G U I D E B O O Kon ENVIRONMENTAL MANAGEMENT SYSTEM,

POLLUTION PREVENTION/CLEANER PRODUCTION

and ENVIRONMENTAL COST ACCOUNTING

ENVIRONMENTAL MANAGEMENT BUREAUDepartment of Environment and Natural Resources

2003

MMMMMessageessageessageessageessage

TTTTTHE DeE DeE DeE DeE Deparparparparpartment of Entment of Entment of Entment of Entment of Envirvirvirvirvironment and Naonment and Naonment and Naonment and Naonment and Naturturturturtural Resoural Resoural Resoural Resoural Resourcescescescesces

(DENR), (DENR), (DENR), (DENR), (DENR), thr thr thr thr through the Enough the Enough the Enough the Enough the Envirvirvirvirvironmental Manaonmental Manaonmental Manaonmental Manaonmental Managggggement Burement Burement Burement Burement Bureaueaueaueaueau

(EMB),(EMB),(EMB),(EMB),(EMB), is g is g is g is g is grrrrreaeaeaeaeatltltltltly pleased to ofy pleased to ofy pleased to ofy pleased to ofy pleased to offffffer this Guideer this Guideer this Guideer this Guideer this Guidebook on Enbook on Enbook on Enbook on Enbook on Envirvirvirvirvironmental Manaonmental Manaonmental Manaonmental Manaonmental Managggggement System,ement System,ement System,ement System,ement System,

PPPPPollution Prollution Prollution Prollution Prollution Preeeeevvvvvention/Cleaner Prention/Cleaner Prention/Cleaner Prention/Cleaner Prention/Cleaner Production and Enoduction and Enoduction and Enoduction and Enoduction and Envirvirvirvirvironmental Cost onmental Cost onmental Cost onmental Cost onmental Cost AccountingAccountingAccountingAccountingAccounting. . . . . WWWWWith thisith thisith thisith thisith this

GuideGuideGuideGuideGuidebook,book,book,book,book, w w w w we hope thae hope thae hope thae hope thae hope that bt bt bt bt businesses will be encourusinesses will be encourusinesses will be encourusinesses will be encourusinesses will be encouraaaaaggggged to consider the ged to consider the ged to consider the ged to consider the ged to consider the gains of linkingains of linkingains of linkingains of linkingains of linking

up morup morup morup morup more ce ce ce ce closellosellosellosellosely with the gy with the gy with the gy with the gy with the gooooovvvvvererererernment and with the commnment and with the commnment and with the commnment and with the commnment and with the community and ciunity and ciunity and ciunity and ciunity and civil society invil society invil society invil society invil society in

ensurensurensurensurensuring sustainaing sustainaing sustainaing sustainaing sustainabbbbble dele dele dele dele devvvvvelopment.elopment.elopment.elopment.elopment.

TTTTThe philosophhe philosophhe philosophhe philosophhe philosophy of eny of eny of eny of eny of envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement has come a long wement has come a long wement has come a long wement has come a long wement has come a long waaaaayyyyy. Muc. Muc. Muc. Muc. Muchhhhh

prprprprprooooogggggrrrrress has been ress has been ress has been ress has been ress has been realizealizealizealizealized in making bed in making bed in making bed in making bed in making businesses and other rusinesses and other rusinesses and other rusinesses and other rusinesses and other relaelaelaelaelated sectorted sectorted sectorted sectorted sectors acs acs acs acs acknoknoknoknoknowledgwledgwledgwledgwledgeeeee

the vthe vthe vthe vthe value of intealue of intealue of intealue of intealue of integggggrrrrraaaaating enting enting enting enting envirvirvirvirvironmental conceronmental conceronmental conceronmental conceronmental concerns in actins in actins in actins in actins in activities,vities,vities,vities,vities, a a a a at the onset. t the onset. t the onset. t the onset. t the onset. TTTTTherherherherhere is noe is noe is noe is noe is no

other wother wother wother wother waaaaay fy fy fy fy for bor bor bor bor businesses to gusinesses to gusinesses to gusinesses to gusinesses to go. o. o. o. o. TTTTTherherherherhere is just no ture is just no ture is just no ture is just no ture is just no turning bacning bacning bacning bacning back. Evk. Evk. Evk. Evk. Everererereryyyyyone mone mone mone mone must considerust considerust considerust considerust consider

the impact of their actithe impact of their actithe impact of their actithe impact of their actithe impact of their activities on the envities on the envities on the envities on the envities on the envirvirvirvirvironment and the commonment and the commonment and the commonment and the commonment and the communities theunities theunities theunities theunities they liy liy liy liy livvvvve and we and we and we and we and worororororkkkkk

in.in.in.in.in.

WWWWWe hae hae hae hae havvvvve high hopes thae high hopes thae high hopes thae high hopes thae high hopes that with this Guidet with this Guidet with this Guidet with this Guidet with this Guidebook,book,book,book,book, the DENR, the DENR, the DENR, the DENR, the DENR, thr thr thr thr through the EMBough the EMBough the EMBough the EMBough the EMB,,,,,

will fwill fwill fwill fwill facilitaacilitaacilitaacilitaacilitate underte underte underte underte understanding of hostanding of hostanding of hostanding of hostanding of how the enw the enw the enw the enw the envirvirvirvirvironmental impact of actionmental impact of actionmental impact of actionmental impact of actionmental impact of activities can bevities can bevities can bevities can bevities can be

anticipaanticipaanticipaanticipaanticipatedtedtedtedted,,,,, measur measur measur measur measured anded anded anded anded and,,,,, e e e e evvvvventuallentuallentuallentuallentuallyyyyy,,,,, mana mana mana mana managgggged as wed as wed as wed as wed as well as cell as cell as cell as cell as clarlarlarlarlarify the rify the rify the rify the rify the roles of boles of boles of boles of boles of business,usiness,usiness,usiness,usiness,

gggggooooovvvvvererererernment rnment rnment rnment rnment reeeeegulagulagulagulagulatortortortortors and comms and comms and comms and comms and communities in the prunities in the prunities in the prunities in the prunities in the process. Specifocess. Specifocess. Specifocess. Specifocess. Specificallicallicallicallicallyyyyy,,,,, it is hoped tha it is hoped tha it is hoped tha it is hoped tha it is hoped that thist thist thist thist this

GuideGuideGuideGuideGuidebook will prbook will prbook will prbook will prbook will prooooovide a better undervide a better undervide a better undervide a better undervide a better understanding of the rstanding of the rstanding of the rstanding of the rstanding of the releeleeleeleelevvvvvance of enance of enance of enance of enance of envirvirvirvirvironmentalonmentalonmentalonmentalonmental

manamanamanamanamanagggggement system,ement system,ement system,ement system,ement system, pollution pr pollution pr pollution pr pollution pr pollution preeeeevvvvvention and contrention and contrention and contrention and contrention and control,ol,ol,ol,ol, and en and en and en and en and envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggementementementementement

accountingaccountingaccountingaccountingaccounting. . . . . WWWWWhile documenting our while documenting our while documenting our while documenting our while documenting our wororororork,k,k,k,k, e e e e experxperxperxperxperiences and the lessons leariences and the lessons leariences and the lessons leariences and the lessons leariences and the lessons learnednednednedned,,,,, w w w w we hopee hopee hopee hopee hope

thathathathathat mort mort mort mort more people will re people will re people will re people will re people will realizealizealizealizealize thae thae thae thae that gt gt gt gt good enood enood enood enood envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement is gement is gement is gement is gement is good food food food food for bor bor bor bor business.usiness.usiness.usiness.usiness.

WWWWWe all hae all hae all hae all hae all havvvvve one we one we one we one we one worororororld to sharld to sharld to sharld to sharld to shareeeee. Let it be our. Let it be our. Let it be our. Let it be our. Let it be ours to prs to prs to prs to prs to protect.otect.otect.otect.otect.

ELISEA G. GOZUNELISEA G. GOZUNELISEA G. GOZUNELISEA G. GOZUNELISEA G. GOZUNSecrSecrSecrSecrSecretaretaretaretaretaryyyyy,,,,, DENR DENR DENR DENR DENR

MMMMMessageessageessageessageessage

THE bHE bHE bHE bHE business commusiness commusiness commusiness commusiness community is immenselunity is immenselunity is immenselunity is immenselunity is immensely pleased to see thisy pleased to see thisy pleased to see thisy pleased to see thisy pleased to see this EMB Guide EMB Guide EMB Guide EMB Guide EMB Guidebook fbook fbook fbook fbook finallinallinallinallinally pry pry pry pry produced because it comes aoduced because it comes aoduced because it comes aoduced because it comes aoduced because it comes at a mostt a mostt a mostt a mostt a most

opporopporopporopporopportune timetune timetune timetune timetune time. F. F. F. F. Fiririririrst,st,st,st,st, it can bank on mor it can bank on mor it can bank on mor it can bank on mor it can bank on more than a decade of se than a decade of se than a decade of se than a decade of se than a decade of swwwwweeeeeeeeeepingpingpingpingpingccccchanghanghanghanghanges in the wes in the wes in the wes in the wes in the waaaaay companies ary companies ary companies ary companies ary companies are dealing with ene dealing with ene dealing with ene dealing with ene dealing with envirvirvirvirvironmental conceronmental conceronmental conceronmental conceronmental concerns as thens as thens as thens as thens as they do by do by do by do by do business.usiness.usiness.usiness.usiness.TTTTThis Guidehis Guidehis Guidehis Guidehis Guidebook also rbook also rbook also rbook also rbook also relies on the gelies on the gelies on the gelies on the gelies on the grrrrreaeaeaeaeat strt strt strt strt strides thaides thaides thaides thaides that hat hat hat hat havvvvve been made to re been made to re been made to re been made to re been made to refefefefefine the kine the kine the kine the kine the keeeeey notionsy notionsy notionsy notionsy notionsinininininvvvvvolvolvolvolvolved in ened in ened in ened in ened in envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement,ement,ement,ement,ement, suc suc suc suc such as pollution prh as pollution prh as pollution prh as pollution prh as pollution preeeeevvvvvention,ention,ention,ention,ention, and en and en and en and en and envirvirvirvirvironmental costonmental costonmental costonmental costonmental cost

accounting, among others.accounting, among others.accounting, among others.accounting, among others.accounting, among others.

BeBeBeBeBeyyyyyond theseond theseond theseond theseond these,,,,, the Guide the Guide the Guide the Guide the Guidebook is surbook is surbook is surbook is surbook is sure to fe to fe to fe to fe to find wide rind wide rind wide rind wide rind wide readereadereadereadereadership and gship and gship and gship and gship and generenerenerenereneraaaaate kte kte kte kte keen intereen intereen intereen intereen interest inest inest inest inest in

the bthe bthe bthe bthe business commusiness commusiness commusiness commusiness community because it comes alongside a strunity because it comes alongside a strunity because it comes alongside a strunity because it comes alongside a strunity because it comes alongside a strong global moong global moong global moong global moong global movvvvvement,ement,ement,ement,ement, led b led b led b led b led by the Unitedy the Unitedy the Unitedy the Unitedy the UnitedNaNaNaNaNations no less,tions no less,tions no less,tions no less,tions no less, to inte to inte to inte to inte to integggggrrrrraaaaate ente ente ente ente envirvirvirvirvironmental conceronmental conceronmental conceronmental conceronmental concerns into all aspects of bns into all aspects of bns into all aspects of bns into all aspects of bns into all aspects of business,usiness,usiness,usiness,usiness, fr fr fr fr from the time aom the time aom the time aom the time aom the time adecision is made to set up one until it becomes fulldecision is made to set up one until it becomes fulldecision is made to set up one until it becomes fulldecision is made to set up one until it becomes fulldecision is made to set up one until it becomes fully opery opery opery opery operaaaaational. Ovtional. Ovtional. Ovtional. Ovtional. Over the past twer the past twer the past twer the past twer the past two yo yo yo yo yearearearearears,s,s,s,s, scor scor scor scor scoresesesesesof bof bof bof bof businesses wusinesses wusinesses wusinesses wusinesses worororororldldldldldwide hawide hawide hawide hawide havvvvve signed up fe signed up fe signed up fe signed up fe signed up for the UN’or the UN’or the UN’or the UN’or the UN’s Global Compact,s Global Compact,s Global Compact,s Global Compact,s Global Compact, w w w w whichichichichich binds signah binds signah binds signah binds signah binds signatortortortortories toies toies toies toies toembrembrembrembrembrace and prace and prace and prace and prace and practice in all wactice in all wactice in all wactice in all wactice in all waaaaays possibys possibys possibys possibys possible 11 kle 11 kle 11 kle 11 kle 11 keeeeey y y y y “g“g“g“g“good prood prood prood prood practice”actice”actice”actice”actice” commitments tha commitments tha commitments tha commitments tha commitments that art art art art are in ture in ture in ture in ture in turnnnnn

collacollacollacollacollapsed into thrpsed into thrpsed into thrpsed into thrpsed into three major pree major pree major pree major pree major principles,inciples,inciples,inciples,inciples, one of them being en one of them being en one of them being en one of them being en one of them being envirvirvirvirvironmental ronmental ronmental ronmental ronmental responsibilityesponsibilityesponsibilityesponsibilityesponsibility.....

As this GuideAs this GuideAs this GuideAs this GuideAs this Guidebook will shobook will shobook will shobook will shobook will showwwww,,,,, b b b b business nousiness nousiness nousiness nousiness now has all the low has all the low has all the low has all the low has all the logggggical rical rical rical rical reasons to embreasons to embreasons to embreasons to embreasons to embrace sucace sucace sucace sucace suchhhhh

prprprprprinciples,inciples,inciples,inciples,inciples, pr pr pr pr primarimarimarimarimarililililily because wy because wy because wy because wy because whahahahahat wt wt wt wt wererererere befe befe befe befe befororororore deemed to be nothing more deemed to be nothing more deemed to be nothing more deemed to be nothing more deemed to be nothing more than loe than loe than loe than loe than low-prw-prw-prw-prw-priorioriorioriorityityityityity,,,,,cacacacacapital-intensipital-intensipital-intensipital-intensipital-intensivvvvve long-tere long-tere long-tere long-tere long-term inm inm inm inm invvvvvestments in enestments in enestments in enestments in enestments in envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement haement haement haement haement havvvvve been pre been pre been pre been pre been prooooovvvvved to be:ed to be:ed to be:ed to be:ed to be:(a) ur(a) ur(a) ur(a) ur(a) urgggggent and non-postponaent and non-postponaent and non-postponaent and non-postponaent and non-postponabbbbble; (b) inle; (b) inle; (b) inle; (b) inle; (b) invvvvvestments thaestments thaestments thaestments thaestments that yield contint yield contint yield contint yield contint yield continuinguinguinguinguing,,,,, substantial ma substantial ma substantial ma substantial ma substantial materterterterterial rial rial rial rial returetureturetureturnsnsnsnsnsin terin terin terin terin terms of rms of rms of rms of rms of recececececycycycycyclalalalalabbbbble rle rle rle rle resouresouresouresouresources and saces and saces and saces and saces and savings gvings gvings gvings gvings generenerenerenereneraaaaated bted bted bted bted by ry ry ry ry reductions in weductions in weductions in weductions in weductions in wastaastaastaastaastaggggge and re and re and re and re and resouresouresouresouresourcececececeleaks; and (c) essential ingleaks; and (c) essential ingleaks; and (c) essential ingleaks; and (c) essential ingleaks; and (c) essential ingrrrrredients to a bedients to a bedients to a bedients to a bedients to a business’usiness’usiness’usiness’usiness’ sustaina sustaina sustaina sustaina sustainabilitybilitybilitybilitybility,,,,, not to mention the enhancement not to mention the enhancement not to mention the enhancement not to mention the enhancement not to mention the enhancement

of its gof its gof its gof its gof its goodoodoodoodoodwill in the immediawill in the immediawill in the immediawill in the immediawill in the immediate and nate and nate and nate and nate and national commtional commtional commtional commtional communityunityunityunityunity.....

WWWWWe hope this Guidee hope this Guidee hope this Guidee hope this Guidee hope this Guidebook prbook prbook prbook prbook promises the staromises the staromises the staromises the staromises the start of et of et of et of et of evvvvven moren moren moren moren more intensie intensie intensie intensie intensivvvvve collae collae collae collae collaborborborborboraaaaation amongtion amongtion amongtion amongtion among

the gthe gthe gthe gthe gooooovvvvvererererernment,nment,nment,nment,nment, pr pr pr pr priiiiivvvvvaaaaate bte bte bte bte business and ciusiness and ciusiness and ciusiness and ciusiness and civil society in this cvil society in this cvil society in this cvil society in this cvil society in this challenghallenghallenghallenghallenge of ke of ke of ke of ke of keeeeeeeeeeping our wping our wping our wping our wping our worororororld and ourld and ourld and ourld and ourld and our

countrcountrcountrcountrcountry aliy aliy aliy aliy alivvvvveeeee,,,,, health health health health healthy and ay and ay and ay and ay and abbbbble to sustain lifle to sustain lifle to sustain lifle to sustain lifle to sustain lifeeeee.....

SERGIO R. ORSERGIO R. ORSERGIO R. ORSERGIO R. ORSERGIO R. ORTIZ-LUISTIZ-LUISTIZ-LUISTIZ-LUISTIZ-LUIS,,,,, JR. JR. JR. JR. JR.President, Philippine ChamberPresident, Philippine ChamberPresident, Philippine ChamberPresident, Philippine ChamberPresident, Philippine Chamberof Commerce and Industryof Commerce and Industryof Commerce and Industryof Commerce and Industryof Commerce and Industry

Its publication is indeed a fitting reminder that the principles underlying soundIts publication is indeed a fitting reminder that the principles underlying soundIts publication is indeed a fitting reminder that the principles underlying soundIts publication is indeed a fitting reminder that the principles underlying soundIts publication is indeed a fitting reminder that the principles underlying soundenenenenenvirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement in bement in bement in bement in bement in business arusiness arusiness arusiness arusiness are ideas we ideas we ideas we ideas we ideas whose time hahose time hahose time hahose time hahose time havvvvve come; nae come; nae come; nae come; nae come; nayyyyy,,,,, e e e e evvvvvenenenenenbebebebebeyyyyyond thaond thaond thaond thaond that,t,t,t,t, the the the the they ary ary ary ary are ideas long oe ideas long oe ideas long oe ideas long oe ideas long ovvvvverererererdueduedueduedue. . . . . TTTTThis Guidehis Guidehis Guidehis Guidehis Guidebook helps ebook helps ebook helps ebook helps ebook helps evvvvverererereryyyyyone rone rone rone rone realizealizealizealizealize thae thae thae thae thatttttsucsucsucsucsuch notions as enh notions as enh notions as enh notions as enh notions as envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement systems,ement systems,ement systems,ement systems,ement systems, pollution pr pollution pr pollution pr pollution pr pollution preeeeevvvvvention/cention/cention/cention/cention/cleanerleanerleanerleanerleanerprprprprproduction,oduction,oduction,oduction,oduction, and e and e and e and e and evvvvven enen enen enen enen envirvirvirvirvironmental accounting aronmental accounting aronmental accounting aronmental accounting aronmental accounting are indispensae indispensae indispensae indispensae indispensabbbbble tools fle tools fle tools fle tools fle tools for ensuror ensuror ensuror ensuror ensuringingingingingthe sustainathe sustainathe sustainathe sustainathe sustainability of both bbility of both bbility of both bbility of both bbility of both business and the enusiness and the enusiness and the enusiness and the enusiness and the envirvirvirvirvironment. Specifonment. Specifonment. Specifonment. Specifonment. Specificallicallicallicallicallyyyyy,,,,, it successfull it successfull it successfull it successfull it successfullyyyyyararararargues thagues thagues thagues thagues that wt wt wt wt whahahahahat wt wt wt wt wererererere once deemed to be just the be once deemed to be just the be once deemed to be just the be once deemed to be just the be once deemed to be just the business of stausiness of stausiness of stausiness of stausiness of state rte rte rte rte reeeeegulagulagulagulagulatortortortortors ors ors ors ors orenenenenenvirvirvirvirvironmental actionmental actionmental actionmental actionmental activists arvists arvists arvists arvists are re re re re reallealleallealleally staky staky staky staky stakes fes fes fes fes for wor wor wor wor whichichichichich bh bh bh bh business and commerusiness and commerusiness and commerusiness and commerusiness and commerce mce mce mce mce must fust fust fust fust fightightightightightfffffor as a maor as a maor as a maor as a maor as a matter of their otter of their otter of their otter of their otter of their own surwn surwn surwn surwn survivivivivivvvvval.al.al.al.al.

