The environmental management program consisted of three control systems for hazardous waste: disposal-site inspection, auditing for compliance, and waste reduction. With these systems environmental managers tried to optimize costs and liabilities, balancing waste disposal and reduction In addition, they weighed the question of extending the hazardous waste programs to Allied-Signal's non-US operations. As the European Community had moved toward harmonization of its member countries' environmental standards during the early 1990s, Plaut had heard discussion in Europe that the EC liability standard for hazardous waste would soon be made more stringent perhaps closer to the American standard. He believed that industrial companies would repeat their US experience with liability costs. With remediation of Superfund sites averaging between $25 million and $40 million each, and rising, Allied-Signal had good reason to worry about similar liability standards in Europe or elsewhere. The potential benefits of applying the company's US waste controls worldwide were clear not only would Allied-Signal reduce its liability risk, but it would gain the "green" reputation that the three executives felt the company deserved. (They did not underestimate the value of the latter, Allied had been hurt badly when saddled with a negative reputation during the 1970s.) But there were several problems with this idea. It certainly would be expensive, and might prove inappropriate. The US program evolved from US environmental law, which observers viewed as far from ideal.1 It might prove too difficult to praft the complex US procedures onto the dissimilar corporate cultures of the company's non-US facilities. In some countries, moreover, the safe disposal facilities that Allied Signal's environmental policy required did not exist. Disposal Site Inspection James Wong, Jr., whose title was then Corporate Manager for Hazardous Waste Control, knew that many of the commercial disposal and reclamation facilities operated in the late 1970s were suspect, and might later lead to environmental problems. He assisted different Allied plants as they began to scrutinize the structural integrity and soundness of operations of the disposal sites that they used. Before too long some glaring weaknesses in this procedure had become evident. The inspections were done with varying degrees of expertise. The decentralized nature of the program led to much repeated effort, one disposal site received visits from different Allied employees eight times over a six-month period. In 1983 HS&ES managers decided to set up a comprehensive, centralized program for the inspection of all disposal sites They purged all inspection data gathered to date - good and bad - and hired technical experts and lawyers to develop procedures and an in-house expertise. Expert consultants inspected sites first, Allied employees reinspected later. Each site was reinspected every third year. Allied wed three criteria to judge disposal sites the risk associated with past activities at a site (for example, pre-RCRA activities) the risk associated with current activities (that is, the technical soundness of a disposal firm's operations), and the financial position of the disposal firm. The last criterion came into play where disposal companies promised indemnity should their work be found wanting. Though reassuring, such pledge only reduced liability risk they did not eliminate it. Allied retained the Corporate Waste Site Inspection Program even after the 1984 RCRA Reauthorization Act. In that law Congress acknowledged that the original act's guidance for disposal facilities was too lenient, and set more exacting construction and performance standards. The result was a sharp decrease in the number of facilities operating in the United States from nearly 100 landfills in 1980, for example, to 20 by 1991. Still, Allied found that many of the post-1984 landfills fell short of its criteria. It rejected a full two thirds of those it inspected. Wong explained: "We have to be at the forefront for things that the government for one reason or another doesn't do. Some types of sites, for instance, don't have to be monitored for ground water pollution. Yet that becomes the focus during most Superfand remedial projects. We have to make sure we're not vulnerable to future changes in the law." In 1986, after EPA began enforcing RCRA's reauthorization, Allied-Signal converted its site inspection program into a consortium. A dozen large companies paid to join, receiving the cost savings from Allied'o inspection of RCRA facilities. As the number of available hazardous waste disposal facilities dwindled, some of the company's plants faced expensive foes for shipping their waste long distances to approved sites. Where costs were exorbitant, a few plants began using unapproved facilities. That practice ended abruptly in 1988, after Hennessy and other top managers realized that Superfund payments would cost the company tens, even hundreds of millions annually for many years to come. Auditing for Compliance Heeding the final recommendation of Arthur D. Little Allied's board set