only focus on ethical standards and corporate social responsibility. Their core value however mentions that they would ‘protect the environment’ and have positive impact on the communities (Smithfield, About). They have a strong framework of governance, management, and accountability for ethical behavior. Their Chief Legal Officer oversees the issues of compliance including issues related to the environment. The Vice President for environment and corporate affairs, who is a part of the compliance committee, is accountable to the board. All serious incidents are reviewed at the executive level (Stewardship Report, 2003). The Corporate Environmental Affairs Group then performs a review of the management steps taken to avoid recurrence. They have an Environmental Management Systems (EMS) which helps to identify the activities that could have an impact on the environment. The company also has an employee accountability policy where employees are expected to comply with the regulations hundred percent (Stewardship Report, 2003). Each employee has to know and understand the legal and policy requirements and to notify the management if they feel there is a violation at any point. However, the company does have an environmental system in place for its various processes. They do have an audit program in place and follow regulatory reporting (Environmental Report, 2001). As an incentive to the employees, they institute annual environmental awards program. They maintain energy and water conservation and process safety management and risk management programs. They have pollution prevention designs in place and they also take up reporting initiatives. They have solid waste reduction process and land management policy development as well. The company addresses the environmental issues through a proactive, risk management approach. In 2000 they adopted an environmental policy committing the company and its employees to environmental performance goals based on continuous improvement. They took advantage of oppurtunities offered by technology and innovation. Their goals include achieving 100 percent compliance with environmental regulations, continuous improvement, reduce emission and waste generation, improve the efficiency in the use of raw materials, reduce operating and capital costs and also communicate its environmental performance and policies to the public. SFI imposes environmental standards on and seeks to acquire environmentally friendly products and materials from all their associates. Even if the company holds a minority interest in any company, SFI extends its environmental management expertise to them. SFI also encourages them to utilize environmental compliance practices that are consistent with their own. They also extend such efforts to their joint ventures. The company has contract with 1950 contract farms of which 1700 are in the US. Even though the contract farmers operate independent business, SFI ensures that all the contract farms comply with all applicable environmental laws, regulations and permit requirements. If the farmers violate the permit requirements, they stand the risk of losing the contract or the live stock can be removed from their farms till the problem is solved. The company does not report about the contract farmers in their reporting but they still insist that the growers prioritize regulatory compliance and the company informally monitors their progress also. They have specific operations in place to minimize environmental damage. Solids from farm wastes can be removed from water and used to convert this into green energy like steam or electricity. SIC sponsored studies by North Carolina State University to modify or replace current methods of swine waste disposal on hog farms. SIC adopted ISSUES (Innovative Sustainable Systems Utilizing Economical Solutions) which has helped to enhance the performance of existing lagoons (Environmental Report, 2001). When this is paired with Methane in a microturbine it harvests the energy value of hog manure to create green electricity. The company continually sponsors studies on environmental protection and commits resources and manpower. They have an integrated land management program that ensures the stewardship of all lands on more than 200 company owned and operated farms in North Carolina. This would ensure continued biological diversity of wetlands. The land management program ensures water quality protection, soil conservation and wildlife habitat development. In addition they have a dedicated research and development unit that is responsible for identifying environmentally responsible and economical technologies for the operations (Stewardship Report, 2003). The organization encourages and reward environmental responsibility in its employees’ workplace behaviors as reported by them. The company has an environmental compliance committee and also institute environment excellence awards annually. Environmental awareness is a part of everyone’s job at SFI. They encourage employees to offer solutions that could further enhance their efforts in environmental protection and management programs. They started the awards program in the year 2000. In 2004, the company data revealed a company-wide jump in emissions and decline in efficiencies for a wide range of metrics and the cause is not clear. They however recognize that plant turnover has caused variations in the absolute environmental data. In 2006 a number of purchases had taken place and the newer plants were operating below production in the months following acquisition. Their environmental management system helps them to uncover inefficiencies. Global climate change has posed a challenge for the company to address the issue of reduction of greenhouse gas emissions. The company expects that concern about climate change and the restrictions on greenhouse gas (GHG) emissions would increase. The use of market-based approach to reduce GHG could pose financial risks for the company but at the same time it could offer opportunity to capture value. It could help create credits for their biogas utilization projects. The energy prices are escalating and they have a strong financial incentive to use this energy. They are trying to focus on how to use energy efficiently and reduce the GHG as they have the GHG occur at several points in their operations. They are also exploring voluntary programs like Chicago Climate Exchange (CCX) and the EPA’s Climate Leaders program. Membership to such programs would lead to specific reduction targets within our overall efficiency efforts. SFI has been attempting to bring in efficiencies in their operations which would not only increase the efficiency in energy consumption but also simultaneously bring financial impact. For instance, their Mason City plant at Iowa has been able to reduce the amount of natural gas it needs to heat the water by 34 percent. This has reduced the plant’s energy use by an average of 50 million BTUs each day and decreased its emissions of carbon dioxide, a major