It seemed an eIt seemed an eIt seemed an eIt seemed an eIt seemed an expensixpensixpensixpensixpensivvvvveeeee,,,,, postponea postponea postponea postponea postponeabbbbble vle vle vle vle venturenturenturenturenture then to oe then to oe then to oe then to oe then to ovvvvverhaul or rerhaul or rerhaul or rerhaul or rerhaul or refefefefeforororororm the wm the wm the wm the wm the waaaaayyyyyone’one’one’one’one’s bs bs bs bs business is orusiness is orusiness is orusiness is orusiness is orggggganizanizanizanizanized or opered or opered or opered or opered or operaaaaated in orted in orted in orted in orted in order to wder to wder to wder to wder to weaeaeaeaeavvvvve in suce in suce in suce in suce in such notions as wh notions as wh notions as wh notions as wh notions as wasteasteasteasteastemanamanamanamanamanagggggement,ement,ement,ement,ement, c c c c cleaner prleaner prleaner prleaner prleaner production,oduction,oduction,oduction,oduction, or pollution pr or pollution pr or pollution pr or pollution pr or pollution preeeeevvvvvention and rention and rention and rention and rention and recececececycycycycyclinglinglinglingling. . . . . TTTTTodaodaodaodaodayyyyy,,,,, it is an it is an it is an it is an it is anessential oneessential oneessential oneessential oneessential one. Not onl. Not onl. Not onl. Not onl. Not only is it essential; it also maky is it essential; it also maky is it essential; it also maky is it essential; it also maky is it essential; it also makes ges ges ges ges good bood bood bood bood business senseusiness senseusiness senseusiness senseusiness sense,,,,, as the as the as the as the as thepapapapapathbrthbrthbrthbrthbreakeakeakeakeakererererers in the fs in the fs in the fs in the fs in the field -- big and eield -- big and eield -- big and eield -- big and eield -- big and evvvvven small ben small ben small ben small ben small businesses,usinesses,usinesses,usinesses,usinesses, it m it m it m it m it must be pointed out -- haust be pointed out -- haust be pointed out -- haust be pointed out -- haust be pointed out -- havvvvveeeeeshoshoshoshoshown us. wn us. wn us. wn us. wn us. TTTTTheir storheir storheir storheir storheir stories,ies,ies,ies,ies, as told b as told b as told b as told b as told by ey ey ey ey experxperxperxperxperts in this Guidets in this Guidets in this Guidets in this Guidets in this Guidebook,book,book,book,book, w w w w would hopefullould hopefullould hopefullould hopefullould hopefully inspiry inspiry inspiry inspiry inspireeeeeeeeeevvvvverererereryyyyyone else similarone else similarone else similarone else similarone else similarllllly situay situay situay situay situated to fted to fted to fted to fted to folloolloolloolloollow suit.w suit.w suit.w suit.w suit.

TTTTThe ehe ehe ehe ehe experxperxperxperxperts wts wts wts wts who contrho contrho contrho contrho contribibibibibuted to this Guideuted to this Guideuted to this Guideuted to this Guideuted to this Guidebook habook habook habook habook havvvvve laid doe laid doe laid doe laid doe laid down their arwn their arwn their arwn their arwn their argumentsgumentsgumentsgumentsgumentsin a vin a vin a vin a vin a vererererery cy cy cy cy clearlearlearlearlear,,,,, compelling manner compelling manner compelling manner compelling manner compelling manner. . . . . YYYYYet beet beet beet beet beyyyyyond their arond their arond their arond their arond their arguments,guments,guments,guments,guments, the most compelling the most compelling the most compelling the most compelling the most compellingrrrrreason feason feason feason feason for embror embror embror embror embracing acing acing acing acing “the b“the b“the b“the b“the business of enusiness of enusiness of enusiness of enusiness of envirvirvirvirvironment”onment”onment”onment”onment” ar ar ar ar are the success store the success store the success store the success store the success stories cited heries cited heries cited heries cited heries cited hereeeee,,,,,especiallespeciallespeciallespeciallespecially the SMEs thay the SMEs thay the SMEs thay the SMEs thay the SMEs that start start start start started bted bted bted bted by thinking they thinking they thinking they thinking they thinking they wy wy wy wy wererererere spending fe spending fe spending fe spending fe spending for eor eor eor eor extrxtrxtrxtrxtras just to complas just to complas just to complas just to complas just to complyyyyywith enwith enwith enwith enwith envirvirvirvirvironmental ronmental ronmental ronmental ronmental reeeeegulagulagulagulagulations and then ended up counting the substantial sations and then ended up counting the substantial sations and then ended up counting the substantial sations and then ended up counting the substantial sations and then ended up counting the substantial savings thevings thevings thevings thevings theyyyyygggggenerenerenerenereneraaaaated fted fted fted fted for themselvor themselvor themselvor themselvor themselves.es.es.es.es.

I commend the people who, despite their tremendous responsibilities, took theI commend the people who, despite their tremendous responsibilities, took theI commend the people who, despite their tremendous responsibilities, took theI commend the people who, despite their tremendous responsibilities, took theI commend the people who, despite their tremendous responsibilities, took thetime to put this Guidetime to put this Guidetime to put this Guidetime to put this Guidetime to put this Guidebook tobook tobook tobook tobook togggggetheretheretheretherether,,,,, as w as w as w as w as well as those well as those well as those well as those well as those who assisted them. I am confho assisted them. I am confho assisted them. I am confho assisted them. I am confho assisted them. I am confidentidentidentidentidentthis Guidethis Guidethis Guidethis Guidethis Guidebook will spabook will spabook will spabook will spabook will spawn ewn ewn ewn ewn evvvvvererererer-incr-incr-incr-incr-increasing initiaeasing initiaeasing initiaeasing initiaeasing initiatititititivvvvves in enes in enes in enes in enes in envirvirvirvirvironmental manaonmental manaonmental manaonmental manaonmental managggggement fement fement fement fement forororororbbbbbusinesses,usinesses,usinesses,usinesses,usinesses, r r r r resulting in a wideningesulting in a wideningesulting in a wideningesulting in a wideningesulting in a widening,,,,, vir vir vir vir virtuous cirtuous cirtuous cirtuous cirtuous circccccle of rle of rle of rle of rle of responsibesponsibesponsibesponsibesponsible ble ble ble ble but saut saut saut saut satisftisftisftisftisfied pried pried pried pried produceroduceroduceroduceroducersssssand consumers.and consumers.and consumers.and consumers.and consumers.

JULIAN DJULIAN DJULIAN DJULIAN DJULIAN D. . . . . AMADORAMADORAMADORAMADORAMADORDirDirDirDirDirectorectorectorectorector,,,,, EMB EMB EMB EMB EMB

FOREWORD

IIIII am tr am tr am tr am tr am tremendouslemendouslemendouslemendouslemendously pleased to see this Guidey pleased to see this Guidey pleased to see this Guidey pleased to see this Guidey pleased to see this Guidebook,book,book,book,book, a timel a timel a timel a timel a timelyyyyy tool f tool f tool f tool f tool for all stakor all stakor all stakor all stakor all stakeholdereholdereholdereholdereholders in the ens in the ens in the ens in the ens in the envirvirvirvirvironment -- bonment -- bonment -- bonment -- bonment -- but prut prut prut prut primarimarimarimarimarilililililyyyyy,,,,,

bbbbbusinesses and their commusinesses and their commusinesses and their commusinesses and their commusinesses and their communities thaunities thaunities thaunities thaunities that deal with gt deal with gt deal with gt deal with gt deal with gooooovvvvvererererernmentnmentnmentnmentnmentrrrrreeeeegulagulagulagulagulatortortortortory bodies -- ay bodies -- ay bodies -- ay bodies -- ay bodies -- at a time wt a time wt a time wt a time wt a time wherherherherhere the notion of stee the notion of stee the notion of stee the notion of stee the notion of stewwwwwararararardshipdshipdshipdshipdshiphas become a pillar of corhas become a pillar of corhas become a pillar of corhas become a pillar of corhas become a pillar of corporporporporporaaaaate rte rte rte rte responsibilityesponsibilityesponsibilityesponsibilityesponsibility.....

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ACKNOWLEDGEMENTS

For the completion of this Guidebook, the invaluable assistance of the following, who providedthe write-ups, data, photographs and/or reviewed the manuscripts, is gratefully acknowledged:

CHAPTER TECHNICAL WRITERS

Dr. Alvin Culaba – De La Salle University-ManilaEngr. Reynaldo Esguerra – Industrial Technology Development Institute,

Department of Science and TechnologyMs. Fatima Reyes – Environmental Management Accounting

Network for Asia Pacific (EMAN-AP)Mr. Manuel Sabater – Environmental Management Bureau,

Department of Environment and Natural Resources

EDITORIAL BOARD MEMBERS

Environmental Management Bureau (EMB) - DENREMB Director Julian Amador

EMB Assistant Director Fernandino Concepcion

Industrial Initiatives for a Sustainable Environment (IISE) Project - EMBMr. Manuel Sabater

Ms. Ritchie Anne Guzman

Environmental Education and Information Division (EEID) - EMBMs. Elenida BasugMr. Harry Quiaoit

Ms. Carmelita Passe

Department of Environment and Natural Resources (DENR)Ms. Vizminda Osorio

Natural Resources Management Program (NRMP)Mr. Gaudencio de la Cruz

Philippine Association of Tertiary Level Educational Institutionsin Environmental Protection and Management (PATLEPAM)

Dr. Ruth GuzmanDr. Lilia Rabago

Philippine Chamber of Commerce and Industry (PCCI)Engr. Jesus Reyes - Nestle Philippines

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SUPPORT STAFF TO THE EDITORIAL BOARD MEMBERS

Administrative and Finance Division - EMBMs. Enrica Tumbagahan

Ms. Charilou Liad

EEID - EMBMs. Cristina Francisco

Ms. Gerarda MeriloMr. Virgilio Santos

Ms. Bernadita BondocMs. Alicia Laplana-Sabater

IISE - EMBMr. Marlon Genovia

CREATIVE AND SUPPORT SERVICES

Media Communications Group, Technology and LivelihoodResource Center (MCG, TLRC)

Ms. Felisa L. FranciscoMr. Gerardo PascualMs. Escarlita AlarazMs. Ester SabijonMs. Arlene Guilas

Mr. Joel Paredes - Editor

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CONTENTS

Messages ............................................................................................................... iiiForeword ................................................................................................................ viiAcknowledgements .............................................................................................. ix

Chapter I Introduction1.1 The Philippine Environmental Situationer .................................... 3

1.2 Approaches to Address Environmental Problems ....................... 6

1.2.1 Government Regulations ................................................. 6

1.2.2 Use of Market Forces ....................................................... 8

Chapter II Understanding Environmental Management System,Pollution Prevention/Cleaner Productionand Environmental Cost Accounting2.1 Environmental Management System........................................... 15

2.1.1 The Concept ..................................................................... 15

2.1.2 The Framework ................................................................ 17

2.1.3 Who Needs an EMS?....................................................... 17

2.1.4 The Benefits ..................................................................... 18

2.1.5 The Costs ......................................................................... 19

2.1.6 Synergy of EMS with Other Management Systems ......... 19

2.1.7 ISO14001: An EMS International Standard ...................... 20

2.2 Pollution Prevention ..................................................................... 21

2.2.1 The Concept ..................................................................... 21

2.2.2 The Framework ................................................................ 24

2.2.3 The Benefits of P2/CP ...................................................... 28

2.2.4 Other Important Considerations ....................................... 29

2.3 Environmental Cost Accounting .................................................. 31

2.3.1 The Concept ..................................................................... 31

2.3.2 The Benefits of ECA ......................................................... 32

2.4 Success Stories ........................................................................... 34

2.4.1 EMS Success Story ......................................................... 34

2.4.2 P2/CP and ECA Success Stories ..................................... 38

Chapter III Initiating and Sustaining an EMS3.1 Introduction .............................................................................. 43

3.2 Setting Up an EMS ...................................................................... 43

3.2.1 Commitment..................................................................... 44

3.2.2 Initial Environmental Review (IER) .................................. 45

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3.3 Planning .............................................................................. 47

3.3.1 Environmental Aspects .................................................... 47

3.3.2 Legal and Other Requirements ........................................ 50

3.3.3 Environmental Policy ........................................................ 51

3.3.4 Objectives and Targets..................................................... 51

3.3.5 Environmental Management Program(s) ......................... 52

3.4 Implementation and Operation .................................................... 54

3.4.1 Structure and Responsibility ............................................ 54

3.4.2 Training, Awareness and Competence ............................ 55

3.4.3 Communication ................................................................ 56

3.4.4 EMS Documentation ........................................................ 57

3.4.5 Operational Control .......................................................... 59

3.4.6 Emergency Preparedness and Response ....................... 60

3.5 Checking and Corrective Action .................................................. 62

3.5.1 Monitoring and Measurement .......................................... 62

3.5.2 Non-Conformance, Corrective and

Preventive Action ............................................................. 63

3.5.3 Records ............................................................................ 64

3.5.4 EMS Audit ........................................................................ 65

3.6 Management Review ................................................................... 66

Chapter IV Establishing a Pollution Prevention/Cleaner Production Program4.1 P2/CP Program Overview ........................................................... 71

4.1.1 Planning and Organizing Phase ....................................... 71

4.1.2 Assessment Phase .......................................................... 75

4.1.3 Feasibility Analysis Phase ................................................ 79

4.1.4 Implementation Phase ..................................................... 81

4.1.5 Monitoring and Evaluation ................................................ 82

4.2 Elements of an Effective P2/CP Program ................................... 83

4.2.1 Top Management Commitment ........................................ 83

4.2.2 Strong Motivation on the Part of

Operating Personnel ........................................................ 83

4.2.3 Technologies are Simple and

Easy to Implement ........................................................... 83

4.2.4 Immediate Realization of Benefits ................................... 83

4.2.5 Waste Assessment by Trained and

Unbiased Personnel to Identify Waste

Sources and P2/CP Options ............................................ 83

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4.3 Options for P2/CP ........................................................................ 84

4.4 What are not P2/CP ..................................................................... 85

4.5 P2/CP Program and EMS ............................................................ 85

Chapter V Assessing the Profitability of Pollution Prevention/Cleaner Production Investments throughEnvironmental Cost Accounting5.1 Steps in Environmental Cost Accounting .................................... 89

5.1.1 Get Management Support ................................................ 90

5.1.2 Organize ECA Team ........................................................ 90

5.1.3 Draw Process Maps ......................................................... 90

5.1.4 Do Material and Energy Balances .................................... 91

5.1.5 Use Cost Checklist ........................................................... 91

5.1.6 Apply Activity-based Costing (ABC) ................................ 93

5.1.7 Determine Internal Source Documents ............................ 93

5.1.8 Seek External Sources of Information

and Expertise ................................................................... 94

5.2 P2/CP Quantitative Analysis ........................................................ 94

5.2.1 P2/CP Profitability Assessment ....................................... 94

5.2.2 Other Financing Issues that Could Affect

Project Analysis .......................................................... 100

5.2.3 P2/CP Profitability Assessment Software ........................ 101

5.3 Qualitative Factors in P2/CP........................................................ 102

5.4 Financing for P2/CP Implementation ........................................... 103

5.4.1 Internal Sources of Funds ................................................ 103

5.4.2 Funds from Outside Sources ........................................... 103

5.5 Sources of More Information on ECA .......................................... 104

Chapter VI Illustrating EMS, P2/CP and ECA6.1 EMS Case Study: The Millennium Designs EMS .......................... 112

6.2 P2/CP Program Case Study: Developing a P2/CP

Program for Millennium Designs ................................................... 119

6.3 ECA Case Study: Applying ECA to the Financial

Assessment of the P2/CP Proposal of Millennium Designs .......... 125

Annexes ................................................................................................................. 133

Sources of Information on EMS, P2/CP and ECA .............................................. 151

Additional ISO14001 and Pollution Prevention Sources ................................... 153

Glossary ................................................................................................................. 157

Acronyms ............................................................................................................... 161

Selected Bibliography .......................................................................................... 163

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IIntroduction

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Sustainability, or more specifically, the adoption of sustainable strategies, hasnow become a byword in doing business. For some, it implies the ability of a

company to survive in a world that has become competitive especially with the

emergence of free trade and the global market economies. For others, it impliesthe need to nurture highly efficient and productive world-class industries that are totally

committed to pursuing business in an environmentally sustainable and efficient manner.

The Philippine Government has a huge stake in making local industry competitive

and sustainable. Poverty, unemployment, social inequities and their consequences, such

as peace and order problems, among others, are persistent issues which have to beaddressed. The important role of industry in helping resolve the country’s economic and

social problems should be acknowledged; and, thus, be strengthened with appropriate

support from all sectors of society. This Guidebook is a contribution to this effort. It promotesa proactive environmental management tool that has been proved to likewise improve

business efficiency, cost savings and provide competitive advantage. It is basically about

Environmental Management System (EMS) based on ISO14001, an international standardthat can transform local industry into world-class status while enabling it to address at the

facility level the poor quality of urban air that everyone has to breathe, and the other growing

environmental problems of the country.

1.1 THE PHILIPPINE ENVIRONMENTAL SITUATIONER

Various reports indicate that the environmental situation in the Philippines is,

generally, poor, especially in urban areas. The World Bank, for example, reported that inManila and other cities, certain pollutants like ozone and nitrogen oxides, are on the rise

while particulate matter levels still exceed standards. In its Philippine Environment Monitor

2002 report, the World Bank added financial cost estimates of air pollution in the country’sfour major cities of Metro Manila, Davao, Cebu and Baguio at more than US$400 million or

PhP21.6 Billion (US$1 = PhP54) per year, affecting more than one fourth of the urban

population in the country.

“ We need to believe that we do hold the future in our hands and thatwe have the power within us to make the changes to put us on asustainable path.”

— Philippine Business for the Environment

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A closer look at the country’s waterways reveals that about 15% of the water bodies

being monitored by the DENR are in a disturbing state of organic pollution - having failed the

national criteria on water quality, particularly on dissolved oxygen and biochemical oxygendemand. As such, majority of the country’s water bodies cannot be used for household

purposes. This situation is continually being aggravated by various activities of all sectors

of the community - from small households up to big factories - that contribute to thedegradation of the quality of the country’s water resources.

In addition, the country’s natural resource stock, a major source of raw materials, is

being depleted at a fast rate with continued utilization, especially by industry. For instance,

the country’s dipterocarp forests, the source of the economically and ecologically importantPhilippine mahogany group species like red lauan (Shorea negrosensis), white lauan (Shoreacontorta) and apitong (Dipterocarp grandifflorus) have already decreased by 6.84 million

hectares from 1977 at 9,380,055 hectares to 1997 at 3,536,017 hectares or an averageof 342,201 hectares a year. For industries, depletion of local resources essential as

production inputs will mean higher procurement costs or, in case of unavailability, delays on

or shutdown of operations.

Business activity isone of the major sources

of significant impacts on

the environment – from theextraction of raw materials to

the generation and disposal of

waste. In fact, industries arethe major sources of toxic

pollutants. For the year 2000,

about 188,000 tons of toxic and

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hazardous substances are generated by industries registered at EMB. For engineers, the

generation of high waste volume indicates inefficiencies in a production system.

Aside from fear of the inability of local business to compete globally, inadequate

attention to environmental protection and resources management has three other threats.

These are: 1) human health risks which increase the social costs to society in terms ofmedical and health care; 2) decline in foreign capital investment in the country due to its

inadequate environmental management capacity and performance, and; 3) loss of

opportunities for industries to introduce innovative production technologies to increase theirproductivity and environmental performance.

It is not surprising that, in recent years, concern over the business viability oflocal industry has risen aside from public concern over industrial impact on people, the

national patrimony and sustainable development. The first question is: Can we sustain our

national development and ensure the health and well-being of our population? The answeris a big YES. But, only if we begin and continue to take care of our environment and resources.

The second question is: Can industry gain business competitive advantage while protecting

the environment and conserving resources? Again, the answer is a big YES. But, onlyif companies understand and apply the available and appropriate tools that they can

use.... NOW.

And, there is no other time!

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1.2 APPROACHES TO ADDRESS ENVIRONMENTAL PROBLEMS

1.2.1 Government Regulations

Before pollution control regulations were implemented, most industries in the 1950s

and 1960s simply ignored the environment. Contaminated wastewater, polluted air and

solid waste (whether hazardous or not) were simply discharged into the environment. Lateron, the concept of “dilution is the solution to pollution” became the norm.

When people started to realize that the environment could not simply absorbpollutants without serious consequences, environmental laws were enacted. To comply

with these regulations, industries, among others,

have to set up their own anti-pollution controldevices or treatment facilities. And hazardous

waste had to find their way to secured land.

As of year 2002, EMB implements five

national environment laws, namely the

Pollution Control Law (PD 984), the PhilippineEnvironmental Impact Assessment System

(PD 1586), the Toxic Substances and Hazardous

and Nuclear Wastes Control Act (RA 6969), theClean Air Act (RA 8749) and the Ecological Solid

Waste Management Act (RA 9003).

Multimedia Transfer of Pollution as a Pollution Control Issue

In controlling pollution through end-of-pipe technologies, the risk of pollutants re-

entering an ecosystem persists. Then U.S. Environmental Protection Agency (USEPA)

Administrator William Reilly put this point succinctly in 1990 when he said, “We have learnedthe inherent limitations of treating and burying waste. A problem solved in one part of the

environment may become another problem in another part. We must curtail pollution closer

to its point of origin so that it is not transferred from place to place.” This statement is bestdemonstrated by the multimedia transfer of pollution of a hypothetical industrial facility

illustrated below:

A facility generates air emissions from its operation. Emissions arecontaminants that may be detrimental to human health and the environment.To remove these contaminants, the facility installed a wet-type air pollutioncontrol device, i.e., water was made to flow countercurrent to the air emissionsto scrub off the contaminants. Cleaner air then left the smoke stack of thefacility.

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However, the contaminants simply transferred to the water. Thecontaminated water, then, had to be treated in a wastewater treatment plantusing chemicals to remove the contaminants from the wastewater. The facilitythen had a cleaner wastewater that could be discharged to a nearby river.

But the contaminants were now in the form of sludge that would haveto be sent off to a secured landfill. With the coming in of rain, the contaminantmay leach out of the secured landfill. Note that rain, even thoughuncontaminated with pollutants that may cause it to be acidic, is still acidic(pH 5.6) because of carbon dioxide in the atmosphere. Note too, that anacidic medium is a very good leaching agent, i.e., it can cause the transferof the contaminant from the sludge to groundwater. Thus, contamination ofgroundwater is not a remote possibility. Groundwater is the usual source ofdrinking water in the Philippines. The risk of contaminated drinking watergetting into the human body is high because of the situation described above.

This illustration shows the potential environmental and health risks of pollutants re-

entering the ecosystem even with end-of-pipe technologies. It also shows that investing in

pollution-control technologies can be costly.

Aside from the above situation, the air and waterways of the country continue to be

polluted. Worse, pollution incidents like those in Marcopper Mining in Marinduque and in the

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regulating emissions rather than their causes. Another disadvantage is “over-regulationand under-enforcement” which may bring the law and the regulators into disrepute.