up an auditing program to check on its own plants' compliance with environmental regulations and company policies, The auditing team was stationed in the HS&ES office, where it would answer to corporate rather than sector managers, and was told to develop a methodology for plant visits. The auditors soon found that because of the complexity of both environmental regulations and Allied's facilities, proper reviews took days rather than hours. The HS&ES Surveillance Program covered approximately 50 of the company's 240 production facilities annually. Low-risk plants received an audit every sixth year, higher risk facilities were visited more often About a dozen of the 50 annual visits covered hazardous and non- hazardous "solid") waste, with the remainder reviewing the plants other environmental health, and safety procedures, Audit teams consisted of company auditors, plant employees, and, for independent verification, outside consultants. They worked from lengthy checklists, which, in the case of the hazardous and solid waste audit, required specific answers to more than a hundred questions. "This kind of procedure is necessarily extremely detailed," said Ralph L. Rhodes, Director of Corporate Health Safety & Environmental Audit. Rhodes and other members of the audit team compiled a report after each visit, listing omissions and incorrect procedures with great detail. "Most things on the reports] refer to procedures not followed or meetings not held, things like that." Rhodes said. For example, "a detailed waste analysis and TCLP [Toxicity Characteristic and Leaching Procedure, a standard test) was not conducted for solvent-contaminated Q-tips that were discarded as solid waste. Or another example, the Waste Minimization Committee didn't meet -- not an earthshaking thing, but the tiniest thing can multiply. All reports were sent to the operating sectors' top management. The internal auditing group. including the outside consultants, reported their findings of the program's adequacy to the board twice each year. At a sampling of sites, auditors ers, ULIS DIE wey was the way everyone did business. Then it turned out it was an aberration." In 1988, for instance, Allied-Signal was the third-largest emitter on the list, behind E.I. du Pont de Nemours and Company and Monsanto Company - both of which had chemicals sales ten times greater than Allied-Signal Responsible Care The HS&ES staff in Morristown reconsidered the company's waste reduction efforts. They received guidance from a program debuting at the chemicals industry's main trade association, the Chemical Manufacturers Association (CMA). In response to the TRI and to the outpouring of public dismay following the Bhopal disaster (in which 3,000 residents of Bhopal, India, died in 1984 after a toxic chemical emitted from a Union Carbide plant), CMA had drafted a one-page statement of principles and six lengthier codes of management practices for its membership. The codes obliged member companies, who comprised 90% of the chemicals capacity in the United States, to adhere to "responsible" manufacturing and handling principles. To give the program teeth, the principles and codes were to be made obligatory, non- compliance was to be grounds for expulsion from CMA CMA management knew such draconian self. policing was unprecedented for any industry. Still, the members felt it necessary in order to reverse the public's overwhelmingly negative opinion of the chemicals industry.20 In September 1988, after much discussion, the CMA board agreed unanimously to go with the new program, which was named Responsible Care (CMA did not proclaim it publicly until 1990.) A five-page Pollution Prevention Code sought voluntary, ongoing, long-term reductions in all pollutants released to the environment. As a corollary, it seeks steady reduction in the amount of wastes generated by member companies. High priority is given to employee and community input in these processes and to the promotion of similar reduction by customers, suppliers, other companies, and governments. Progress is measured annually.21 Allied-Signal was an early, enthusiastic participant in Responsible Care. And although some observers were dubious about the program's power to force reductions among CMA members environmental activists, for example, challenged the validity of a method lacking outside verification22 - Allied-Signal managers later credited Responsible Care with giving shape to their revamped waste reduction program In April 1989, not long after signing on to Responsible Care, Frederic M. Poves, president of the Engineered Materials Sector (EMS) and a member of CMA's executive board, sent a memorandum to all EMS managers. Noting that one of the elements of Responsible Care was "waste reduction module" Poses announced just such a policy for the sector: I am asking you to reconsider the air emission, water discharge, and solid waste 23 control programa24 at each of your locations, and to kick off this effort by doing the following: G-Delineate and quantify all losses from your operations (air, water, and solid wastes). - List those projects or process and administration