greenhouse gas. To further ensure environmental protection they use natural gas wherever possible and try to eliminate the facilities that require oil. Individual plants also burn biogas to reduce natural gas use. Their environmental reports carry details of the use of biogas, natural gas and liquid propane gas. As far as reporting on GHG is concerned they include data on emissions of several GHGs from 11 first processing and 33 further processing facilities but these figures do not include contributions from cattle feedlots, hog feedmills, and the transportation of live feed, animals, and food products. They need to capture a greater portion of the carbon footprint. Water is extensively used for different processes and for the last few years they have been making efforts towards water conservation. The company has a history of reporting key data, including our use of energy, water, chlorine, and ammonia group-wide. They also disclose air emissions, solid waste generation, and recycling rates. They use absolute data to track the overall environmental performance. This helps to track and compare efficiencies of their operations. In March 2001, Carroll’s Foods, a part of SFI, became the world’s first agricultural livestock company to receive ISO 14001 certificate for environmental management systems on its farms (Environmental Report, 2001). ISO certification is the gold standard for environmental excellence. This implies that the company has clearly defined methods of monitoring and measuring the environmental impacts. They had started developing an environmental management system as early as 1997 to meet the stringent certification requirements of the Geneva-based International Organization for Standardization. In 2004, the company’s pork processing plant in Tar Heel, North Carolina, was the world’s first major meat-processing plant to achieve ISO 14001 certification. Even their Polish affiliate received ISO 14001 certification for its 28 farms in 2005. These certificates by themselves do not guarantee environmental performance but the ISO guidelines require a commitment to a long-term management plan. This approach is having its intended effect by improving environmental management and performance. The company strives to be in full compliance at all times. They track several indicators of compliance including notice of violations (NOVs) and penalties. Their program – Operation Zero tries to reduce the NOVs to zero. They attempt to improve the coordination and communication within the company to eliminate the NOVs, to increase training conference attendance, earn third party recognition and share results annually with management. At their plant in New Jersey they had received 14 NOVs in 2006 for waste water permit exccedances. The subsequently made upgradation of the waster water treatment system and as a result they received fewer NOVs in 2007. Their air emissions are also attracting fines and needs attention. SFI also maintains a toxic release inventory data base, the data for which is gathered from their 33 sites and it represents the amount of chemicals kept on site. This data helps the management to take informed decisions about the chemical management practices. They even capture energy from waste water. To improve its environmental-sustainability performance the company should focus on waster water treatment and control of GHG and other air pollution. Even though they have an EMS and an employee accountability program, they continue to receive NOVs and pay fines. This means there is a lack of effective governance at some point. While they mahe reduced the number of NOVs in 1007 from 2006, the fact remains that they still do receive the NOVs. They claim to have Operation Zero in place but that does not seem to be effective. An audit of Smithfield Food Inc has been carried out through the available details on their website. No public information was available and nor could data be collected from the environmental protection agencies. Nevertheless it can be seen that Smithfield Food Inc. is committed to environment sustainability and has its management system in place. It in ingrained into their mission and core values. They have a separate Vice President in charge of this department and supervisors to assist him. The employees too are accountable for any flaws and it is their responsibility to understand and know the regulations as well as compliance. They do have effective system for various processes in place but they still receive NOVs which suggests that there is scope for improvement in their processes. To some extent it can be said that they have adopted the regulations under pressure. Violating the regulations attract fines and also stopping of certain operations. This often is an incentive to abide by the laws. The company has also demonstrated that it is environmentally alert as they have sponsored certain technological development and research programs. The findings have helped the company to implement them in their environment sustainability programs. They have received ISO 14001 certificate of excellence which not only motivates the employees but also shows that the company has the methods for monitoring and measuring the environmental impacts. All their compliance data, the fines paid by them and the violations are available to the public. They are making attempts to minimize the use of natural gas and concentrate on biogas thereby also reducing their costs. They encourage and reward their employees for the past few years. The names of the employees are available on the reports. They ensure that all their associates and the contract farmers also abide by the laws and regulations for environment sustainability. However, the company does need to focus on reducing the NOvs and need to incorporate a new policy. They would first have to identify the operation or specific plant from where the maximum NOVs are generated and the fines paid. The next step would be to identify the people responsible for this. The operations would have to be studied to determine where the problem lies and then change has to be incorporated. This would have to be reviewed by their EMS people to ensure there is no recurrence. References Environmental Report, 2001, 'Smithfield Foods', retrieved online 22 February, 2009 from http://www.smithfieldfoods.com/PDF/SMF_enviro_report_01.pdf Maltby, J 1995, 'Environmental audit: theory and practices', Managerial Auditing Journal, vol. 10, no. 8, pp. 15-26 Smithfield. about, retrieved online 22 February, 2009 from http://www.smithfieldfoods.com/our_company/about_us.aspx Stewardship Report, 2003, 'Environment, Employee Safety and Animal Welfare', retrieved online 22 February, 2009 from http://www.smithfieldfoods.com/PDF/SFD_StewardshipReport_03.pdf Vinten, G 1996, 'The objectives of the environmental audit', Environmental Management and Health, vol. 7, no. 3, pp. 12–21. Welford, R 1994, 'Improving Corporate Environmental Performance', Environmental Management and Health, vol. 5, no. 2, pp. 6-10 Read More