There has to be a way to complement pollution control. New laws such as the CleanAir Act (Republic Act or RA 8749) and the Ecological Solid Waste Management Act

(RA 9003) have realized this need as they espoused new state policies that put more

emphasis on pollution prevention.

1.2.2 Use of Market Forces

1.2.2.1 Use of Market-Based Instruments

Market-based tools are designed to internalize environmental costs, to demonstrate

to producers and consumers the need to use natural resources responsibly, and to minimize

pollution and waste.

1.2.2.2 Environmental Users’ Fee and Other Market-Based Instruments(MBIs)

The Philippine Clean Air Act provides for the use of Market-based Instruments (MBIs)

as tools to promote cooperation between government and industry. Commonly known MBIsstudied under the Industrial Environmental Management Project (IEMP) of the DENR include

the following: pollution charge, refund-deposit systems, risk and liability schemes, user feeon raw materials, creating a market for waste and financial incentives/subsidies. These arebriefly discussed below.

The pollution charge, called the environmental users’ fee by the Laguna Lake

Development Authority (LLDA), refers to a fee per unit of pollutant discharged to air, water,

small-scale gold mining and processing areas

of Davao del Norte have to happen, as if to

highlight the fact that end-of-pipe control ofpollution is not the only insurance for protecting

the environment.

It should be underscored, however, that

pollution-control legislations have an important

role in pollution management. Among others,they set the bar for acceptable environmental

quality. Their disadvantage is that they allow

little flexibility and mainly concentrate on

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and soil. With pollution charge, a firm under the jurisdiction of

LLDA is expected to reduce emissions up to the point

where the marginal cost of additional abatement isjust equal to the charge. An example is the peso

charge per ton of Biochemical Oxygen Demand

(BOD) discharged or sulfur dioxide or carbondioxide emitted.

The refund-deposit system is a

surcharge on recyclable or reusable products.It promotes changes in consumer behavior. An

example is when refund of deposit is made for

turning over a container like bottles to a storeor an approved recycling center.

Risk and liability schemes refer to an insurance

mechanism to cover the cost of environmental remediation oreconomic and health damages resulting from a company’s

activities. It shifts the burden from society to the firm for potential

damage to the environment. An example is insurance mechanismto cover the cost of habitat rehabilitation.

User fee on raw material is a fee or levy

affecting input costs. It promotes recycling orenhanced resource efficiency in a process. An

example is a tax on water to encourage firms to

reduce water use and/or recycle water.

Creating a market for waste simply means providing for the purchase, sale, and

transfer of waste products. It promotes waste separation and use of waste products as a

raw material. An example is industrial waste exchange where organic waste is used forfertilizer.

Financial incentives/subsidies refer to investment programs such as grants,

subsidized loans, loan guarantees, or tax incentives. It promotes investment in qualifyingpollution management equipment and/or services. An example is accelerated depreciation

of the cost of pollution control equipment.

Generally, MBIs provoke a range of responses from targeted firms and industries.Because each firm operates within a unique set of parameters, different firms may select

different types of investments to achieve the same overall objective.

1010101010

1.2.2.3 Environmental Management System (EMS), Pollution Prevention/Cleaner Production (P2/CP) and Environmental Cost Accounting(ECA)

With the Geneva-based International Organization for Standardization (ISO) playing

a catalytic role in the development and promotion of ISO14000, EMS adoption by businessis basically an initiative of the private sector to promote international trade. In this context,

and in view of such internal drivers as cost savings, improved production efficiency and, in

general, business competitive advantage, voluntary implementation of EMS and P2/CP byindustry is essentially a market influence. It is assumed that, in general, the market will

reward organizations implementing an EMS with greater market share and, as a

consequence, market pressure will encourageothers to adopt the same. For example, suppliers of

automotive parts with EMS will have competitive

advantage in supplying automotive manufacturersdemanding a certified EMS from its suppliers. This

is also known as Greening the Supply Chain, a

practice now common in Western Europe and otheradvanced nations. Moreover, EMS implementation

in a process of continual improvement will prepare

organizations to meet present and future stringentregulatory requirements and avoid potential costly

environmental litigations, fines and penalties. The

overall outcome should be that more organizationswill become more proactive in environmental

management, improving their environmental

performance and gaining business competitiveadvantage.

With an EMS, an organization’s primary focus will be given to prevention andconservation strategies with provision for a comprehensive pollution and resource

management program rather than mere compliance with waste disposal or government-

set environmental quality standards and requirements.

Cognizant of the usefulness of EMS and P2/CP in improving industry’s environmental

management and performance, P2/CP is now made a state policy in the Philippine CleanAir Act and the Ecological Solid Waste Management Act. The Clean Air Act puts emphasis

on pollution prevention rather than pollution control. Its Implementing Rules and Regulations

(IRR) provide certain regulatory privileges, such as phased compliance and discount in

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fines or reduction in penalties to an establishment which will establish and maintain an

EMS, subject to certain conditions, including the submission of acceptable proofs of

implementation.

In brief, an effective EMS with P2/CP Program will help reduce waste at source,

improve environmental performance, enable an organization to comply with present andfuture stringent environmental regulations, enhance overall productivity and, thus, save money

and increase profits. In this context, an ENVIRONMENTAL MANAGEMENT SYSTEM with

P2/CP can make GOOD BUSINESS SENSE.

From the perspective of industry, good businesssense is better understood in money figures. To convince

decision-makers that an environmental investment like an

EMS with a P2/CP Program is not a mere cost center,there is a need to incorporate environmental costs and

benefits in an organization’s cash flow estimation.

Environmental cost accounting is an innovative accountingpractice that seeks to help business identify and estimate

environmental cost information for a host of business

reporting and management decision-making functions.

This guidebook aims to provide the readera guide on how to install, implement and maintain

an EMS with P2/CP and ECA. Its principal targets

are the Small and Medium Enterprises (SMEs).SMEs can make a big difference in the

environment because they comprise over 90% of

the total business establishments in the country.Local Government Units (LGUs), academic

institutions and hospitals, among others, may also

find this guidebook a useful reference.

13

IIUnderstandingUnderstandingUnderstandingUnderstandingEnEnEnEnvirvirvirvironmentalonmentalonmentalonmentalManagement System,Management System,Management System,Management System,PPPPPollution Prollution Prollution Prollution Prollution Preeeeevvvvvention/ention/ention/ention/ention/Cleaner PrCleaner PrCleaner PrCleaner Productionoductionoductionoductionand Enand Enand Enand EnvirvirvirvironmentalonmentalonmentalonmentalCost Cost Cost Cost AccountingAccountingAccountingAccounting

14

15

2.1 ENVIRONMENTAL MANAGEMENT SYSTEM

2.1.1 The Concept

By definition, an Environmental Management System (EMS) is part of the overallmanagement system in an organization. It is a continual cycle of planning, doing

(Implementation and Operation), checking, and acting (Review) on the programs

that an organization takes to meet its obligations to the environment or thesurroundings in which it operates, including air, water, land, natural resources, flora, fauna,

humans, and their inter-relations. Simply put, an EMS follows a process of continual

improvement involving an environmental policy, planning, implementation, checking andcorrective action, and management review.

The environmental obligations of an organization are linked with its operations. Aneconomic activity and the environment are closely related. The environment is the source

of many production inputs and serves as a catch basin or receptacle for discharges or

emissions. More specifically, organizations interact with the environment when they do anyof the following:

a) Activities

Examples: Buying raw materials, supplies, equipment and others;

Disposal of waste

b) Delivery of products and servicesExamples: Transportation of products or goods by land, water or air;

Providing after-sales customer service

c) Processing of raw materials

Examples: Storage of raw materials;Production, assembly or fabrication;

Chemical treatment

When the products of any of the above interactions are released to the environment,

then an environmental aspect is generated, causing various environmental problems. When

these causes become significant, effective management may be required to deal with thesituation.

An environmental aspect is an element of an organization’s activities, products,or services that can interact with the environment. Examples are emissions to the

atmosphere, releases to land of solid or liquid substances, use or consumption of resource

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(energy, chemical, or water), human health and

generation of noise, odor or vibration. Significant

environmental aspects are those that have asignificant environmental impact. Their

significance is determined by a set of criteria

established by an organization.

Environmental impact is any change inthe environment, whether adverse or beneficial,

wholly or partially, resulting from an organization’s

activities, products or services. The significanceof environmental impacts is also determined by

the organization and these, in turn, determine the

significant environmental aspect. Examples areair pollution, water pollution, ozone depletion and

chemical burns.

Other current global and local environmental issues or concerns include the following:

the greenhouse effect that can bring about global warming, toxic chemicals and hazardous

waste storage and disposal, solid waste disposal problems, land degradation and loss ofsoil productivity, photochemical smog, aquatic and terrestrial toxicity, depletion of finite natural

resources and human health issues.

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2.1.2 The Framework

An EMS based on ISO14001 has 17 elements that can be distributed as shown in

the chart below:

2.1.3 Who Needs an EMS?

An EMS may be needed by any organization that is looking for strategies to improve

its environmental performance. An organization needs an EMS if it is ineffective in complying

with environmental laws and regulations, recognizes its environmental problems to be ofsignificant liability, lacks the time and resources to effectively manage its environmental

obligations, has no established effective environmental policy, and is seeking a competitive

edge.

An organization may be a small, medium or large enterprise in the private and/or

public sector.

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2.1.4 The Benefits

An organization considers establishing an EMS if it wants to achieve any of thefollowing benefits:

Management

• competitive advantage

• improved environmental performance

• balanced economic and environmental interests• development of good industry or organizational practice

• more incentives for the use of innovative technology

Legal

• improved legal and regulatory compliance• enhanced relations with government authorities

• access to government regulatory flexibility and permitting assistance

• avoidance of CDO (cease and desist order)

Financial

• improved market share• improved operational costs

• reduced penalty and liability costs

• better access to capital• reduced insurance premiums

Internal

• more productive and efficient work force

• more employee involvement• enhanced employee morale

• reduced training effort for employees and staff

External

• improved public image and customer trust

• enhanced public and community relations• reduced customer pressure

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2.1.6 Synergy of EMS with Other Management Systems

The basic components of an EMS will look familiar to someone experienced in

quality management systems. The management system approaches are very similar. Bothinclude provisions for management commitment; a policy; implementation that includes

assignment of responsibilities, training, documentation and document control; corrective

and preventive actions; management review; and continual improvement. Recognizing thecommonalities, many organizations consider integrating their environmental and quality

management systems (QMS).

While inherently similar and compatible, there are underlying differences between

the two systems. QMS is fundamentally customer- and market-driven; i.e., the customerdetermines quality expectations. EMS, on the other hand, is driven by a broader range of

stakeholders including government requirements and community expectations.

Essentially, EMS requires a much broader definition of “customer.” Commitment to

compliance, pollution prevention and continual improvement are the anchors of a company’senvironmental policy. Identification of environmental aspects and impacts is another key

element of EMS planning. Emergency preparedness is as critical as the process to

communicate with internal and external parties.

2.1.5 The Costs

EMS development may entail thefollowing costs: staff/manager time and

other employee time. Internal labor and

logistical costs represent the bulk of theEMS resources expended by many

organizations.

Other costs include consulting

assistance, outside training of personnel

and certification costs if an organizationpursues third-party conformity audit.

Many organizations have foundthat implementing an EMS is a vehicle

for positive change. They have seen that

the benefits of an EMS far outweigh itscosts.

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2.1.7 ISO14001: An EMS International Standard

What is ISO?

ISO stands for International Organization for Standardization. It is a non-governmentorganization founded in 1946, based in Geneva, Switzerland. It has over 130 member-

countries represented by their national standard bodies. Its main objective is to develop

product and management system standards to facilitate international trade, among others.Adoption of ISO standards is voluntary.

What is ISO14000?

ISO14000 is a series of international standards that provides guidance to

organizations wishing to develop and implement an effective environmental policy. It providesa framework for setting and measuring environmental performance. Technical Comittee

(TC) 207 is an ISO technical sub-committee tasked with the development and review of

ISO14000 series standards. It is organization- and process- oriented. ISO14004 is an EMSguidance document. ISO14001 is an EMS specification document.

What is ISO14001?

ISO14001 specifies requirements for an environmental management system in order

to enable the organization to formulate a policy and objectives, taking into account legalrequirements and information about significant environmental impacts and aspects. It is

applicable to any organization that wishes to implement, maintain and improve an EMS;

ensure compliance with its environmental policy; demonstrate such compliance to others;seek a certification of its EMS by a third-party certification body; and make a self-determination

and self-declaration of compliance with the Standard. It is a system standard and is voluntary.

It defines the minimum requirements of an EMS. It allows organizations to identify programsto help achieve established objectives and targets. It requires organizations to show a

commitment to the prevention of pollution, legal compliance and to continual improvement.

Its equivalent document in the Philippines is the Philippine National Standard (PNS) 1701.

As of the end of 2001, there are 36,765 organizations certified to ISO14001

worldwide, a 60.5% increase in new certifications compared to year 2000. Japan has thehighest number of certifications at 8,123; followed by Germany, with 3,380; the UK, with

2,722; Sweden, with 2,070; and Spain with 2,064. In Asia, China ranks second to Japan

with 1,085; Taiwan, with 999; South Korea, with 880; Thailand, with 483; Malaysia, with 367;Singapore, with 298; Indonesia, with 199; and the Philippines, with 120 or an increase of

38% from its record of 46 in 2002.

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What ISO14001 is not.

ISO14001 is not a product standard, a performance standard, a prescription of

values for environmental performance indicators and a mandate for best technologies.

Neither is it a system that includes aspects of occupational health and safety or a relianceon people.

2.2 POLLUTION PREVENTION

A Pollution Prevention/Cleaner Production (P2/CP) Program helps a company identify

waste and, more importantly, their origin and causes and the potential solutions for reducingthem. Incorporated into the overall business operation and management system of the

company, a P2/CP Program realizes improved environmental and economic performance

with the support of both management and staff.

2.2.1 The Concept

Pollution prevention and cleaner production are terms often used interchangeably.The United Nations Environment Programme (UNEP) stated, however, that the distinction

tends to be geographical – North America tends to use Pollution Prevention (P2) while the

rest of the world utilizes Cleaner Production (CP). Listed below are the official definitions ofP2 and CP as defined by the USEPA and the UNEP.

The USEPA defines pollution prevention (P2) as the use of materials, processes, or

practices that reduce or eliminate the creation of pollutants or wastes at the source. It

includes practices that reduce the use of hazardous materials, energy, water or otherresources. It seeks to protect natural resources through conservation for more efficient

use.

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On the other hand, UNEP defines cleaner production (CP) as the continuous

application of an integrated preventive environmental strategy to processes, products andservices to increase overall efficiency and reduce risks to humans and the environment.

UNEP further explains how CP can be applied to the processes used in an industry, to the

products themselves and to various services provided in society as follows:

• For processes, CP results from one or a combination of conserving raw

materials, water, energy; eliminating toxic raw materials; and reducing thequantity and toxicity of all emissions and wastes at source during the production

processes.

• For products, CP aims to reduce the environmental, health and safety impact

of products over their entire life cycles; from raw materials extraction through

the manufacturing and use, to its “ultimate” disposal of products.

• For services, CP implies incorporating environmental concerns into designing

and delivering services.

P2/CP-related Terms

Aside from P2/CP, a number of related terms have been used to depict the advantages

of addressing pollution/waste problems even before they occur. These include the following:

• Eco-efficiency is a term that the World Business Council for Sustainable

Development (WBCSD) coined in 1992. The Council defines eco-efficiency as

the delivery of competitively priced goods and services that satisfy humanneeds and bring quality of life, while progressively reducing ecological impactand resource intensity throughout the life cycle to a level at least in line with theearth’s estimated carrying capacity.

• Prior to the use of P2, USEPA used the term waste minimization. In its report

to the US Congress, USEPA defined it as the reduction, to the extent feasible,of hazardous waste that is generated or subsequently, treated, stored or disposedof. It includes any source reduction or recycling activity undertaken by agenerator that results in either (1) the reduction in total volume or quantity ofhazardous waste, or (2) the reduction of toxicity of hazardous waste, or both, solong as the reduction is consistent with the goal of minimizing present and futurethreats to human health and the environment.

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• Green Productivity, a term used by the Asian Productivity Organization (APO),

is defined as a strategy for enhancing productivity and environmentalperformance for overall socio-economic development.

• Aside from the USEPA definition of P2, Environment Canada also used the

term P2 with its definition as the use of processes, practices, materials, productsor energy that avoid or minimize the creation of pollutants and waste, and reducethe overall risk to human health or the environment.

Legal Definition of Pollution and Industrial Waste

In Presidential Decree No. 984, pollution is defined as:

“...any alteration of the physical, chemical and biologicalproperties of any water, air and/or land resources of thePhilippines or any discharge thereto of any liquid, gaseousor solid waste as will or is likely to create or to render suchwater, air and land resources harmful, detrimental or injuriousto public health, safety or welfare, or which will adverselyaffect their utilization for domestic, commercial, industrial,agricultural, recreational, or other legitimate purposes.”

Under the same decree, industrial waste means:

“ ...any liquid, gaseous or solid matter,or other waste substance or acombination thereof resultingfrom any process or industry,manufacturing, trade or business orfrom the development, processing orrecovery of any natural resourceswhich may cause or tend to causepollution, or contribute to thepollution of the water, air and landresources of the Philippines.”

The above legal terms underscore that waste causes pollution. Furthermore, waste

manifests low productivity which, in turn, leads to wasteful utilization of resources that maycause pollution, and products to become costlier in the market. With pollution and with

products not performing well in the market, economic slowdown may set in, which may be

followed by social instability.

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2.2.2 The Framework

Pollution prevention refers to both recycling and the reduction or eliminationof pollution from its source. In the waste management hierarchy shown on page 25, an

organization’s first option is source reduction. Source reduction includes the following

strategies: good housekeeping or good operatingpractices, changes in technology, changes in inputor raw material and/or changes in product design.

The second option of an organization should berecycling. Treatment and disposal at the bottom of

the waste management hierarchy should be third and

last, respectively. But, these last two options fall underpollution control. Pollution Prevention (P2) efforts are

the preferable waste management schemes. Its

advantage can be well understood in the adage, “Anounce of prevention is better than a pound of cure.”

Pollution Prevention is a proactive tool. The choice of

P2 options are considered as final stage in a PollutionPrevention Opportunity Assessment, a process that

Business Definition of Waste

From the business standpoint, waste is viewed as:

“...a production inefficiency that has to be addressed or aresource that is out of place, thus, the need to find the rightplace to utilize this waste and turn it into a resource.”

The 3M Corporation gave a more appropriate definition of waste from the point ofview of business as

“...anything other than the minimum amount of equipment,materials, parts, space and workers’ time which areabsolutely essential to add value to the product.”

As such, an equipment running without any load, raw materials that spill on the

factory floor, overstocked parts, unutilized spaces and workers left idle while waiting for thenext-in-process material to arrive -- all these may be signs of waste.

P2/CP provides not only the environment-friendly solution but, also, the more

economic way toward productivity and resource conservation.

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Source Reduction or Elimination

Source reduction is any practice that reduces the amount of any hazardoussubstance, pollutant or contaminant entering any waste stream or released to the

environment. Source reduction may be achieved through either product change or processchange.

Product change involves a change in product quality standards and product

composition. Aside from this, product change may also mean an increase in the product’sdurability or product substitution. Examples of product changes are: use of unleaded gasoline,

use of biodegradable products over non-biodegradable, use of water-based paints in wood

furniture and wooden toys or use of non-CFC containing sprays. A very good example ofproduct change that has affirmed the benefits of P2/CP is the compact fluorescent lamp,

Waste Management Hierarchy

Source Reduction or EliminationPollution

PreventionRecycling

Treatment

DisposalPollution

Control

In ISO14001, however, as well as in the United States, the

term Prevention of Pollution is being used to refer to both Pollution

Prevention (source reduction and recycling) and Pollution Control

(Treatment and Disposal).

involves a review and evaluation of the input materials and unit process being used in a

facility as well as the products, by-products and wastes it generates.

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Input material change, implemented

either through raw material substitution or useof more pure materials, reduces the potential

for generating hazardous waste because no

hazardous material is introduced into theprocess stream. For example, shifting to water-

based paints from solvent-based paints

eliminates the generation of volatile organiccompounds. Purified materials lessen the

burden of later removing impurities from theproduction system. Other examples of input

material changes are replacing solvent-based

ink with water-based ink in the printing industry,phosphate-containing chemicals with non-

phosphate chemicals in the textile industry, and

cyanide solutions with alkaline, non-cyanidesolutions in electroplating.

Technology changes may be achieved through changes in the production process.Examples of technology changes are use of automation in process and conditions, such

as temperatuture equipment/piping/layout changes; changes in operational setting; additional

automation; conventional to spray-painting; and, dry heating over wet heating. In anelectroplating shop, technology changes may include shifting from the cyanide plating

process to the non-cyanide plating process (production process); modifying rinse tanks to

effect countercurrent flow instead of co-current flow (equipment modification); use ofconductivity meters in rinse tanks to reduce water usage (automation); and, operating at

the low-end of plating solution concentration to reduce chemicals in drag-out (process

condition changes).

also called CFL. Compared to ordinary fluorescent

lamps that provide the same light intensity, CFLs not

only consume less electricity and last longer, but arealso smaller in size, thus, requiring less materials and

energy to produce.

Process changes, on the other hand, include

changes in input material or in technology, and

improved operating practices.

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Operating and maintenance procedures

ensure that the facility works at its optimum capacitywith little or no breakdown of equipment. Materials

handling and inventory practices help reduce loss

of materials from mishandling and expiration. Atypical example of this is the practice of first-in-first-out or FIFO stock inventory, which prevents a

situation where certain materials, because ofoversight, are not pulled out for use before they

expire.