changes that could incrementally reduce the above streams to some minimal level. These projects could be over and above those required for regulatory compliance. A second memo, from EMS Vice President for Operations, L. Ray Taunton, accentuated Poses' request, calling it the beginning of a program to focus our Sector's waste reduction efforts." Taunton promised managers support on recognizing waste reduction opportunities, identifying top-priority projects, and monitoring their progress. He assigned Lawrence M. Fischer, then Manager of Solid Waste for EMS, to coordinate the venture. Larry Fischer had been with the company since 1963. He had seen the 1985 waste reduction program sink with hardly a trace in some divisions, and knew a much greater exertion from environmental managers would be required for the new undertaking to be different . "In our company] culture it wouldn't work for Corporate to say "Do this' and move on," he said. In a firm as geographically and functionally diverse as Allied-Signal memos from headquarters tended to get lost, particularly if unrelated to plants' core productive and profit-making roles. Yet in perceiving that obstacle, Fischer uncovered a fundamental dilemma of waste reduction because HS&ES managers (though mostly engineers) were ignorant of the production dynamics at plants, they were reliant upon plant engineers to tell them how much reduction was feasible, Requiring each facility to meet the same flat goal would have been suboptimal - even damaging, if it caused slowdowns in production. The first great difficulty that Fischer and his environmental management peers faced with the waste reduction program was in persuading line managers and plant engineers to enlist. Fischer began by canvassing HS&ES employees within the EMS sector for both "baseline data on hazardous waste generation and suggestions on making the enterprise work. He also emphasized the compilation of lists of waste-reducing projects at each plant. The plant and division level HS&ES employees were given responsibility for prodding plant committees on waste, of which some had been formed in response to earlier environmental regulatory pressures. The priority accorded the endeavor was heightened by a meeting that Fred Poses devoted to waste reduction in October 1989 He pronounced the initial labor at data-gathering and project definition successful accorded the endeavor was heightened by a meeting that Fred Poses devoted to waste reduction in October 1989. He pronounced the initial labor at data gathering and project definition successful enough to proceed with goal-setting, Poses asked all EMS plants to set short-term (1990) and medium-term (1994) goals for hazardous waste reduction, based on 1988 baseline levels. He distributed new summary forms for internal reporting, to be filled out quarterly Ray Taunton soon added another form, for tracking the status of individual projects (see Exhibit 5). In a 1989 memo, Fischer had enumerated several justifications for waste reduction, to be used to sway line employees. They included lessened operating cost, relief from burdensome regulations, and improved local community relations -- all traditional concerns of chemicals plant employees. To that roll he later added two more eased liability risk and an improved to d reputation for "green" behavior. The new bases, cited just before Earth Day 1990, reflected the striking increase in the prominence of environmental issues in American society. To capitalize on the connection between green-ness and hazardous waste minimization, Fischer introduced a logo for the waste reduction program: "AS:AP," for "Allied-Signal: Against Pollution with an implication of haste (see Exhibit 6). Building on the logo, Fischer and a communications consultant developed a bimonthly newsletter at a cost of $25,000. With a circulation of 500 for its initial issue in December 1990, AS:AP was a distinct publication meant to highlight the existence of the waste reduction program. Articles on waste reduction had run previously in sector and plant newsletters only. AS AP emphasized the program's importance to top EMS management - a point evident in the front-page identification of green-ness and hazardous waste minimization, Fischer introduced a logo for the waste reduction program: "ASAP" for "Allied-Signal: Against Pollution with an implication of haste Building on the logo, Fischer and a communications consultant developed a bimonthly newsletter at a cost of $25,000 With a circulation of 500 for its initial issue in December 1990, ASAP was a distinct publication meant to highlight the existence of the waste reduction program. Articles on waste reduction had run previously in sector and plant newsletters only. AS AP emphasized the program's importance to top EMS management -- a point evident in the front-page identification of the publisher, Poses.

Questions: 1. How has the governments hazardous waste regulations affected Allied-Signal? 2. What are the organizational capabilities necessary to implement such strategy? 3. Going forward through the mid-1990s, should Callahan recommend any changes to this system?