Production scheduling, especially forbatch production runs, helps reduce the

frequency of equipment cleaning, thereby

reducing requirements for cleaning (such aswater and detergent) and the attendant waste

generation. Stream and waste segregation

eliminates the chances of contamination fromless hazardous and/or less pollutive waste. This

practice also helps ease recycling of materials

and/or reduces treatment costs. Themanagement practice of providing rewards and

recognition not only helps promote P2/CP but

also makes its implementation moresustainable.

Recycling

Recycling involves the return of a waste material either to the originating processas a substitute for an input material (reuse) or to another process as an input material

(use). If the waste material cannot be used within the company, it may be sent to another

Improved operating practices, also known as good manufacturing practices, include

preventive and maintenance procedures, materials handling improvement, inventory control,

stream and waste segregation, effective supervision, employee participation, productionscheduling/planning/control, cost accounting/allocation, spill containment, loss prevention

program, computerization for inventory control and materials tracking.

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Treatment involves any method,technique or process designed to change

the physical, chemical and/or biologicalproperties or composition of waste, or to

neutralize the waste to make it safe or

more stable to transport, store or disposeof. This may include wastewater

treatment process, such as activated

sludge; air pollution control devices, suchas filter bags and cyclones; and thermal

destruction of solid waste, such as

pyrolysis and incineration.

After treatment, the safer or more

stable waste is ready for disposal or discharge into receiving bodies of water, emission intothe atmosphere, or containment in a sanitary landfill.

2.2.3 The Benefits of P2/CP

To illustrate the benefits of P2/CP, consider a factory requiring 100 units of raw

materials to produce 80 units of finished products. From the law of conservation of mass,this factory also generates 20 units of waste. In this hypothetical case, assume that the

company where it becomes a resource for the

latter. The Philippine Business for theEnvironment adopted this concept, i.e., the wasteof one industry could be an input or raw materialof another, in the operation of its Industrial WasteExchange Program (IWEP). Examples of

recycling are use of cooling water for wash water

(reuse) and chromium recovery in leathertanning (reclamation).

Treatment and Disposal

Although not part of the P2/CP waste-

management strategies, treatment and disposalare presented to serve as a reminder that any

residual waste will still have to be addressed.

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practice of P2/CP reduces the generation of waste to 10 units. Through such reduction, the

factory may maintain its production capacity at 80units finished products. In this case, raw

material consumption is reduced to 90 units, thereby reducing operating costs. On theother hand, consuming 100 units of raw materials means 90 units of finished products.

Thus, productivity is increased. Furthermore, the reduction of waste from 20 to 10units

spells lower treatment costs for the factory.

Aside from the benefits of increased productivity and reduced operating waste

disposal costs, the Integrated Program on CP Technologies (IPCT) of the Department ofScience and Technology (DOST) cites the following advantages of P2/CP implementation:

• Reduced risk of liability. Undertaking P2/CP can reduce regulatory exposureand, in some cases, may eliminate the need for permits, manifesting, monitoring

and reporting. Shifting to non-toxic materials from toxic substances takes away

the need to report this to the regulatory agency. The absence of hazardouswaste reduces the likelihood of any long-term liability for the company.

• Public Health and Environmental Benefits. Less waste, especially hazardous

waste, means that the public is exposed to less danger. Furthermore, consuming

fewer raw materials helps conserve natural and mineral resources.

• Worker Health and Safety. Not only is the public exposed to reduced risks but,more importantly, workers may be assured of a healthier and safer work

environment. Leaks, spills and releases of hazardous materials decrease the

exposure of plant personnel.

• Improved Corporate Image and Global Competitiveness. The public, ingeneral, would appreciate a company practicing P2/CP. With the growing trend

of green consumerism, where people tend to buy environment-friendly products,

P2/CP would surely be a plus factor for the company. Besides the fact that themarket accepts the products because of P2/CP, production costs also decrease,

thereby making the products cost-effective.

The IPCT of DOST has adopted the slogan, Increased Productivity, DecreasedWaste, Improved Quality and Safer Work Environment in the promotion of P2/CP.

2.2.4 Other Important Considerations

Six important factors should be considered in the establishment of a P2/CP Program(see Table 2.2.4). In the traditional feasibility study of a business enterprise, factors such

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4. Organizational

Source: Adapted from http://www.uneptie.org/pc/cp/understanding_cp/cp_industries.htm

SUB-CATEGORIESFACTORS

• Cost of external capital for investments in industry

• Availability of funding mechanisms appropriate for P2/CP investments

• Perception of business due to innovative nature of P2/CP investments

• Evaluation procedures of P2/CP by credit provider for lending, equityparticipation, etc.

• Cost effectiveness of P2/CP investments given present resource prices

• Maturity of the company’s internal cost calculation and cost allocationpractices

• Maturity of the company’s internal capital budgeting and capitalallocation procedures

• Focus on environmental, technology, trade and industry development,and strategies

• Maturity of the environmental policy framework including level ofregulatory enforcement

• Leadership for environmental affairs

• Risk related to P2/CP e.g., availability of incentives

• Maturity of the environmental management function in companyoperations

• Maturity of the company’s organizational structure and its managementand information systems

• Level of employee involvement and project work

• Presence of sound operation basis with well-established productionpractices, maintenance schemes

• Need for comprehensive assessment to identify appropriate P2/CPopportunities

• Accessibility of equipment supportive of P2/CP (e.g., high-qualityengineering, small wares for process instrumentation)

• Accessibility of reliable technical information tailored to company’sneeds and assimilative capacities

• Perception regarding its contribution to environmental improvement

• Interpretation or understanding of P2/CP concept

• Need to manage change

1. Financial

2. Economic

3. Policy-related

Table 2.2.4 Other Important Considerations in P2/CP

as financial, economic, technical and organizational preparedness or presence of policy

support, may spell success or failure. These factors should, thus, be made part of the

P2/CP Planning Stage.

5. Technical

6. Conceptual

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2.3 ENVIRONMENTAL COST ACCOUNTING

2.3.1 The Concept

Environmental Cost Accounting (ECA) is also known by other names, such as

Environmental Management Accounting, Environmental Cost Assessment, TotalEnvironmental Cost Accounting or Green Accounting.

Its salient features include environmental cost information that are internal to thecompany, i.e., environment-related business costs that a company actually pays for or may

pay for considering future regulatory requirements; waste management-related costs, such

as waste treatment, pollution control and disposal costs; lost purchase values of wastedraw materials and other manufacturing inputs; and environmental cost accounting data that

is valuable for many types of management activities or decisions, but can be particularly

useful for environmental management decisions, such as investment appraisal for cleanerproduction and/or technologies.

ECA evolved due to the fact that environmental cost information needed in today’sbusiness decision-making cannot be sufficiently gathered from conventional accounting

procedures. Traditional accounting systems often fail to give accurate environmental cost

data owing to the following limitations:

a) Many environmental costs are hidden in the company’s

overhead or general accounts, thereby making environment-related costs invisible to business owners and managers;

b) Cost accounting systems that do not separate

environmental costs from non-environmental

costs often misallocate environmental costs toproducts and services;

c) Accounting records usually do not track

wasted materials and other flows, such as

energy and water; and

d) Some significant environment-related costs,such as future regulatory costs, potential

remediation or clean up and potential liabilities,

may not be found in the accounting records atall.

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There are two general types of costs that may be referred to as environmental

costs, namely:

a) External environmental costs, which refer to those paid for by society

(e.g., natural resources damage, biodiversity loss, health cost of

communities, etc.)

b) Internal environmental costs or environment-related costs that businesses

actually pay for or will pay for considering foreseeable future environmentalregulations, such as pollution fees, penalties, etc.

From the viewpoint of an environmental economist, external environmental costs(and benefits) are important in policy analysis and formulation. Policy makers can better

recognize the importance of environmental interventions when money value is attached to

environmental externalities. From the viewpoint of a business accountant, externalenvironmental costs (and benefits) are not easy to measure financially and are ordinarily

not considered in business cash flow estimation. However, such costs and benefits can be

estimated by a company through government rules and regulations. An example is theEnvironmental User’s Fee as implemented by the LLDA. Unless externalities are internalized

cost, they do not enter the capital budgeting process of business.

It is important to note that ECA focuses on the identification and estimation of internal

environmental costs for management decision-making purposes.

2.3.2 The Benefits of ECA

ECA provides business with valuable information to improve decision-making. Itenables managers to do:

• More accurately track and manage raw

materials, energy and waste;

• More accurately identify, estimate andmanage costs, particularly costs of

wasted raw materials and waste

management;• Better recognize and estimate the

financial and other core business benefits

of environmental management activities;and

33

• Better measure and report environmental and financial performance, thus

improving company image with customers, investors, finance providers,

employees, communities, environmental organizations and government.

Many companies use environmental cost data for both environmental and non-

environmental management activities. Environmental cost information proves useful formanagement decisions in the following areas:

a) Process/Technology Changeb) Product/Service Design

c) Purchasing

d) Supply Chain Managemente) Budgeting and Investment Appraisal

f ) Cost Control

g) Product Mixh) Performance Evaluation and Benchmarking

The government also stands to benefit from the adoption of ECA by industry. Theimplementation of ECA practices can improve the working relationship between regulatory

agencies and enterprises due to the following benefits:

a) The more the industry is able to justify environmental programs on the basis

of financial self-interest, the lower will be the financial, political and other

burdens of environmental protection on government;

b) Implementation of ECA by the industry strengthens the effectiveness of

existing government policies/regulations by revealing to companies the trueenvironmental costs and benefits resulting from those policies/regulations;

c) Government can use industry ECA data to estimate and report financial andenvironmental performance metrics for government stakeholders, such as

regulated industries or the industry partners in voluntary programs; and

d) Industry ECA data can be used to improve government program/policy

design.

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2.4 SUCCESS STORIES

2.4.1 EMS Success Story

Mactan Rock, an SME operating in Mactan Island, Cebu, is involved in themanufacture of chemicals and equipment for wastewater treatment. This company was

certified to ISO14001 in June 1999. The company President, Mr. A. Tompar, argues that

their adoption of an EMS aims to ensure that the company will ‘walk the talk’. Here aresome excerpts of his paper presented in a Technical Conference organized by EMB in year

2001.

This is the environmental policy of the company:

“Mactan Rock is fully committed to implement its EMS which includesproviding quality products and services that will prevent pollution and promotewaste minimization. The Company is also committed to the protection of thewater aquifer and develop zero-wastewater discharge technology. The companycommits to comply with the environmental requirements of the governmentand other organizations to which MRII subscribes.

It is our strong belief that a sound environmental policy contributes tothe competitive strength and benefits of our customers, shareholders, employeesand suppliers by contributing to the overall well-being of Mother Nature, ingeneral, and the communities we serve, in particular.

We will continuously seek opportunities to improve our adherence tothese principles and will periodically report progress to our stakeholders.”

EMS enabled the company to fully comply with all regulatory requirements.

“The company also commits to comply with all environmentalrequirements of the government and other organizations to which our companysubscribes. We’re proud to say that when we started all these, we realized wehad to comply with a lot of environmental laws. Since we are a small company,we were under the impression that government agencies take us for granted sothey do not really monitor our regulatory compliance. In spite of that, we’reproud to say that we have complied now with all requirements of the government– environmental laws and others like water usage, which is very important inthe protection of our aquifer. It is on record that we submit regular reports tothe DENR on our compliance to all environmental laws.”

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ISO14001 certification enabled the company to gain business competitive advantage.

“We believe that a sound environmental policy contributes to ourcompetitive strength and benefits our clients. Our competitive strength wasdemonstrated by the fact that we continue to get business in this time of economiccrisis. Before, multinational companies shied away from buying products andservices from local companies like ours. But our ISO14001 certification hashelped us a lot in increasing our market share. And we are very proud to saythat we were able to have access to a lot of multinational companies because ofour ISO14001 certification. Our shareholders are very happy for us as wesurvive and still make some money during this period of economic downturn.Our employees are also very happy to see that, instead of being laid off in2001, we were even able to create more jobs. Our suppliers are also happysince we were able to sustain and improve our business.”

EMS drove the company to strengthen its organization.

“In pursuing our EMS, it is very important that we have a very strongorganization. It is very important that not only the people behind the company,or the workers of the company, are committed but also the owners, especiallymyself. I am fully committed, as the President, to deliver the Objectives, Targetsand Programs of our EMS. One of the most important issues or problems thatwe’re trying to tackle now is really imparting EMS in each of our employees.Filipinos like to slide back, sa umpisa lang then eventually, gusto pa rin natingbumalik sa kinagawian natin (the concept of ningas kugon). So, it’s reallyimportant that we internalize it, and we’re putting a lot of efforts into that. Infact, we give monthly recognition to those who help in this effort just to sustainour EMS initiative.

Our company is a model of participative management, meaning thereal management of our company is handled by a group of people responsiblein our departments. I am the Environmental Management Representative (EMR)of our company since we are a small company. But I’m trying to delegate itnow to my daughter, who is an SGS-certified ISO14000 Auditor. In ourcompany, our Chief Environmental Manager, Senior Operating Manager andEMS Coordinator are still striving to gain knowledge, skills and techniquesfrom other companies and training institutions in pursuit of our EMS.

When we started our EMS, we put up an EMS Steering Committee tohelp us in planning, installing, implementing, monitoring and improving of

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our system. This Committee is headed by my eldest daughter with coordinatorsfrom each department as members. We have coordinators for sales, operations,administration, engineering, materials and finance.”

EMS motivated the company to adopt green accounting and influence itsstakeholders.

“Our Finance Department is now pursuing green accounting whileour Materials Department pursues greening the supply chain. We are thusconducting orientation seminars for our suppliers on their social responsibility,environmental accountability, and advocating to them the incorporation of EMSin their business management. It’s commendable that a lot of big companiesright now are trying to pursue this worthwhile endeavor. Business will betterunderstand and appreciate an EMS if other big businesses take the lead and it’sa fact that survival of business relies on the market. If the market will respondto the pursuit of greening our environment or making our environmentsustainable for the next generation, how can local business compete or survive?”

EMS has made the company proactive, enabling it to identify and evaluate itsoperations which are significant to the environment.

“When we started our EMS, we had to identify the aspects and theimpacts of our business activities, and I think we have identified 700 of these,which we graded or ranked according to how much they will affect theenvironment. This is how we realized the significance of our operations to waterpollution, especially in our location where we sit over an aquifer. If we pollutethat aquifer, we ourselves will be poisoned. We have to give priority toaddressing our use and generation of chemicals. Ground or soil pollution is oursecond priority. In the beginning, our compliance with legal requirements wasreally an important issue. The depletion of our natural resources is another.Because of this, we began, among others, to plant trees around our facility.When we started our company, our compound didn’t have a single tree sincewe don’t have lots of irrigated water. So, it was like a desert then. But now, ourcompound looks like a forest.”

EMS has made the company better understand and implement measures for theprevention of pollution.

“We have undertaken several initiatives for the prevention of pollution.We installed new pollution control devices even if the DENR issued us aCertificate of Non-coverage under the Environmental Impact Assessment

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System. We set up containment in all our storage areas and our areas ofoperations which we feel may contaminate our ground, soil and groundwater.We put up double containment which we check regularly to address possiblecracks. We also installed a few scrubbers for our mixing area. This helps usincrease our production and protect the environment. We also put absorbents,oil booms and oil skimmers into our wastewater facilities and other areas whereemergency spills from cars and trucks may occur. We also have a simple box-type wastewater treatment facility which we use to extract water for recycling.Recycled water irrigates our trees.

We are in the middle of a subdivision — the Grand Pacific Villa, anarea previously planned to be classified as commercial/industrial. And we arevery proud to say that our neighbors have no single complaint against us. Infact, we have improved our relationship with them, helping them execute theirown solid waste management and recycling programs. We pursue a Tree-planting Program in their streets every six months. This is part of the call ofour EMS—to influence our stakeholders. Our environmental awarenesscampaign, however, has also influenced our employees. They have also realizedthe relevance of EMS in their households. They are now implementing EMSprograms in their own households, remembering our policy that, by puttinggarbage in our pocket and not throwing it recklessly somewhere else, we canhelp solve the problem of solid waste in our community.

In our manufacturing plant, analysis of the soil was bad in the beginningsince, as I have said, we used to allow batteries to lie scattered around ourcompound. The battery is one of the sources of lead and, for many years, ourwarehouse was not very diligent on that. But we solved our lead problem aftertwo years simply by cleaning out operations and making sure that batteries,both big and small, are well-handled. Small batteries are put in a plastic drumwhile the big batteries are sold to battery manufacturers.

We also pursue waste segregation under our Solid Waste ManagementProgram. We compost all our biodegradable materials. Composting helps usmake our plants healthy, especially in our land in Mactan which is not veryfertile. We also recycle a lot. We have instituted recycling of our containers. Weused to buy new drums and plastic pails each time we delivered our products.Since we started recycling, our cost in new drums and pails was greatly reduced,enabling us to keep competitive prices for our products.”

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EMS prompted the company to conserve resources.

“We saved on our water expenses because of water conservation andrecycling. As we succeeded in reducing our groundwater extraction by athousand cubic meters per day, we enabled local residents to extract the sameamount of water from Mactan Island. This enabled them to save on the highcost of truck water which is more expensive during summer. In a way, ourEMS implementation enables us to help the local economy, as we contribute inensuring the availability of local water resources for domestic consumption.”

2.4.2 P2/CP and ECA Success Stories

From 1992 to 1996, the DENR implemented the USAID-assisted project entitled,

Industrial Environmental Management Project (IEMP). IEMP provided P2/CP assistance to

about 140 industrial facilities. The Project resulted in the reduction of over 33 million cubicmeters of water annually for the industrial facilities. Aside from this, the organic pollution

load was reduced by 30 tons in the same period. On the financial side, these facilities

invested some US$20 million, but realized a total benefit equivalent to US$30 million.

Among the companies assisted by IEMP were a starch manufacturer and an

electroplating shop, both in the Visayas region.

• For the starch manufacturing facility, IEMP recommended the recycling of

untreated separator water into wash water for raw material cleaning. TheP2/CP option cost the company PhP79,000 but reduced water consumption by

60%, thus, saving PhP339,960 in pumping and maintenance costs. IEMP also

recommended the installation of a tangential screen before the wastewatertreatment plant. This P2/CP option not only recovered cassava peels and bits

of tubers, but also reduced the Biochemical Oxygen Demand (BOD) load by

67%.

• The electroplating shop invested in an electrostatic rotary atomizer, which

saved the company 45% in paints and solvents or an equivalent amount ofPhP1,800,000 by utilizing centrifugal force to atomize paint and electrostatic

charging for paint to be readily absorbed by the work piece. The P2/CP change

also reduced paint sludge by 40% or about 1.7 cubic meters per year.

Likewise, the ITDI/DOST Project funded by AusAID, entitled, Wastewater Treatment

Technology Transfer and Cleaner Production Demonstration Project, assisted a textile dyeing

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corporation and a fruit juice company. These companies implemented the following P2/CP

options:

Textile Dyeing• Waste segregation (segregate wastewater according to pollution load)

• Raw material substitution (from bleaching chemicals to enzymes; use of azo-safe dyestuff)

• Process change (use of one-bath method to eliminate some steps in the

production process)• Recycling (reused condensates from machines)

• Good operating practices (monitoring of process parameters; preventive

maintenance)

For these P2/CP options, the textile-dyeing corporation spent PhP 480,000 for process

modification and optimization and PhP1,290,000 for the reuse of condensates from dyeingmachines. It, however, realized the following benefits: reduced process chemical

consumption amounting to PhP520,000 and reduced water consumption by 15% equivalent

to PhP380,000 for the former P2/CP option and decreased energy usage by 10-15%- savingthe company, on the average, PhP1,405,000 for the latter.

Fruit Juice Canning• Technology change (installation of trigger nozzles; fail-safing)

• Good operating practice (training and supervision of workers; incentives scheme)

• Recycling (return of condensate to boiler; reuse of clean-in process rinse water)

Similarly, the fruit juice canning company spent less than PhP500,000 but was able

to save more than PhP1,250,000. More important, the company reduced its pollution load

by 54.5 kilograms of BOD (Biochemical Oxygen Demand) per day.

Other ITDI/DOST-assisted companies under IPCT experienced the same thing,

i.e., environmental and economic benefits from P2/CP.

• A marine processing company in the Visayas area implemented P2/CP

through good operating practices like waste segregation, preventivemaintenance, water recycling, retrofitting and shifting to dryer cleaning methods.

For a measly sum of PhP4,300 for these P2/CP options, the company realizedthe following benefits: reduced water consumption by 50%, thus, reducing

wastewater generation by the same amount, lower requirement for cleaning

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chemicals, and reduced plant wastewater BOD concentration from 300

milligrams/liter (mg/L) to less than 100 mg/L or about 850 kg BOD/year. Annual

savings for this company was almost PhP300,000.

Investments in clean technologies also helped companies not only reduce pollution

load, but also bring down operating and waste disposal costs.

• Another IPCT-ITDI/DOST-assisted company, a homeware exportingcompany, purchased a high-volume/low-pressure (HVLP) paint spray gun forPhP16,000. The paint spray gun increased painting efficiency, thereby, reducing

paint consumption by 650 liters or PhP60,000 per annum. This means less

paint sludge to dispose of. More significantly, the higher its painting efficiencywent, the lower its fugitive paint emissions in the workplace, thus resulting in a

safer work environment.

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IIIInitiating and Sustainingan EnvironmentalManagement System

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3.1 INTRODUCTION

T his Chapter focuses on the major activities required to successfully implement

an EMS. It starts from setting up, to performing the other major componentactivities of the EMS continual improvement cycle such as PLANNING, DOING

(Implementation and Operation), CHECKING and ACTING (Review) on the

programs that an organization carries out to meet its environmental obligations. Thesemajor activities are vital in sustaining the EMS.

The requirements of ISO14001 are discussed for each major activity, includingwhy it has to be done, tasks needed to implement them and some illustrative examples to

facilitate understanding of the requirements of the standard.

3.2 SETTING UP AN EMS

There are two very important steps to carry out in setting up an EMS. Commitment

from the top management ensures that the organization is ready to embark on a project

whatever it entails to achieve success. The basis for setting up an EMS would be theresult of an Initial Environmental Review (IER) of the organization’s activities, products or

services. This will provide a gap analysis of where the organization is at the moment

against the requirements of the EMS standard.

“An environmental program can only be successful if the commitmentto make it work comes from the top, and if employees are involvedalong the way. In the same breadth, the practice of caring for theenvironment should not be limited to big companies, but should bea shared responsibility with all, regardless of company size, businessor industry.”

JUAN B. SANTOSChairman, Philippine Business

for the Environment and Chairman, NestléPhilippines, Inc.

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3.2.1 Commitment

The success of the EMS implementation depends upon commitment from all levelsand functions of the organization, especially from top management. The on-going

commitment and leadership of top management are crucial and should be obtained at the

very beginning. When implementing an EMS, top management has to commit the following:

• Make environmental management among the highest priorities

• Provide full support to the implementation of project team• Take actions to reduce the organization’s impact on the environment by

providing the needed financial and human resources, and

• Consider and plan the impact of cultural change this process will entail.

In order to effectively plan, allocate resources and monitor the progress of your

EMS implementation, you will need to draw up an EMS implementation plan. The plan

should contain the activities and responsibilities from the start, until you have successfullyimplemented your EMS, and the timeframe in which it is expected to carry out these

activities.

Table 3.2.1 on the next page shows the objective of seeking top management

commitment, tasks you will need to undertake to achieve this, and examples to illustrate

some of the needed tasks.

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Table 3.2.1Seeking Top Management CommitmentObjective: To know why an organization wants to establish an EMS

Tasks Illustrative Examples

1. Secure commitment from topmanagement• Know what the management

wants to address in the EMS

• Identify project champion

2. Appoint an EnvironmentalManagement Representative orEMR• Understand the operations of

the organization• Has the necessary authority

3. Allocate budget and directschedule• Understand that it will

entail staff and employee time,training, materials, consultingtime, and some equipment andfacilities

• Set up implementation team• Determine the EMS timeframe

for EMS development andimplementation

4. Know from management ifcertification is to be pursued ornot

• Air pollution from fumes created by the sprayingprocess and which generates public complaint

• Disposal of contaminated empty drums• Non-compliance with Clean Air Act• Energy and Water Conservation

3.2.2 Initial Environmental Review

An Initial Environmental Review (IER) of the organization’s activities, products or

services is undertaken to establish your current status vis-a-vis meeting the requirementsof ISO14001, and identify what needs to done.

The IER process covers the following:

• Identifying your aspects and impacts to gain a more complete understanding

of how the actions of your organization and employees affect the environment

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• Identifying legal and other requirements to check any non-compliance and

the organization’s commitment to comply with a corresponding program to

achieve compliance

• Looking at your environmental management practices and procedures. This

covers checking your existing overall management system and whether or notyou have some or all of the requirements of an EMS already in place

• Getting some feedback from past accidents/incidents. This involves checkingyour records of accidents/incidents and finding out if you have emergency

response actions

The conduct of an IER is not required in ISO14001, but is very useful in establishing

a basis for your EMS. However, guidance on the conduct of IER is given in PNS 1704:1996

or ISO14004:1996 documents.

Table 3.2.2 on the next page shows the objectives of conducting an IER, tasks

required to do it and examples to illustrate some of the things you will need to know.

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3.3 PLANNING

This is the first major component activity of the EMS continual improvement cycle.It covers identifying of significant aspects and impacts, determining applicable legal and

regulatory requirements and establishing environmental objectives, targets and programs.

Planning is clause 4.3 in the ISO14001 standard.

3.3.1 Environmental Aspects

The organization begins by identifying all its activities over which it has control or

influence, its products and/or services and the environmental aspects associated with it

(Clause 4.3.1). Environmental aspects are elements of an organization’s activities, productsor services that can interact with the environment. Organizations interact with the

environment when they process or manufacture raw materials, deliver products or services

or undertake activities, such as purchasing materials, repair equipment or train staff.Examples of environmental aspects are:• Emissions to air (e.g., fumes, dust or particulate matter, oxides of sulfur or

nitrogen from burning)

• Management is concerned about the following issues:- Noncompliance with current environmental

regulations- Public complaints from pollution it generates

• Paint spraying operations which emit excessive fumesand leave pigments on the ground

• ISO9002 certification• OSHAS 18000 certification

• RA 6969 covers the use and disposal of toxic andhazardous substances used by the organization

1. Know the basic environmentalissues of the business

2. Identify the operations which affector have potential impact on theenvironment

3. Know existing environmental,safety and health and qualitymanagement practices andprocedures

4. Know the legal and regulatoryrequirements of the organization

5. Know the views of interestedparties or stakeholders

6. Know feedback from previous orpast accidents or incidents

Table 3.2.2Conducting an Initial Environmental ReviewObjectives:To determine the organization’s current position with the environment

To provide the basis for establishing an EMS

Tasks Illustrative Examples

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• Discharge to water (e.g., effluent, solid waste discharges)• Releases to land (e.g., solid wastes or liquid wastes)• Resource use (e.g., electricity, water)• Human health (e.g., exposure to chemicals, solvent fumes)

Each of these aspects (CAUSES) creates impact (EFFECTS) on the environment.Impacts are any change to the environment, whether adverse or beneficial, wholly or

partially, resulting from an organization’s activities, products or services. Examples of

impacts are:• Air pollution• Water pollution• Greenhouse effect or global warming• Acid rain• Loss of soil productivity• Loss of marine life• Depletion of natural resources• Health effects (e.g., respiratory illness, allergy, hearing impairment)

It is important that organizations identify which among the environmental impacts

are significant to them to determine the significant aspects. Significant aspects are thosewith significant impacts. These aspects shall be the focus of the organization’s

environmental policy, objectives, targets and programs. The determination of significance

is done by the organization using its own set of criteria in order to prioritize, also, theactions to be taken for environmental planning. The following criteria for determining

environmental significance may be used:

Ecological factors• Quantities of air emissions• Volume of solid waste discharges• Volume of effluent discharge• Quantities of energy or water use

Environmental risk factors• Severity or seriousness of impact• Probability of occurrence• Detection of the aspect• Duration of impact

Business concerns• Legal and regulatory compliance• Cost of disposal or clean-up• Public image

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A combination of the aforementioned factors are used to evaluate whether the

environmental impact associated with an aspect is significant or not. It is also useful to

consider the site factors, such as location of the plant (i.e., urban or rural/agricultural),geology and hydrogeology of the site, spatial (i.e., size) and temporal (i.e., weather, wind

conditions) factors to assist you in determining significant impacts. Those aspects with

significant impacts become significant aspects.

Table 3.3.1 shows the objectives of aspects and impacts identification, tasks you

will need to undertake to achieve this, and examples to illustrate some of the neededtasks.

Table. 3.3.1 Identifying Environmental Aspects and ImpactsObjectives: To determine what you are trying to manage in your facility

To determine the priorities of your organization

1. Identify all your organization’sactivities, products and/or services

2. Determine all environmentalaspects and the associatedimpacts• Consider those within your

control and influence• Consider under normal,

abnormal and emergencyconditions

3. Determine significant aspects• Establish environmental

significance criteria• Evaluate impacts to

determine which aresignificant using the criteria

• Determine significant aspectsfrom significant impactsevaluation

4. Prioritize significant aspects andmaintain aspects list

5. Update list of aspects and impactsall the time

• Finishing operations, maintenance of equipment,administrative work, chemical products

• Fumes from cleaning solvents• Spray paint pigments on the ground• Resource use from electricity and water

Tasks Illustrative Examples

See Annex 3.1 for an example of an Environmental Aspect Rating System (EARS)

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1. Check all activities that arecovered by legal and otherregulatory requirements

2. Keep an updated inventory ofapplicable laws and regulations

3. Keep track of compliance records

4. Communicate to personnelresponsible for implementation

• Disposal of contaminated wastes is covered underRepublic Act 6969

• Ecological Solid Waste Management Act (RA 9003)• DAO 2000-81

Tasks Illustrative Examples

3.3.2 Legal and other Requirements

All laws and regulations that apply to identified environmental aspects related tothe organization’s activities, products or services need to be identified. Other requirements

that the organization subscribes to, such as the building code and occupational health

and safety requirements must also be included. These information should be communicatedto all personnel whose activity or task creates environmental aspects. Access to current

and proposed legislation and related developments can be sourced through the following:

• Government agency concerned (e.g., DENR, LLDA, DOST)• Non-government organizations (e.g., Partnership for Clean

Air, Luntiang Pilipinas)

• Industry associations (e.g., PCAPI)• Internet (e.g., www.emb.gov.ph)

• News dailies and environmental magazines (e.g.,

Philippines Environment Monitor, Business andEnvironment)

• Environmental symposia/fora

Initial information related to legal compliance can be derived

from the results of an IER if it has been conducted by the organization.

Table 3.3.2 shows the objectives of determining legal and regulatory requirements,

tasks you will need to undertake to achieve this and examples to illustrate some of the

needed tasks.

Table 3.3.2Determining Legal and Other RequirementsObjectives: To determine what environmental laws and regulatory requirements apply to

your organization

To determine your environmental compliance

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3.3.3 Environmental Policy

The organization’s environmental policy is a documented statement of commitmentto environment from the top management. It establishes its environmental goals and guides

decision-making in relation to the significant aspects associated with its activities, products

or services. The policy also demonstrates its commitment to the prevention of pollution,compliance to applicable laws and regulations, and to continual improvement. The standard

requires that this policy be fully communicated to all interested parties or its stakeholders

and that this be made available to the public.

Table 3.3.3 shows the objectives of formulating an environmental policy and the

tasks you will undertake to achieve this.

Table 3.3.3Formulating an Environmental PolicyObjectives: To determine your organization’s commitment to the environment

To determine your environmental goals and objectives

• Mactan Rock’s Environmental Policy in Chapter IISec 2.4.1 i.e., Success Stories

• Recycling and reuse of used papers• Water-based paints

• Security personnel• Cleaners• Chemical suppliers

• Barangay/community• Local Government Unit (LGU)

1. Establish environmental policy• Know what your significant

aspects and impacts are• Know your legal and other

requirements

2. State commitments to:• Prevention of pollution• Legal compliance• Continual improvement

3. Communicate to all employees,contractors and suppliers

4. Make available to public

Tasks Illustrative Examples

3.3.4 Objectives and Targets

Documented objectives and targets are formulated for each of the identified

significant aspects. Environmental objectives relate to the organization’s commitment to

the prevention of pollution and continual improvement, as well as legal compliance. In

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setting up the objectives and targets, the financial, technological and business resources,

including the views of interested parties must be fully considered. These objectives must

be performance-based and specific, with corresponding measurable and quantifiabletargets. The organization must ensure that these are achievable within a period of time.

Table 3.3.4 shows the objectives of setting the environmental objectives and targets,tasks involved to achieve these and examples to illustrate some of the needed tasks.

Table 3.3.4Setting of Environmental Objectives and TargetsObjectives: To determine your progress and milestones in your EMS implementation

To determine improvements in your environmental performance

1. Set objectives and targets• Know what your organization

does and its concerns• Know the organization’s

financial resources• Know what technology exists

and are available

2. Consider significant aspects,legal requirements and views ofinterested parties

3. Specify performance-basedobjectives and measurabletargets and specify performanceindicators

4. Monitor targets

• To reduce the amount of contaminated solid wastesby 30% from the 2001 volume by end of the year

• To recycle cleaning water up to 30% by June 2003• To eliminate the use of chemical-based solvents by

end of October 2003• To reduce fume emissions in the painting process by

50% from current figures at the end of the April 2004

Tasks Illustrative Examples

3.3.5 Environmental Management Program(s)

An environmental management program (EMP) is a detailed set of action plans asa means to achieving the priority environmental objectives and targets (EOTs). It outlines

what must be implemented first, by whom, how and when for each of the set objectives

and targets. The action plan must include the following:• Designating responsibility for achieving objectives and targets at each

relevant function and level;

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• Providing the means (i.e. people, skills, technology,

financial resources etc.) for fulfilling the objectives

and targets; and

• Designating a time frame within which objectivesand targets will be achieved.

It is usual to incorporate the organization’s EMP in its

overall strategic plan, such as solid waste management, energyand water conservation, and waste minimization strategies.

Additional action plans are added when there are new projects,

new or modified activities, products or services, thus, amending the EMP in the process.EMPs are reviewed on a periodic basis, and revised accordingly to reflect changes in the

organization’s objectives and targets.

Table 3.3.5 shows the objectives of establishing an environmental management

program, the tasks involved in implementing this and examples to illustrate some of theneeded tasks.

Table 3.3.5Establishing an Environmental Management ProgramObjectives: To determine your company’s environmental activities

To determine who is doing what and by when

1. Set action plan• Know your environmental

objectives and targets• Know your company’s capability

and resources available

2. Provide resources needed for eachaction

3. Specify responsible person/s

4. Include methods or means used todeliver the action

5. Indicate time table for completion

6. Track progress

• Reduce gas emissions

• PhP75,000.00

• Engineering Manager

• Install gas scrubbers to reduce emissions to air fromspraying process

• Six months

• Establishing an environmental performance indicator

Tasks Illustrative Examples

See Annex 3.2 for an example of an EMS Program Matrix indicating objective and target.

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3.4 IMPLEMENTATION AND OPERATION

3.4.1 Structure and Responsibility

Effective management of environmental issues requires well-defined roles,

responsibility and authorities in the organization. This would also entail needed resources;that is, financial, human and technology, to ensure the effectiveness and sustainability of

the environmental management system. It is important to appoint an Environmental

Management Representative (EMR) to liaise with the top management (or managementcommittee) regarding the progress of EMS implementation and operation to generate

feedback (from the implementation committee) to facilitate the continual improvement of

the environmental management system.

Table 3.4.1 shows the objectives of establishing an EMS organization and

responsibilities, tasks required to achieve these and examples to illustrate some of the

needed tasks.

Table 3.4.1Establishing an EMS Structure and Assigning ResponsibilitiesObjectives: To determine your management system structure

To determine your key EMS personnel

1. Adopt an EMS structure andorganization• Know your existing overall

management structure• Know your current

management systems• Know key environmental

issues in the organization

2. Designate an EnvironmentalManagement Representative(EMR)

3. Appoint members of theImplementation Committee (IC)

4. Assign specific tasks to ICmembers

5. Assign environmentalresponsibilities to key personneland to all employees

Tasks Illustrative Examples

• Management appoints an EMR to head the EMSimplementation committee and participate inmanagement review

• Document control officer takes charge of updatingthe EMS records

• Pollution Control Officer (PCO) ensures that all legalcompliance is monitored in the company

• Community relations officer may handle complaintsfrom the public

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3.4.2 Training, Awareness and Competence

Various programs to disseminate information about the

EMS should be undertaken. This should be done at different

levels of the organization from the top management to the shopfloor personnel and extended to contractors and suppliers. This

is to ensure that everyone has understanding of the

environmental issues that are being addressed by theorganization as part of its EMS. It is also important that specific

information, such as the environmental aspects and impacts

associated with their activities, and the organization’s productsand services are understood so that each one will know his/

her respective role and responsibility in the achievement of

the organization’s environmental policy and their set objectivesand targets. Employees whose tasks may create environmental aspects, should be trained

to become competent in preventing or minimizing adverse impact on the environment.

Competencies of personnel could be demonstrated through their education, training, skillsand experience to deliver the task.

Table 3.4.2 shows the objectives of conducting competency trainings, the tasksrequired to achieve this and examples to illustrate some of the needed tasks.

Table 3.4.2Conducting Competency Training and EMS AwarenessObjectives: To identify your organization’s training needs

To determine your personnel competency requirements

• Top management, supervisors, security guards,suppliers

• Spraying operators, hazardous waste handlers

1. Conduct training needs analysis• Know what your significant

aspects and impacts are• Know your legal and other

requirements• Know your organization

contractors/subcontractors,suppliers

• Know emergency situations

2. Organize awareness trainings forall employees

3. Conduct competency trainings forkey personnel

Tasks Illustrative Examples

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3.4.3 Communication

Communication about the environmentalaspects and the environmental management system

(EMS) has to be disseminated across all levels (top

to bottom and vise versa) and functions of theorganization. It is also important that communication

to and from external parties are properly received,

documented and given action. These allow themanagement to generate useful feedback and to

ensure improved environmental performance and

make the status are known to all its stakeholders. Allforms of media, such as electronic mail, memoranda,

notices, minutes of meetings, postage on bulletin

boards, fora or meetings, and newsletters may beutilized to disseminate information.

Table 3.4.3 shows the objective of establishing communication procedure in theorganization, the tasks required to achieve this and examples to illustrate some of the

needed tasks.

Table 3.4.3Establishing an Internal and External Communication ProcedureObjective: To determine who talks to whom

• A Memorandum to operators

• Complaint from the neighbor about excessive fumesfrom spraying

• Minutes of departmental meetings

1. Set up an internal system ofcommunicating environmentalissues across all levels andfunctions in the organization• Know the organization’s

environmental issues• Know the key personnel or

party involved

2. Set up an external system ofcommunicating environmentalpolicy to interested party

• Know common issues raisedagainst the organization fromstakeholders or interested party

3. Provide feedback from top tobottom

Tasks Illustrative Examples

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The EMS Procedures Manual contains procedures that an organization should

establish as required in the ISO14001. These are as follows:

1. Identification of environmental aspects and evaluation of environmental

significance2. Identification and access to legal and other requirements to which the

organization subscribes

3. Establishing and maintaining Environmental Management Programs

3.4.4 Environmental Management System Documentation

Documentation, in any media, such as print or electronic, is important to ensurethe effectiveness in carrying out the tasks prescribed by the environmental management

system. It would normally be in the form of an EMS manual. This manual describes the

core elements of the management system and their interaction, as well as providesdirections to related EMS documentation. The hierarchy of EMS documentation is as

follows:

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4. Training, Awareness and Competence

5. Communication

6. Document Control7. Operational Control

8. Emergency Preparedness and Response

9. Monitoring and Measurement10. Non-conformance and corrective and preventive action

11. Records

12. EMS Audit

The Operational Control Procedures Manual

contains the operations and activities of theorganization that are associated with its identified

significant environmental aspects.

Work instructions consists of specific

steps to carry out a task, particularly in areas

where deviation from the work instructioncan create an impact on the environment.

Operational Control Procedures may

contain all the Work Instructions.

Document control is necessary to

ensure that all documents created arecorrect, complete, up to date, available

and can easily be located. The EMS

documents require regular review,revision and approval to ensure they are

updated. Normally, documents have

number and revision number, effectivitydate, person who wrote, reviewed and approved the document. To ensure against

unintended use, obsolete documents should be promptly removed from all points of issue

and points of use, while obsolete documents retained for legal and/or knowledgepreservation purposes are identified as such.

Table 3.4.4 on the next page shows the objectives of controlling EMS documents,tasks needed to achieve this and examples to illustrate some of the needed tasks.

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1. Develop an environmentalmanagement manual to containcore EMS information anddirection

• Know organization operations andscope of EMS

• Know requirements for each EMSelement

• Document procedures and workinstructions

• Know your significant aspects andimpacts

• Know existing systems andprocedures or norms

• Know your operational controls andkey personnel

2. Ensure all documents haveappropriate signature of authorities

3. Assign codes on all documents forease of use, maintenance anddisposal

• Environmental policy, organizational set up

• Policy statements required by EMS standard

• Procedure for handling public complaints should beproperly filed and contained in the manual

• Procedure to reduce the emission of toxic fumes fromthe spraying process should be available at thepainting section

• EMB-G-P-001-2002where P = Procedures

G = source of the reference code

Table 3.4.4Documenting the EMS and Controlling EMS DocumentsObjectives: To create EMS documents

To implement a system for issuance, review, approval, control, retention,

distribution and disposal of EMS documents

Tasks Illustrative Examples

See Annex 3.3 for an example of an EMS document control procedure.

3.4.5 Operational Control

Activities and operations of the organization that have identified significant impacts

would need operational procedures to ensure that the environmental policy, objectives

and target are achieved. These activities and operations are critical and, therefore, shouldbe carried out under specified operating criteria in order that they are adequately controlled

to prevent or minimize their impact on the environment. These procedures have to be

properly documented to cover situations where their absence could lead to deviationsfrom the environmental policy and the set objectives and targets. Where these procedures

are relevant to suppliers, contractors and subcontractors, they have to be fully

communicated to them as well.

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Table 3.4.5 shows the objectives of establishing operational control procedures,

the tasks needed to achieve this and examples to illustrate some of these tasks.

Table 3.4.5Establishing Operational Control ProceduresObjective: To determine your operations or activities in your work area with significant

environmental aspects as well as your technical capability

1. Identify critical activities that haveenvironmental significance• Know what your significant

aspects and impacts are• Know the key operational

parameters• Know the key parameters

monitored for legal compliance

2. Develop documented operationalcontrol procedures and workinstructions for critical activities

3. Ensure personnel involved musthave required competencies

• The excessive emission of fumes from spraying

• Proper use of the spraying gun should not dischargemore than 1 kg of pigments

Tasks Illustrative Examples

See Annex 3.4 for an example of an EMS operational control procedure.

3.4.6 Emergency Preparedness and Response

The organization must address its activities, products or

services that have environmental aspects and impacts

under emergency conditions or in accidents where theycould lead to an emergency situation. These are

unexpected events and, therefore, controls must be put

in place to ensure that further damage to theenvironment is prevented. Emergency equipment and

facilities must be available and functional at all times.

An emergency team is always helpful. It must becompetent in handling such situations. Emergency

preparedness and response procedures are

important so all employees know how torespond in emergency situations. Drills and

testing of procedures and equipment must be

done on a periodic basis.

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Table 3.4.6 shows the objectives of establishing emergency preparedness and

response (EPR) procedures, the tasks needed to achieve this and examples to illustrate

some of these tasks.

Table 3.4.6Establishing Emergency Preparedness and Response ProceduresObjectives: To determine your environmental impacts under emergency or abnormal

conditions

To determine your response capability to deal with environmental aspects during

emergency situations

To determine the status of emergency equipment, facilities and preparedness

of people

1. Develop emergency responseprocedures• Determine what aspects are

significant under emergencyconditions

• Determine existing emergencyresponse procedures

• Determine controls in place toprevent occurrence and/orrecurrence of significantaspects under emergencyconditions

2. Determine the extent of impact tophysical environment and humans

3. Identify key personnel to handleemergencies

4. Key personnel should have therequired competency trainings

5. Ensure that equipment andfacilities are always functional

6. Conduct emergency drills to testpeople and equipment

7. Document any occurrence ofemergencies and lessons toprevent future occurrence

• The total failure of the scrubbing system createsexcessive and prolonged discharge of fumes to theneighborhood

• Stop finishing operation; repaint scrubber

Tasks Illustrative Examples

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3.5 CHECKING AND CORRECTIVE ACTION

3.5.1 Monitoring and Measurement

The key characteristics of the organization’s activities and operations that can

create significant environmental impacts should be regularly monitored and measured.Performance indicators are established to track environmental performance, relevant

operational controls and conformance with the organization’s objectives and targets.

Instruments used to monitor parameters must be calibrated whenever they are utilized.Records must be kept for the various measurements as well as conformances to the

established objectives and targets. Monitoring should also include compliance to applicable

environmental laws and regulations.

Table 5.5.1 shows the objectives of establishing monitoring and measurement

procedures, tasks needed to achieve this and examples to illustrate some of these tasks.

Table 5.5.1Establishing Monitoring and Measurement ProceduresObjectives: To determine what you are actually doing

To determine how much you are actually doing

1. Develop procedures on how youmonitor and measure operationalactivities associated withsignificant aspects and impacts• Know your activities that need

to be monitored and measured• Know what you can monitor

and measure• Know legal compliance

monitoring requirements

2. Maintain records that haveinformation to trackenvironmental performance

3. Conduct regular maintenance andcalibration of equipment andfacilities

4. Keep maintenance and calibrationrecords

• Spraying operations

• Fumes at the spraying process

• Quantities of fume emissions

Tasks Illustrative Examples

See Annex 3.5 for an example of an EMS monitoring and measurement form.

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3.5.2 Non-Conformance, Corrective and Preventive Action

The organization must take corrective actions for any occurrence of environmentalaspects and non-conformance to the environmental management system. Preventive

measures are necessary to ensure that similar situations do not occur again. In addressing

non-conformance, the root cause has to be identified and investigated so that measurestaken become effective. Responsibility and authority are important to ensure who initiates

and completes the appropriate corrective and prevention action as well as the follow-up

activities.

Table 3.5.2 shows the objectives of identifying non-conformities and establishing

corrective and preventive actions, tasks needed to achieve these and examples to illustratesome of these tasks.

Table 3.5.2 Identifying Non-conformance and Establishing Corrective andPreventive Actions

Objectives: To determine your non-conformance with EMS criteria

To determine your inconsistencies with established procedures and work

instructions

• Excessive fume emissions

• Incompetent operator

• Train operator

1 Determine what yournonconformities are• Know criteria of non-

conformities• Know the cause of non-

conformities

2. Identify the actions to mitigateenvironmental impacts by the non-conformance

3. Identify corrective/preventiveactions to correct non-conformance

4. Evaluate the corrective action

5. Record reports of details of thenonconformance

Tasks Illustrative Examples

See Annex 3.6 for an example of an EMS Non-conformance Action Report (NCAR).

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3.5.3 Records

Records are necessary to show that the environmental management system isfunctional and effective. Procedures allow the identification, maintenance and the disposal

of environmental records covering operational and management activities, such as training,

audits and reviews.

Records are also evidence of the ongoing operation of EMS. In addition to the

above, records should also cover:

• legislative requirements, other regulatory

requirements and permits (register ofenvironmental regulations)

• Environmental aspects and their

associated impacts (environmental effectsregister)

• Inspection, maintenance and calibration

records• Incident reports

• Product identification, composition and

property data• Contractor and supplier information

• Emergency response records

be stored and maintained in a manner where these can be retrieved easily and protected

against damage, deterioration or loss. The organization must also establish and recordretention times for records.

Table 3.5.3 on the next page shows the objective of identifying EMS records,tasks needed to achieve this and examples to illustrate some of these tasks.

Environmental records must be legible,

identifiable and traceable to the activity,

product or service involved. The records must

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3.5.4 EMS Audit

The organization needs to monitor achievement of the environmental policy. The

audit is conducted on a regular basis to verify whether or not objectives, targets and

programs are carried out as planned; and, that nonconformance to the EMS are givenappropriate and effective corrective and preventive action. An audit plan is prepared to

ensure that scope, objectives, methodologies as well as responsibilities and competencies

are clearly identified. Results of audits should be reported to the top management for itsimmediate action.

Table 3.5.4 on the next page shows the objective of conducting an EMS audit,tasks needed to achieve this, and examples to illustrate some of these tasks.

1. Identify what your EMS records are• Know established procedures• Know operational controls• Know emergency

occurrences• Know key monitoring and

measurement parameters

2. Codify records for ease ofaccessing and utilization

3. Define a system of collecting,controlling and keeping of records

4. Ensure records are updated

Table 3.5.3Identifying EMS RecordsObjective: To determine what you have managed

Tasks Illustrative Examples

• Amount of water used for cleaning purposes• Quantity of air pollutants emitted from spraying

operations• Number of bags of collected contaminated solid

wastes per day

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3.6 MANAGEMENT REVIEW

After internal or external audit are conducted, management evaluates its results tocheck the continuing suitability, adequacy and effectiveness of the EMS. The review should

be broad enough in scope to address the environmental dimensions of all activities,

products or services of the organization, including their impact on financial performanceand, possibly, competitive position. Not all components of the EMS need to be reviewed

at the same time. But they can be reviewed collectively over a period of time. It is also

important to review policies, systems and procedures for appropriateness and efficacy.

The review process should cover:

• review of environmental objectives, targets and programmes• EMS audit report

• an evaluation of its effectiveness and

Table 3.5.4Conducting Internal EMS AuditsObjective: To determine if the organization is doing what it says

1. Prepare an audit plan• Must have implemented EMS

for at least three months• Know all EMS documents

2. Specify the following in the auditplan:• Scope and purpose• Date and location• Methodology and reporting

3. Conduct regular EMS audit basedon audit plan

4. Ensure that EMS internal auditorsare trained and competent

5. Document and present auditfindings

6. Keep audit reports

• Environmental Management Manual

• Compliance audit of finishing section

• Check procedures• Interview personnel

• Every six months

• Audit report in management review

Tasks Illustrative Examples

See Annex 3.7 for an example of an EMS audit plan.

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1. Hold periodic managementreviews

2. Consider results of EMS audits

3. Review set of environmentalobjectives and targets

4. Check progress of environmentalmanagement program

5. Record results of reviews

6. Implement any changes to EMS

• Twice in a year

• Audit findings

• A proposed installation of scrubber

• Record of minutes of meetings

Tasks Illustrative Examples

• an evaluation of the suitability of the environmental policy and the need for

changes in view of:

• changing legislation• changing expectations and requirements of interested parties

• changes in the products or activities of the organization

• advances in science and technology• lessons learned from environmental accidents

• market preferences and

• reporting and communication

Table 3.6 shows the objective of conducting management reviews, tasks required

to achieve this and examples to illustrate some of these tasks.

Table 3.6 Conducting Management ReviewObjective: To determine where you want to go next

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IVEstablishing aPollution Prevention/Cleaner ProductionProgram

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This chapter discusses the various phases involved in a P2/CP Program based

on models implemented in the country. The P2/CP Program Overview in Figure

4.1 provides a summary of these phases and their corresponding activities.

The key elements of an effective P2/CP Program from the experience of

Philippine companies are also presented. Moreover, the P2/CP options are reviewed to

distinguish what are P2/CP and what are not. Lastly, this Chapter ends with a discussion

on the relationship of P2/CP with an EMS.

4.1 P2/CP PROGRAM OVERVIEW

Since 1990, a number of foreign-funded projects provided the Philippines with

technical assistance on P2/CP for both industry and government. These included projects

of the International Development Research Centre of Canada, UNEP/UNIDO, United States

Agency for International Development (USAID), Asian Productivity Organization (APO),

Green Aid Plan of Japan and the Australian Agency for International Development

(AusAID). Each assistance program has its own assessment protocol. But, basically,

these protocols involved five major phases, namely: Planning and Organizing, Assessment,

Feasibility Analysis, Implementation, and Monitoring.

The IPCT of the ITDI/DOST put together all these protocols and developed a P2/

CP Program applicable to Philippine conditions, particularly to small and medium

enterprises. Still, the IPCT-ITDI/DOST protocol contains the five major phases enumerated

above. Figure 4.1. provides an overview of the P2/CP Program showing all the phases.

4.1.1 Planning and Organizing Phase

For management to commit itself to a P2/CP Program, it must recognize the need

for P2/CP. This can be best realized by first identifying environmental and economic

issues confronting the company, such as regulatory pressure, community complaints,

high cost of treatment and disposal of waste, etc. The environmental and economics

issues become drivers of change in a company to adopt P2/CP. It is easier to convince

management to adopt P2/CP if it is aware of its benefits and sees companies practicing

P2/CP.

A P2/CP task force, organized for the purpose of the Program, facilitates the overall

P2/CP implementation. The task force, headed preferably from the highest level, develops

the plan and directs its implementation. Ideally, task force members must have sufficient

technical, business and communication skills. In most cases, the task force members

must be oriented on P2/CP concepts and methodologies. Their respective roles,

responsibilities and authorities must also be clarified at this stage.

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Figure 4.1 P2/CP Program Overview

TOP MANAGEMENT COMMITMENT• Identify Issues – Regulatory, Complaints, Occupational Health Hazards Incidents• Recognize Need to Establish P2/CP Program• Get Management Support

PLANNING AND ORGANIZING PHASEOrganize P2/CP Task Force• Organize Task Force – IPCT and company personnel/management• Orient on P2/CP and P2/CP AssessmentSet Goals• Review Corporate Policies• Identify Driving and Restraining Forces• Set P2/CP Goal (s) / Criteria for PrioritizationIdentify Focus Area• Collect and Review Data – Process Flow Diagram (PFD), Raw Materials and Other InputsProducts, Plant Layout, Organizational Chart, Initial Environmental Examination (IEE), Pollution

Control Officer (PCO) reports, etc.• Verify or Construct PFD through Facility Walkthrough – Cover all areas from receiving/warehouseto storage/distribution, Inspect process flow, Auxiliaries, Identify raw materials, Products and

By-products• Identify Waste Streams and Current Waste Management Practices• Obtain Overall Material Balance• Identify Priority Area(s) – Focus for Detailed AssessmentPlan P2/CP Assessment• Establish Environmental Performance Indicators (EPI)• Schedule Detailed P2/CP Assessment

ASSESSMENT PHASE: FACILITY DIAGNOSIS• Organize P2/CP Assessment Team – delegate tasks and focus areas• Collect Data for EPI• Do Material and Energy Balance• Cause Diagnosis – determine root causes of waste generation• Set Objectives – should be specific, measurable, attainable, relevant, time-bound• Generate Options – integrate all possible options• Classify Options – screen options according to practicality/viability

ASSESSMENT PHASE: DOCUMENTATION• Record Findings – briefing, consultation with top management• Develop Recommendations – simplify and finalize• Prepare Schedules and Designate Tasks – for implementation, monitoring, next visit• Prepare FiRST Report – furnish brief report to top management

FEASIBILITY ANALYSIS PHASE• Identify and Fill up Data Gaps• Feasibility Analysis: Technical, Environmental, and Economic Studies

IMPLEMENTATION PHASE• Select Projects for Implementation• Obtain Funding• Install Equipment/ Implement P2/CP Option• Conduct Training/ Review and Adjust

MONITORING and EVALUATION PHASE• Acquire and Analyze Data• Evaluate Economic and Environmental Performance

SUSTAINING the P2/CP PROGRAM

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while restraining forces have to be identified early in the process so that the company can

overcome them immediately. These forces are presented in detail in Chapter II (see Sections

2.2.3 and 2.2.4).

The P2/CP Program goal, consistent with corporate policies, helps develop criteria

for prioritizing which issues/waste to address during the Assessment Phase of the Program.

Prioritization will eventually help concentrate the efforts of the task force. With the criteria,

the task force identifies the area(s) of focus. This can be achieved by collecting and

reviewing facility data; verifying or constructing a process flow diagram through a facility

walkthrough; identifying waste streams and current waste management practices; and

developing an overall material balance.

Facility data include process flow diagrams, production data (raw material

consumption, production outputs, etc.), plant layout, organizational chart, environmental

reports and permits, utility bills, equipment specifications, and others. A facility walkthrough

helps the task force verify or construct the flow materials inside the plant and identify

waste sources. The UNEP/UNIDO Technical Report Series No. 7 on Audit and ReductionManual for Industrial Emissions and Wastes provides

for a very good guide in preparing material balance for

plant operations.

After identifying the focus area(s), the P2/CP

task force develops a schedule for the next phase. In

developing the schedule, it is important to pay particular

attention to the following operations: make-up chemical

addition, start-up and shutdown, equipment cleaning

and shift changes.

Table 4.1.1. on the next page provides examples

of tasks to be undertaken under the Planning and

Organizing Phase.

After its organization, the P2/CP task force sets

the P2/CP goal by reviewing corporate policies and

identifying company-specific driving and restraining

forces. The task force may develop corporate

environment policy. If there is none, it must align the

P2/CP Program with existing corporate policies. As a

stepping-stone to the implementation of an environmental

management system, the corporate environment policy

can be formulated in accordance with the International

Organization for Standardization (ISO) 14001 standards.

Driving forces help move the Program further forward

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responsible for undertaking the Program

Table 4.1.1 Illustrative Examples of Tasks Under the Planning and OrganizingPhase

Objective: To delineate P2/CP Program goal and identify persons in the organization

P2/CP task force members may include representativesfrom production, quality control, purchasing, accountingand human resource departments and the pollutioncontrol officer.

The P2/CP program goal may be related to compliance,increased productivity, improved quality and/or reducedwaste generation.

The P2/CP program goal must be consistent with theorganization’s environmental policy and its other policiesand programs.

Driving forces could be related to regulatory, financial,environmental, public image, employee’s welfare andcompetitiveness issue. Other factors, on the otherhand, may be related to financial, economic, policy,organizational, technical and conceptual issues.

Criteria for prioritization may be based on the severityof a problem, its frequency of occurrence, costimplications of possible solutions and cost of not takingany action on the problem area.

A focus area could be that part of the production facilitythat generates the most amount of waste or anequipment that causes a lot of rejects.

The following information can assist in the identificationof the focus area(s): process flow diagram, productiondata (raw material and other inputs and product andwaste outputs), plant layout, organizational chart, initialenvironmental review, pollution control officer’s report,engineer’s report, utility bills, etc.

A company-supplied process flow diagram may not bevery accurate; e.g., what is labelled as simply packagingmay involve more than just one step.

Waste in each production step does not include onlywastewater, solid waste and air emissions, but, alsospilled raw materials, fugitive emissions, leakingpipelines, etc.

Organize and orient P2/CP task force

Set P2/CP program goal(s)

Review corporate policies

Identify driving forces and otherfactors for consideration

Set criteria for prioritization

Identify focus area(s)

Collect and review data

Verify or construct process flowdiagram through a facility walkthrough

Identify waste streams and wastemanagement practices

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Obtain overall material balance

Plan P2/CP assessment

Establish environmental performanceindicators (EPI) = basic data/reference figures

Schedule detailed P2/CP assessment

What goes into the facility must come out of it, either asa product, by-product or waste; any discrepancy is anindication of unaccounted input and/or output.

Planning the assessment includes not only schedulesand tasks, but, also the identification of what informationto collect and who to interview during the assessment.

EPI measures the performance of a company’s inputsand/or waste generation vis-à-vis its production; basicdata include material input, packaging, energy input,solid waste, wastewater, air emission, transportation,occupational accidents, training and environmental costwhile reference figures include product output, materialinput, energy input, water input, number of employees,workdays, sales and production cost.

P2/CP assessment should coincide with plant operations;of particular interest in those processes are: during themake-up of chemical addition, start-up, change shift,preparation for shut down and cleaning and maintenanceactivities.

Table 4.1.1 cont’d.

Tasks Illustrative Examples

4.1.2 Assessment Phase

Activities during the Assessment Phase include the following: organization of

focus area(s), assessment team, collection of data for environmental performance

indicators, performance of material and energy balance of focus area(s), diagnosis of

cause of waste generation, setting of objectives, and generation and classification of

options.

Note that the P2/CP assessment team is different from the P2/CP task force. The

task force provides the overall direction of the Program while the assessment team is in

charge of the tasks enumerated above. As such, the assessment team may include

operating staff directly involved in the focus area. However, the task force may still

participate in the detailed assessment, as it can provide objectivity in observing focus

area operations.

After identifying waste sources, the assessment team analyzes and identifies the

root cause(s) of waste generation. A number of engineering and management tools are

Tasks Illustrative Examples

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available for this purpose. Among these are interviewing,

check sheets, Pareto analysis, 5W2H (who, what,

where, when, why, how, how much) method, cause-

and-effect diagram, and eco-mapping. The

determination of the root cause(s) can help the

assessment team set practical objectives.

With the objectives set, the

assessment team can now identify possible

P2/CP options to help solve the waste-

generation problem. Again, engineering and

management tools are available for this work.

These are brainstorming, layout design, 5S (sort,

systematize, sweep, standardize, self-discipline), benchmarking, and failsafing or

mistake-proofing. Solutions can also be searched from literature, the Internet and best

practice guidebooks.

Figure 4.1.2 Cause Diagnosis and P2/CP Options

Recycling

Recovery & ReuseReclamationRaw Material/

Intermediate in WasteStream

Valuable Material inWaste Stream

Source Reduction

Product Changes Source Control

Input Material ChangeChoice of Raw Mate-

TechnologyChange

Good Housekeeping

Improved Equipment/Layout

Improved OperatingConditions

New Technology

Product Specifications

Operating/MaintenanceProcedures

Equipment/LayoutNeeds Improvement

rial

Process ControlOld Technology

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Figure 4.1.2 presents the possible general causes of waste stream generation

and the corresponding P2/CP options following the various techniques of applying

source reduction and recycling to reduce waste.

Once P2/CP options have been listed, especially if brainstorming methodology

was used, the options must be screened and classified as practical, low-cost/low-risk, and

for further financial and technical study. Likewise, the options can be prioritized by

considering the following factors: capability to achieve goal of reduction, benefits, existence

of technology, cost-effectiveness, effect on production run, convincing evidence, additional

requirements (labor, utilities), and effect on multimedia transfer of pollution.

Documentation of the assessment findings and recommendations is important. A

preliminary report, referred to as the FiRST (Findings, Recommendations, Schedules and

Tasks) Report by IPCT-ITDI/DOST, containing these recomendations (P2/CP options),

schedules and tasks for implementation can help guide the task force and top management

in providing the necessary resources for the next three phases of the P2/CP Program.

A detailed report of the P2/CP Assessment must be prepared. This report

incorporates, aside from the former information, technical and financial analysis of

alternatives. During the preparation of the detailed report, the assessment team may

have to return to the facility to collect any data gap.

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Organize P2/CP assessment team

Collect data for EPI

Do materials and energy balance

Perform cause diagnosis

Set objectives

Generate P2/CP options

Classify P2/CP options

Record findings

Develop recommendations

The P2/CP assessment team, not to be confused withthe P2/CP task force, is responsible for the actual P2/CP assessment; the team may include operating staffdirectly involved in the identified focus area or personnelwhose functions may have impact or have generatedimpact to the activities in the focus area.

EPI for a focus area, such as for an electroplatingprocess, may be the amount of chemicals used persurface plated; for a painting job, it may be liters of paintper number of items painted; for a cooking vat, kilogramsof gas per kilogram of product.

Actual measurements during operations may benecessary to obtain the materials and energy balance.

The cause of waste generation may be related toequipment operation and maintenance procedures,process efficiency, equipment design and layout, choiceand quality of input materials, choice of productiontechnology, presence of raw material of intermediateproducts in waste stream, presence of potentiallyvaluable components in waste stream or productspecification.

Objectives should be specific, measurable, attainable,relevant and time-bound; e.g., to reduce waterconsumption by 10% within six months.

P2/CP options may involve changes in productspecifications, changes in choice of raw materials, goodhousekeeping practices, improved equipment or facilitylayout, improved operating conditions, use of newtechnology, recovery.

Options generated, specially using brainstorming, maybe classified as practical, low-cost/low-risk and for furthertechnical and financial evaluation. Low-cost/low-riskoptions are also referred to as low-hanging fruits.

Findings include the quantification of waste and theidentification of their causes.

Recommendations include P2/CP options generatedduring the P2/CP assessment.

Table 4.1.2. on the next page provides examples of tasks to be undertaken under

the Assessment Phase.

Tasks Illustrative Examples

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Table 4.1.2Illustrative Examples of Tasks Under the Assessment PhaseObjective: To identify waste sources and causes and potential P2/CP options to reduce

waste generation

4.1.3 Feasibility Analysis Phase

The Feasibility Analysis Phase involves evaluation of P2/CP according to its

economic and technical viability. The economic or financial feasibility of a P2/CP may be

determined using the following financial indicators: payback period, net present value,

benefit/cost ratio and/or internal rate of return. The chapter on Environmental Cost

Accounting presents these items in more detail.

Prepare schedules and designatetasks

Prepare initial P2/CP assessmentreport

Implementation of P2/CP options may be short-term(within six months) or long-term (more than six months).

This report contains findings (waste quantities andsources), recommendations (P2/CP options), scheduleand task assignments.

Tasks Illustrative Examples

Table 4.1.2 cont’d.

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Identify and fill up data gaps

Perform feasibility analysis of P2/CPoptions

Technical

Environmental

Economic

Not all information may be available during the P2/CPassessment. In the course of the preparation of theP2/CP assessment report, it may be necessary to returnto the facility to collect these data. Since most PhilippineSMEs lack data on their production, it is important thatthey develop a monitoring program for their activities.

P2/CP options are evaluated according to their technical,economic and environmental viability.

Technical evaluation considers not only functionality ofthe options, but, also impact on worker health and safety,product quality, space requirements, compatibility withexisting production processes and labor requirements.

Potential environmental impact of the options includeeffect on the number and toxicity of waste streams,transfer to other media, energy consumption, etc.

Financial feasibility may be evaluated using benefit-costratio, internal rate of return, payback period, etc.

Technical evaluation considers not only functionality of the P2/CP option, but, also

its impact on worker’s health and safety, product quality, space requirements, compatibility

with existing production processes and labor requirements. It will be to the advantage of

the facility if it consults people or groups that may likely be affected by the P2/CP option;

e.g., if product quality is affected, solicit the opinion of the customer; if a new raw material

will be utilized, consult with the purchasing department. Likewise, research and

development or trial runs have to be done to prove the technical feasibility of the option.

Aside from technical and financial evaluation, the environmental impact of the

option must be considered. These may include effect on the number and toxicity of waste

streams, transfer to other media, energy consumption and other environmental impacts.

A change in process may eliminate the generation of wastewater, but, energy consumption

may increase.

Table 4.1.3 provides examples of tasks to be undertaken under the Feasibility

Analysis Phase.

Tasks Illustrative Examples

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Table 4.1.3 Illustrative Examples of TasksUnder the Feasibility AnalysisPhase

Objective: To evaluate the technical, financialand environmental viability of P2/CP options

4.1.4 Implementation Phase

Once P2/CP options are chosen forimplementation, management approval issought to fully realize the benefits of P2/CP. Thetask force convinces top management of themerits of the options. Funds for the options maybe sourced internally or from banks.Implementation of these P2/CP projects doesnot differ with an ordinary project. It requiresconceptualization, planning, execution (alsoincludes procurement, construction, installation)and termination. Likewise, training may haveto be provided to personnel affected by the changes.

Table 4.1.4 provides examples of tasks to be undertaken under the ImplementationPhase.

Select P2/CP projects for implemen-tation

Obtain funding

Install equipment/implement P2/CPoption

Conduct training

Review and adjust

Based on the technical, environmental and economicviability and the prioritization criteria of the facility, P2/CP projects are selected for implementation.

Funding for P2/CP projects may either be internally orexternally generated.

The implementation of a P2/CP project does not differfrom any regular project. It may need conceptualization,planning, execution (procurement, construction andinstallation) and termination.

Training of personnel for the implementation is criticalin the implementation of the P2/CP project. The skills,knowledge and; more importantly, the attitude of staffmay have to be changed or upgraded.

The P2/CP project may need some fine-tuning onceimplemented; thus, a review of the project is necessaryand adjustments have to be made, if needed.

Tasks Illustrative Examples

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Table 4.1.4 Illustrative Examples of Tasks Under theImplementation Phase

Objective: To implement identified P2/CP options orprojects

4.1.5 Monitoring and Evaluation

Monitoring requires the quantitative measurementof the progress of P2/CP implementation. Environmentalperformance indicators developed during the Planning andOrganizing Phase determine the environmental andeconomic impact of the options. In the gathering andclassifying of data, the following guidelines are provided:collect from the same sampling or measurement pointsusing the same collection methods, preferably by the sameperson using the same instruments; document datacollection criteria per indicator; and specify frequency ofmeasurements.

Likewise, it is important to normalize the data to adjust to external factors. Commonnormalization factors considered are: total employee hours; area, weight or volume ofraw materials purchased; and sales of products.

Finally, it is mandatory to review and, when necessary, adjust the goals andobjectives of the P2/CP Program. Reiteration of the Assessment Phase is done in thelight of further reducing waste generation and/or developments in the business, technologyand legislative field. The P2/CP Program will also have a greater chance of success if it ispart of the company’s EMS.

Table 4.1.5 shows examples of tasks to be performed under the Monitoring andEvaluation Phase.

Table 4.1.5 Illustrative Examples of Tasks Under Monitoring and EvaluationObjective: To measure the progress of P2/CP projects and institute adjustments if necessary

Acquire and analyze data

Evaluate economic andenvironmental performance

Quantitative evaluation of the impact (both in terms ofcosts and environmental) is important in the monitoringof the P2/CP program. Data on EPIs identified earliermust be collected.

The evaluation of the economic and environmentalperformance of the P2/CP program must take intoaccount external factors. It is important to correlate EPIswith inputs and outputs of the facility being assessed.

Tasks Illustrative Examples

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4.2 ELEMENTS OF AN EFFECTIVE P2/CP PROGRAM

In the course of its implementation, the IPCT-ITDI/DOST identified the following

features of an effective P2/CP Program:

4.2.1 Top Management Commitment. For the simple reason that top management

has both operation control over production and environmental policy decisions,

the commitment of top management is critical to the success of any P2/CP program.

Since changes in the manufacturing areas are usually needed in the implementation

of P2/CP programs, the approval of top management must be sought before any

of these changes can be effected.

4.2.2 Strong Motivation on the Part of Operating Personnel. The production personnel

cause much of the waste generated in an industrial facility; as such, their

participation in solving pollution problems through P2/CP is required. IPCT observed

that operating personnel are motivated to implement P2/CP not only by rewards

and recognition, but, also by their awareness of the environmental consequences

of the waste they generate.

4.2.3 Technologies Are Simple and Easy to Implement. Simple modifications to existing

equipment have provided for a number of success stories in the Philippines.

Inserting baffles to existing rinse tanks or by pipes and fittings can result in

countercurrent flow rinsing, which reduces water consumption to as high as 90%.

4.2.4 Immediate Realization of Benefits. Management commitment becomes firmer

once it sees that P2/CP implementation immediately redounds to cost savings

and increased production outputs. Safer working conditions and, at times, simpler

operating practices that reduce waste, motivate employees to cooperate in the

implementation of P2/CP. Modification of facility layout saves space and distance

for employees, thus, entailing lesser effort for them.

4.2.5 Waste Assessment by Trained and Unbiased Personnel to Identify WasteSources and P2/CP Options. Trained and unbiased personnel provide for an

objective observation of facility operations. The use of a waste assessment protocol,

such as the one that will be presented in the succeeding subsection, guided both

technical assistance providers and facility staff in identifying waste sources and

their root causes. With root causes identified, the assessors can easily come up

with appropriate P2/CP options.

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4.3 OPTIONS FOR POLLUTION PREVENTION/CLEANERPRODUCTIONThe matrix below shows the P2/CP options and examples of applications.

Table 4.3 Matrix of P2/CP Options with Examples

P2/CP Option Sub-option Applications

Source Reduction Product Change

Process Change • Input

Material

Change

• Technology

Change

• Improved

Operating

Practice

Recycling Reuse

Reclamation

• Production of Compact

Fluorescent Lamp (CFL)

instead of ordinary

fluorescent lamp

• Production of low-volume/dual-

flush water closets

• Use of water-based paints

instead of solvent-based paint

• Use of non-cyanide plating

process instead of cyanide

plating process in production

• Modifying rinse tanks to effect

countercurrent flow instead of

co-current flow

• First In-First Out or FIFO Stock

Inventory

• Improvement of Materials

Handling

• Use of cooling water for wash

water

• Chromium recovery in leather

tanning

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4.4 WHAT ARE NOT P2/CP

Pollution control measures which are applied after the generation of pollutants arenot categorized as pollution prevention. Examples are waste treatment processes, volumereduction and dilution. Treatment has been discussed on page 28. Volume reductioninvolves concentrating hazardous or toxic constituents, like drying of a heavy metal-containing sludge before disposal, which decreases the sludge water content and wastevolume, but not the amount and toxicity of heavy metals in the sludge. Dilution, on theother hand, involves diluting a waste stream with water after generation, but does notreduce the absolute amount of hazardous constituents discharged into the environment.

4.5 P2/CP PROGRAM AND ENVIRONMENTAL MANAGEMENT SYSTEM

The P2/CP Program plays an important part in the implementation of theEnvironmental Management System (EMS). Chapter III provided for a more detaileddiscussion on EMS.

The first element of an EMS, environmental policy, refers to a company’scommitment to the prevention of pollution. Although this may be achieved through propertreatment systems, a P2/CP Program is a more logical option as previously discussed,i.e., because of the environmental and economic benefits. Apart from the commitment tothe prevention of pollution, the EMS environmental policy requires the company’scommitment to continuous improvement. As such, a P2/CP Program is definitely acontinuous improvement process as the Program suggests a reiteration of the AssessmentPhase to further reduce pollution load, increase savings and productivity, and improveworking conditions.

Under the second element of EMS (Planning), a P2/CP Program can help achievean organization’s goals, objectives and targets for its environmental management program(EMP). In fact, a P2/CP Program should be an integral component of the EMP. A P2/CPProgram describes the means for achieving environmental objectives andtargets. Companies certified to ISO14001 standards usually have a P2/CP Program as part of their EMP.

Finally, as discussed in the previous chapters, pollution caneventually lead to economic slowdown and, possibly, social instability.P2/CP, on the other hand, can increase productivity, meaning, a moreefficient, economical and effective utilization of resources. Thistranslates to cost-effective products in the market that could spureconomic development and growth. A better economy means betterstandards of living and human welfare. P2/CP is not only good for theenvironment, but, also makes good economic sense.

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VAssessing the Profitabilityof Pollution Prevention/Cleaner ProductionInvestments throughEnvironmental CostAccounting

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T his Chapter discusses the guidelines on how to apply Environmental Cost

Accounting (ECA) in the profitability assessment of P2/CP investments. The

goal of this ECA guide is, thus, in the area of capital budgeting decisions,

particularly to provide information to help improve the practice of P2/CP

financial analysis. More complete and accurate recognition of cost savings and less tangible

benefits can lead companies to invest more in P2/CP projects that improve competitiveness

and long-term sustainability.

It should be emphasized, however, that

environmental cost information can be used to influence

many types of management decisions in companies.

ECA can be used for different types of management

decisions such as in purchasing, inventory control and

supply chain management. One of the most practical

applications of ECA is, as a profitability assessment

tool for investment projects that prevent wastes and

save money for the company.

Discussion in this chapter is limited to

P2/CP for simplification purposes. Section 2.1.5,

p.19, Chapter II enumerated the costs to consider in

an EMS investment.

5.1 STEPS IN ECA

Tools and approaches for identifying and estimating environmental costs and

savings for P2/CP Financial Analysis are discussed below.

An important consideration in profitability assessment is the inclusion of complete

and accurate cost and benefits information. Researches show that one of the barriers to

increased investments in P2/CP and other environmental improvements is the

underestimation of the financial and less tangible benefits resulting from such projects.

This is attributed in part to conventional accounting practices that limit the ability of

companies to identify, track and allocate environment-type costs incurred in operations.

ECA addresses this difficulty and provides a way by which environmental cost and savings

information can enter the financial decision-making process.

The application of the following ECA tools and approaches can assist companies

in comprehensively identifying costs and savings needed in P2/CP project analysis:

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compare data from the accounting records with what is actually happening in the facility to

improve cost estimates. To facilitate the identification and estimation of environment-related

costs in a facility, it is advisable to form an ECA team composed of personnel from the

departments mentioned below:

1. Accounting Department

2. Purchasing / Materials Control and Inventory

3. Maintenance and Engineering Department

4. Production Department

5. Environment, Safety and Health Department

6. Quality Control

7. Research and Development

8. Sales and Marketing

9. Legal Department

5.1.3 Draw Process Maps

Only through a good understanding of the company processes can environmental

cost data be identified, traced and estimated. Mapping is a graphical representation of a

process and is one of the most useful tools for data identification and estimation. Mapping

the current process and the new process (after P2/CP) will help in determining the relevant

costs that must be included in project analysis.

5.1.1 Get Management Support

The company’s senior management approval and

support should first be secured before undertaking ECA in

a company. Senior management provides the authority and

sets the tone for supporting cooperative efforts to identify

and gather all the relevant environment-related costs

associated with the proposed P2/CP project.

5.1.2 Organize ECA Team

Teamwork is critical since most environmental

costs and savings information can only be estimated by

an analysis of data from different departments and

through interviews of managers and personnel. Aside

from accountants, other company professionals will have to

get involved in ECA efforts. Engineers, in particular, can

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5.1.4 Do Material and Energy Balances

Material and energy balances help in the quantification of costs related to waste

generation and management. This is important in P2/CP project analysis as P2/CP has its

greatest impact on waste generation and its costs. Company engineers need to do material

balances in order to arrive at a good estimation of materials going out of the facility as

wastes. Physical unit information provided by the material balances will then be utilized to

estimate the cost savings generated by the reduction of waste under the P2/CP project.

A material balance basically says: What comes in must come out – somewhere.

So, a raw material used in a facility comes out, either in the form of product or of waste. In

the absence of chemical reactions, the general formula for a materials balance over a

given period is:

Input + Initial Inventory = Output + Final Inventory

Input includes raw materials and output includes both intended products and

unintended wastes. The inventory could include inventories of raw materials or final product

in the stockroom or inventories of waste, e.g., a pile of solid scrap waiting to be disposed.

5.1.5 Use Cost Checklist

In combination with process maps, the Cost of Waste (Environmental Costs)

Checklist can help in identifying the most relevant and significant costs related to the

generation and management of waste in companies. In P2/CP, many components of the

costs of wastes will be reduced. Cost savings provide a financial basis for investing in

P2/CP.

There are three major categories of cost of waste, namely: (1) operating inputs

(associated with lost manufacturing inputs), (2) waste management and treatment costs,

and (3) less tangible costs.

The Cost of Waste Checklist in the next page gives a classified listing of a company’s

environmental costs.

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Waste Management Labor

• equipment operation• supervision• inspection/QA/QC• environmental permitting• environmental training• sampling/monitoring• medical surveillance• waste collection and handling• waste labelling• spill clean-up• recordkeeping• regulatory reporting• inspections

Waste ManagementFloor Space

• rent• mortgage

Waste Management Fees

• permit fees• emissions fees• disposal fees• legal fees• laboratory fees• training fees

Waste Management

• Depreciation and taxes• depreciation of equipment• taxes• tax credits

Waste Management

• Cost of Capital• financing costs• investment opportunity

Waste ManagementMaterials

• raw materials• solvents• catalysts• water• gases• office supplies• protective equipment• spill response equipment• containers• labels

Waste ManagementEnergy

• electricity• natural gas• coal• oil• wood/biomass• district heating and cooling• fuel additives• coolants

Operating Inputs

Operating Input Materials

• raw materials• solvents• catalysts• water• gases• office supplies• equipment maintenance

supplies• facility maintenance

supplies

Operating Input Energy

• electricity• natural gas• coal• oil• wood/biomass• district heating and cooling• fuel additives• coolants

Operating Input Labor(Including benefits)

• equipment operation• supervision• inspection/

Quality Assurance/Quality Control (QA/QC)

• maintenance• design/engineering• laboratory• procurement• logistics• sales/marketing• financial/accounting• clerical• management

Operating Floor Space

• rent• mortgage

Operating Depreciationand Taxes

• depreciation of equipment• taxes• tax credits

Operating Cost of Capital

• financing costs• investment opportunity

Table 5.1.5Cost of Waste Checklist

Waste Management (Waste Handling, Recycling, Treatment, Disposal and RegulatoryCompliance)

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5.1.6 Apply Activity-based Costing (ABC)

Under ABC, all costs are allocated from company overhead accounts to the process,

product or projects that actually generated the costs based on activities with direct

relationships to cost generation. Through improved cost allocation, an activity-based costing

system can accurately identify products and services which have higher environmental

costs. More detailed cost information provided under ABC also assist in the process of

collecting more accurate data for project analysis purposes.

5.1.7 Determine Internal Source Documents

Costs relevant to the P2/CP project evaluation can be estimated by an analysis of

company records combined with staff interviews. Listed below are the sources of

environment-related cost information that may be relevant to a proposed P2/CP project

analysis:

a. Original source documents (e.g., purchase invoices, receipts, etc.)

b. Accounting ledger accounts and reports (e.g., cost of production reports,

factory ledgers)

c. Maintenance and engineering records and estimates (e.g., production reports,

waste management records, equipment logs)

d. Materials Control and Inventory

e. Quality Records (e.g., rejects/rework and waste records)

f. Staff Interviews

Less Tangibles

Potential Liability

• business shutdown costs• non-compliance fines• site clean-up costs• legal costs• personal injury claims• property damage claims• natural resource damage

claims

Productivity

• product quality• production throughput• production flexibility• production reliability• worker absenteeism• worker morale

Future Regulation

• stricter enforcement ofcurrent regulations

• modification of currentregulations

• new regulations

Insurance

• workers’ health insurance• workers’ compensation• general property/fire

insurance• general liability/hazard• environmental liability• unemployment

Company Image

• access to customers/markets

• access to financing• public relations

Table 5.1.5 cont’d.

Source: Tellus Institute, Boston. Environmental Cost and Savings Checklist. Massachusetts, USA, 1995.

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5.1.8 Seek External Sources of Information and Expertise

Some environmental costs important in P2/CP evaluation can only be collected

using data from outside sources. Information on regulatory costs can be provided by

environmental agencies; insurance companies can estimate potential liabilities; and

equipment/technology vendors can quote investment expenditures for treatment facilities

and technologies. Remediation and clean up costs can be estimated with the assistance

of engineering and environmental consultants. Assistance from these outside experts is

sometimes needed to quantify less tangible costs and benefits as listed in Table 5.1.5.

Table 5.1 shows examples of the tasks involved under Planning and Organizing

for ECA in your company.

Table 5.1 Illustrative Examples of Tasks Under Planning and Organizing for ECAObjective: To know the different tools and approaches for environmental cost identification

and estimation

1.1 Get Management Support

1.2 Organize ECA Team

1.3 Draw Process Maps

1.4 Do Material and Energy Balance

1.5 Use Cost of Waste Checklist

1.6 Apply ABC

1.7 Determine Internal Sources ofInformation

1.8 Seek External Information andExpertise

1.1. Management needs to see financial benefits ofP2/CP

1.2. Department Heads as members of the ECA Team

1.3. Plant Activity Flowchart

1.4. See Chapter IV on P2

1.5. Operating Inputs, Treatment Cost

1.6. Waste Disposal Costs

1.7. Accounting Ledger Accounts

1.8. Cost of fines and penalties from regulatory agencies

Tasks Illustrative Examples

5.2 P2/CP QUANTITATIVE ANALYSIS

5.2.1 P2/CP Profitability Assessment

ECA, which calls for the comprehensive assessment of project costs and savings

with particular focus on environmental cost impacts, will lead to better profitability analysis

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of proposed P2/CP Projects. Capital budgeting is the accounting term for the process of

determining profitability of projects. Capital budgeting, which is sometimes referred to as

the capital expenditure decision, consists of two main steps as outlined in the next page.

5.2.1.1 Collecting Project Costs and SavingsInformation

The most important part of performing the financial

analysis of cleaner production initiative is the identification

and collection of all costs that are relevant to current

operations and the proposed cleaner production

alternative. Research and anecdotal evidence have

revealed that companies often fail to include all costs

in the financial analysis and, therefore, do not capture

much of the potential savings from environmental

improvement projects. ECA is particularly useful in

addressing this failure.

In the profitability assessment process, the costs are estimated and analyzed based

on their impact on profitability.

5.2.1.1.1 Investment

The investment costs include the initial cost necessary to implement the cleaner

production project, e.g., equipment purchase costs plus all necessary costs to put the

equipment in operation – installation, start up materials, permits, etc.

Tellus Institute in the U.S. provides a checklist of the possible costs associated

with a capital investment project as outlined in the next page.

5.2.1.1.2 The Company’s Operating Costs Before and After the Project

The financial analysis of cleaner production investment entails gathering complete

and accurate cost in the form of relevant incremental costs calculated on an annual basis.

Incremental costs are changes or differences between the operating costs of the current

process (business as usual) and the projected costs under the new project (P2/CP). These

costs include expenses, such as raw materials, maintenance, waste disposal and utilities

which continue over the life of the project. All costs should be converted to total annual

amounts in order to perform the financial analysis. Take note that a project can increase

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Checklist of Possible Costs Associated with aCapital Investment Project

or decrease operating costs but the net effect is usually savings or a net decrease in case

of P2/CP. The savings will accrue to the company during the project’s lifetime.

The cost of waste checklist offers a list of operating costs that may be affected by

the implementation of P2/CP projects. These costs include those for operating inputs,

waste management, treatment and disposal and, in some cases, less tangible items (e.g.,

potential liability) that may be quantified for purposes of project analysis.

Purchased Equipment

EquipmentSales taxPrice for initial spare partsProcess equipmentMonitoring equipmentPreparedness/Protective equipment

Safety equipmentStorage and Materials handling equipment

Laboratory/Analytical equipmentFreight/Insurance

Utility Connections and New Systems

ElectricitySteamCooling and process waterRefrigerationFuel (gas or oil)Plant airInert gasGeneral plumbingSewerage

Installation

VendorContractorIn-house staffConstruction/installationLabor and supervisionTaxes and insurance

Equipment rental

Start Up and Training

Vendor/ContractorIn-houseTrials/Manufacturing variances

Materials

PipingElectricalInstrumentsStructuralInsulationBuilding construction materialsPainting materialsDucting materials

Site Preparation

Demolition, clearing, etc.Disposal of old equipment, rubbishWalkways, roads and fencingGrading, landscaping

Engineering/Contractor (In-House & External)

PlanningEngineeringProcurementConsultantsDesignDraftingAccountingSupervision

Contingency

Permitting - Fees and In-house staff

Initial Charge for Catalysts & Chemicals

Working Capital (funds for raw materials,inventory, materials/supplies)

Salvage Value of replaced equipment

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The following case illustrates the cost analysis of a P2/CP project.

A company considers switching to a water-based coating system in order to

eliminate solvent use required by its present coating system. The new coating system

requires capital investment of PhP150,000. The impact of the project on company operating

costs is shown in the following worksheet.

Identification of the initial and incremental costs is followed by their translation into

annual cash flows over a project’s economic lifetime. Cash flows refer to the actual outflows

and inflows of money – expenditures and savings – incurred and generated by a project.

Initial (one-time) cash flows are the cost of the equipment and all expenses required for

installation and running the new process. In the case of the water-based coating system,

this is represented by the capital outlay of PhP150,000. Operating (also called period)

cash flows consist of all the incremental costs of operating new equipment or operating

the newly-installed process and all the savings (avoided) costs generated by the project.

As shown in the previous operating costs summary, the net savings for the proposed new

system is PhP74,600. The complete details and profitability assessment results of the

water-based coating project are shown at the end of this chapter.

Sample Worksheet for P2/CP Project Analysis

Operating Costs Summary

Cost Item Before Project After Project

Material Cost:Coating Materials PhP 250,000 PhP 275,000

Operating and Maintenance Labor:Direct Labor - Coating 340,000 340,000

Utilities:Electricity 60,000 45,000

Other Manufacturing Inputs:Disposal Costs:

Cost to Dispose Solvent, Rags and Liners 40,000 2,000

Environmental Fees:Supplies:

Cleaning Materials 48,000 2,400

Others:Environmental Compliance 5,000 4,000

Total Operating Costs PhP 743,000 PhP 668,400

Operating Cost Savings:

Operating Cost Before – Operating Cost After = Operating CostProject Project Savings

PhP743,000 – PhP668,400 = PhP74,600

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5.2.1.2 Applying Measures of Profitability

A profitability indicator is a single number that characterizes the profitability of the

project to the company. Some of the most common profitability indicators in project analysis

are Simple Payback, Net Present Value and Internal Rate of Return.

5.2.1.2.1 Simple Payback

Payback period analysis (simple payback) measures how long a project will take

to return its original investment. It ranks projects according to the length of the period –

the shorter the period, the more attractive is the project. The payback period is the amount

of time required for an investment to generate enough cash flow to just cover the initial

capital outlay for that investment. In P2/CP investments, the net cost savings usually

represent the project’s cash flow. Depending on the nature of the cash flows, payback

period can be calculated as follows:

• If annual cash flows are equal, the initial investment amount is divided by the

cash flows. For example, if the initial investment is PhP12,000 and the cash

flow is PhP15,000 per year, then the payback period is PhP12,000/

PhP15,000=0.8 years. In other words, it will take less than a year for the

investment cost to be recovered.

• If the cash flows vary each year, the cash flows are added incrementally until

they equal the initial investment amount. The period of time that corresponds

to when the added cash flows equal the investment is the payback period.

For example:

An investment of PhP50,000 has the following cash flow: 1st year - PhP25,000;

2nd year - PhP30,000; 3rd year - PhP30,000. The

payback is 1.83 year, computed as PhP25,000

recovered in year 1; another PhP25,000 to be

recovered in year 2. So, the payback is equal to 1

year and PhP25,000/PhP30,000 or 1.83 years.

5.2.1.2.2 Net Present Value

Net Present Value (NPV) analysis relies heavily on the

concept of the time value of money and is a powerful tool for

assessing profitability over the life of the project. The time value of

money recognizes that PhP100 today can be invested to earn a

return.

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The time value of money measures the value of money at different points in time

as determined by a discount rate. The discount rate is the interest rate that is used to

convert the future value of money to its present value (value now at year 0). The discount

rate is the rate of interest or return that a business or person can earn on the best alternative

use of money at the same level of risk. The discount rate is a function of what the company

must pay to acquire capital (money) and what rate of return for a given level of risk it must

earn on the investment.

The time value of money is considered in the financial analysis of cleaner production

projects when the cash flows received over the lifetime of the project are converted to

their present values. The present values of cash flows that will be received in the future

can be calculated using a financial calculator, spreadsheet software or a present value

table which lists the present value factors at different discount rates and period (years).

The present value factor is multiplied by the cash flows that will occur in the future to bring

the respective cash flows in their present values.

Period Year 1 Year 2 Year 3

Projected Cash Flows PhP1,000 PhP2,000 PhP4,000

multiplied by:

PV factor at 10% discount rate 0.9091 0.8264 0.7513

Present Value of Cash Flows PhP909.10 PhP1,652.80 PhP3,005.20

Meaning:

at a discount rate of 10%, PhP1,000 received a year from now is worth PhP909.10

today;

at a discount rate of 10%, PhP2,000 received two years from now is worth

PhP1,652.80 today;

at a discount rate of 10% PhP4,000 received three years from now is worth

PhP3,005.20 today.

The time value of money is important in the financial analysis of P2/CP projects

since the project has an initial investment cost that occurs now (year 0), but, the cash

flows or savings from the project will only accrue to the company over a period of time in

the future. So, in order to determine the profitability of the project, the initial investment

(amount of money to be spent) on the project should be compared to the time-adjusted

(present value) cash flows of the project over its lifetime. A positive net present value

occurs when the sum of the present values of all the cash flows from the project (investment

cost and cash flows over the project’s lifetime) is greater than 0. This means that the

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project is profitable at the time frame and at the discount rate used in the analysis.

Conversely, a negative net present value occurs when the sum of the present values of

the cash flows from the project (investment cost and cash flows over the project’s lifetime)

is less than 0. Projects with negative present values are deemed unprofitable at the time

frame and discount rate used in the analysis.

Illustration of Net Present Values Analysis:

A project’s initial investment cost is PhP5,000 with cash flows projected at PhP1,000

for the first year; PhP2,000 for the second year; and, PhP4,000 for the third year. The

discount rate is 10%.

Investment Cost (PhP5,000.00)*

Add: Present Values of Cash Flows at 10%

First Year PhP1,000 x PV factor 0.9091 PhP 909.10

Second Year PhP2,000 x PV factor 0.8264 1,652.80

Third Year PhP4,000 x PV factor 0.7513 3,005.20 PhP5,567.10

Net Present Value + 567.10

* The investment cost is a negative cash flow or an outflow of cash from the company.

5.2.1.2.3 Internal Rate of Return (IRR)

The IRR is a profitability measure, expressed in percentage terms, that is analogous

to an average rate of return from an investment. IRR is the discount rate that will yield a

net present value of zero for a given stream of cash flows. This method allows a comparison

between the IRR of a project and a company’s self-determined discount rate (hurdle rate).

A financial calculator or a computer spread sheet can be used to determine IRR. In general,

if the IRR is greater than the company’s hurdle rate, the project will be accepted. If the

IRR is less than the hurdle rate, the project will be rejected.

5.2.2 Other Financing Issues That Could Affect Project Analysis

Briefly discussed below are the other factors that may affect project profitability

assessments:

5.2.2.1 Inflation

Inflation refers to the decline in the purchasing power of the peso, causing the cost

of goods and services to rise. As we know from experiencing inflation, the same item will

go up in price as time passes – things cost more in the future. As a result of inflation,

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money is more valuable now than later. It can be said

that money loses purchasing power over time. In

forecasting the cash flows over the lifetime of the

project, it is important to incorporate projected inflation,

especially when the pollution prevention project

derives significant savings from avoided costs

of purchased goods. Instead of adjusting the cash

flows over the lifetime of the project, inflation

can be alternatively taken into account in the

determination of the discount rate used in project

analysis.

5.2.2.2 Taxes and Other Credits

Taxes can be an important project cash

flow. A firm may have to pay national and/or local

income taxes on the revenues or savings

generated by a project. The project’s cash flows should be reduced by the income tax to

be paid on the company’s added income resulting from the savings in operating costs

from the project.

Depreciation is the reduction in the value of a long-lived asset over its useful life.

Depreciation expense is a noncash expense because there is no outflow of cash that

corresponds with the annual depreciation charge. The cash outflow occurred at the time

the initial costs were incurred. As a noncash expense, depreciation is a source of cash

because the depreciation charges decrease taxable income; thus, the tax that is not paid

represents a cash savings that should be included in project analysis. The value of the

depreciation tax shield is determined by multiplying the depreciation expense by the tax

rate. The resulting figure equals the amount of tax that is not paid and, thus, represents

additional cash flows (cash savings) to the firm.

5.2.3 P2/CP Profitability Assessment Software

A software called E2 Finance Philippines is available for the financial analysis of

cleaner production projects. The software is a Philippine-modified version of the P2 Finance

software developed by Tellus Institute and is part of the training package of the course,

Environmental Cost Assessment: Profiting from Cleaner Production, being offered by the

Philippine Institute of Certified Public Accountants (PICPA).

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Table 5.2 provides examples of the tasks required under Quantitative Analysis to

meet the objectives indicated.

Table 5.2 Illustrative Examples of Tasks Under Quantitative Analysis

1. Identify andestimate the costand savings thatare relevant to theanalysis

1.2 Compute forthe indicatorsof profitabilityusing thesimple anddiscountedmethods

2. Adjust calculationstaking intoconsideration otherfactors, such astaxes and inflation

3. Acquire the P2/CPprofitabilityassessmentsoftware that canbe used in yourcompany

1.1 To know whatincrementalcost items areto be includedin your projectanalysis andwhere tosource theseinformation

1.2 To know howto compute forthe indicatorsof profitability

2. To know whatother finance itemsto consider in theassessment

3. To know whatP2/CP profitabilityassessmentsoftware isavailable

1. P2/CP ProfitabilityAssessment

1.1 Collection ofP2/CP ProjectCost andSavingsInformation

1.2 Application ofMeasures ofProfitability

2. Consideration ofOther FinancingIssues

3. SoftwareApplication

1.2 Application ofsimplepaybackindicator, NPVor InternalRate of Returnin a P2/CPproject

Phase/Activity Objective Task Illustrative Example

5.3 QUALITATIVE FACTORS IN P2/CP

The financial analysis of a P2/CP investment project may involve the presence of

other factors that are difficult to quantify, but, may have strategic significance for a business

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enterprise. Positive impact on productivity, market share, public image, stakeholder relations

and other factors must be considered for a clearer picture of P2/CP profitability. Less

tangible benefits may provide the needed advantage to secure approval for P2/CP projects.

Table 5.3 shows an illustrative example of a task under this subject.

Table 5.3 Illustrative Example Under Qualitative Analysis

1. Less TangibleBenefits of P2/CP

1. To know what thequalitative benefitsof P2/CPimprovements inyour company

1. Determine and

include in theP2/CP profitabilityassessment thequalitative or lesstangible benefits inorder to strengthenproposal

1. Improved

productivity,increasedmarket share,improved publicimage aredifficult toquantify but canbe included asqualitativefactors

Phase/Activity Objective Task Illustrative Example

5.4. FINANCING FOR P2/CP IMPLEMENTATION

Several sources of funding can be considered to finance a P2/CP project. Generally,

projects can be implemented by utilizing funds from the following sources:

5.4.1 Internal Sources of Funds

Internal funds can be generated by retained profits or capital supplied by the

owner(s) of the firm. Earnings retained in the business can also be utilized

for other purposes, such as P2/CP improvements. The owner(s) of the

business may also decide to put in additional money to implement P2/

CP.

5.4.2 Funds from Outside Sources

If internal funds are not available, the firm will have

to look for outside sources of finance. Financing may come

from external private sector sources, including banks,

development corporations, equipment vendors and

subsidiary finance companies.

The government can be an important supplier of

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capital to finance projects for P2/CP through the provision of grants or subsidies.

Government-managed development funds are those where the finance is provided, with

conditions on the types of project it can support, by an institution such as the United

Nations or the World Bank. Examples of government-managed development funds are

the financing facilities available from government financial institutions.

The Land Bank of the Philippines (LBP) and the Development Bank of the

Philippines (DBP) offer various lending facilities with favorable terms for environment-

related projects, such as investments for pollution control and abatement, cleaner

production, pollution prevention and waste minimization. Table 5.4 shows illustrative

examples of tasks under this subject.

Table 5.4 Illustrative Examples of Tasks Under Financing P2/CP Projects

1. Sourcing Financefor P2/CP ProjectImplementation

1.1 InternalSources ofFinance

1.2 ExternalSources ofFinance

1.1 To know whatfunding sourcesare availablewithin thecompany for theimplementationof P2/CP

1.2 To know whatP2/CP financingfacilities areavailable fromoutside sources

1.1 Profits, savings,additional capital

1.2 DBP, Land Bank,etc.

1. Determine thedifferent sources offinancing availableto fund theproposed P2/CPProject

Phase/Activity Objective Task Illustrative Example

5.5 SOURCES OF MORE INFORMATION ON ECA

The following organizations and sources of information provide access to available

training, publications and networks in the field of ECA:

• The Philippine Institute of Certified Public Accountants (PICPA) offers a course on

environmental cost accounting as a tool for environmental management and the

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implementation of pollution prevention/cleaner production investments. PICPA’s

Environmental Accounting Committee can be contacted for training schedules

at telephone number (632)723-5467 or at the PICPA national office at

700 Shaw Boulevard, Mandaluyong City, Philippines. PICPA’s website is

http://www.picpa.com.ph

• The United Nations’ Experts Working Group on Environmental Management

Accounting (EMA) has published the workbook, EMA Procedures and Principleswhich can be downloaded at http://www.un.org/esa/sustdev1.htm. This EMA

application tool is intended to track annual environmental expenditures of a facility

and this information can be valuable in documenting the financial returns of EMS

implementation. For EMS implementation, EMA can show that environment-related

costs on an annual basis will decrease over time, while environmental savings

increase.

• For information on networking opportunities, one can apply for membership to the

Environmental Management Accounting Network for Asia Pacific (EMAN-AP).

Membership registration is available at http://eman-ap.net. EMAN-AP’s contact

person in the Philippines is Maria Fatima Reyes (email: mfreyes@pacific.net.ph).

• For information on a broad range of topics on environmental management

accounting, visit the International Website on EMA at http://www.EMAwebsite.org.

• For more information on P2/CP financing, browse the website of the United Nations

Environment Program on CP Financing at www.financingcp.org. In this website,

can be found, among others, the particular topic on preparing a bankable proposal

for CP.

Table 5.5. shows an example of a task under this subject.

Table 5.5 Illustrative Example of a Task Under Sourcing of Information on ECA

1. Sources ofmoreinformation onECA

1. To know where toget moreinformation onECA

1. Research othermaterials on ECA.

Phase/Activity Objective Task Illustrative Example

1. PICPA, UNEP

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VIIllustratingEnvironmentalManagement System,Pollution Prevention/Cleaner Productionand EnvironmentalCost Accounting

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The case study in this chapter involves applications of EMS, P2/CP and ECA.

The technical and financial data are utilized solely for illustrative purposes.

To check the level of knowledge and understanding gained from this Guidebook,

the reader is encouraged to answer the questions provided in this chapter.

Items requiring computations are given with an illustrative example as reference.

BACKGROUND

Millennium Designs (MD) is a local company located in a densely populated area

50 kilometers north of Manila and 150 meters away from a river stream. The company,

with 75 employees, operates on a single shift from 8 a.m. to 5 p.m. with lunch break, 300

days every year. MD, a medium-sized facility, manufactures steel frames for office and

home furniture. The dominant markets are the local manufacturers and distributors of

home and office furniture in Metro Manila and the nearby provinces. Recently, the company

began selling some of its high-end products to customers in Japan and Singapore. Although

the sale from its overseas market is still small, management has optimistically projected a

steady growth in the export division in the coming years.

The figure below shows Millennium Designs’ organizational structure.

Millennium Designs’ Organizational Structure

Technical

Engineering

Pollution Control Officer

Research & Development

Administration/Finance

Production

Quality Control

Personnel

Procurement

Accounting

Sales/Marketing

Domestic

CEO/President

International

Market Research

110110110110110

The Production Department has three (3) sections: Forming Section, Frame

Preparation Section and Finishing Section. Figure 6.1 shows the flow chart of steel bar

manufacture, indicating inputs and nonproduct outputs.

Figure 6.1 Flowchart of manufacturing steel bars

The manufacturing operations involve the following steps:

• Cutting the steel to the desired length using a steel saw

• Forming the steel to the desired shape

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• Grinding the steel to remove sharp edges brought about by the cutting operation

• Welding the steel pieces together to form the frames

• Grinding the frame to remove excesses in welded joints

• Cleaning of frame to remove dust and dirt

• Application of primer to frame

• Application of finishing coat to frame depending on customer specifications

• Wrapping of frame with plastic as protection

These operations generate waste, such as steel scraps from cutting, spent grinding

pads, spent welding rods, rugs, spray liners and spent solvents. Most of these materials,

particularly scrap metals, are sold to junk shops. A walkthrough in the MD facility revealed

that solvent containers are left open, causing the solvent to evaporate.

Based on observations, most of its environmental problems occur in the facility’s

finishing operations, where solvent is heavily used for cleaning purposes. MD consumes

a dozen 200-liter drums of cleaning solvent (PhP20/liter). Steel frames are coated in the

company’s finishing department where, depending on customer specifications, several

layers of different coating materials are applied to the steel frames using high-volume,

low-pressure spray guns. The gun parts – lines, nozzles, etc. – are cleaned with a solvent

at the end of each shift and when lacquer pigments are changed. The spent solvent,

together with contaminated rugs and spray liners, are placed in container drums for disposal.

As far as management is concerned, a strategy of compliance with environmental

regulations is also important in order to stay profitable in business. Recently, however,

the company has been receiving some complaints from a local environmental NGO about

the improper disposal of the company’s drums, which are fouling up the nearby river; as

well as excessive fumes from the finishing operations.

Worker satisfaction is a corporate priority at MD as shown by the company’s steady

investment in improved working conditions at the facility. Four workers and a supervisor

are assigned to the Finishing Section.

Currently, MD spends the following amounts (all units in PhP) for Coatings

Operations:

• Coating materials ..................................................... 250,000

• Production labor ....................................................... 340,000

• Cleaning solvent ...................................................... 48,000

• Disposal costs (for solvent, liners and rugs) ............ 40,000

• Electricity .................................................................. 60,000

• Environmental compliance reporting ....................... 5,000

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The firm estimated that the Aqueous Coating System would require an initial

investment cost of PhP150,000 for the additional wastewater equipment purchase plus

additional expenses for piping, training and permitting. The additional equipment will

have a useful life of five years.

An analysis of the proposed project revealed the following operating (period) cost

impacts:

• Coating materialsThe cost will increase by about 10%.

• Production laborNo change – the same number of employees would be required to apply the

aqueous-based formulations.

• Cleaning solventSolvent use will be eliminated.

• Disposal costThis will be significantly reduced by the elimination of solvent use. Cost of

rugs and liner disposal will remain at about PhP2,000/year.

• Aqueous-based cleanerThis is estimated at PhP2,400/year.

• ElectricityLess ventilation requirements will reduce electricity cost by 25%.

• Environmental complianceCompliance activities will be reduced by 20%.

One option that the company considered was switching to an aqueous (water)-

based coating system. The potential environmental benefits from the investment are

significant because the aqueous coating system will reduce hazardous emissions and

eliminate the use of solvents for clean-up. However, some additional investment for piping

and equipment is needed to treat the wastewater from the new system. After a careful

consideration of the technical and financial aspects, including less tangible benefits of the

proposed project, the company decided to invest in the new aqueous coating system.

6.1 EMS CASE STUDY:

The MD Environmental Management System

The top management of Millennium Designs realized that the only way for them toeffectively manage the growing environmental concerns of the company was to implementan EMS. The company’s commitment to the environment includes programs to complywith all applicable laws and regulations, prevent pollution and ensure continualimprovement.

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Five phases are involved in establishing the EMS: (1) setting up, (2) planning, (3)

doing, (4) checking and (5) acting. Specific steps for each phase are discussed below. A

set of ‘questions’ and ‘guide’ are provided, though not exhaustively, only to provide clarity

and facilitate understanding of the case study.

1. Setting up the EMS

1.1 Secure commitment from top management.

Questions • What are the environmental problems associated with steel bar

manufacture?

• Are there other environmental problems in addition to waste

discharges and emissions?

• What are the complaints from the surrounding communities?

• Is MD’s image to the public being affected?

• Is the cost of legal penalties for polluting the water significantly

increasing?

• Do customers from Japan and Singapore require an EMS?

Guide • The statement of environmental commitment must come from top

management.

• The recognition of environmental problems need not always come

from the top; it may emanate from shop floor operators, from any

concerned employee or from the public.

• Top management appoints a key person authorized to handle

environmental matters of the company.

• The appointed person must have the proper authority.

1.2 Conduct an IER to determine the status of current efforts of MD to address

environmental issues and concerns.

Questions • Are there existing programs to deal with the current environmental

issues and problems related to fumes from solvents and disposal

of contaminated drums?

• Does MD comply with the Philippine Clean Air Act (RA 8749;

DAO 2000-81) or the Ecological Solid Waste Management Act

(RA 9003)?

• Does the company follow occupational health and safety as well as

quality management guidelines?

• Have actions been taken to address past complaints from the public

or local NGOs?

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Guide • IER is useful in determining the level of MD’s efforts in dealing with

its environmental obligations.

• IER becomes the basis for the company’s EMS.

2. Planning all activities related to the development and implementation ofthe EMS

2.1 Determine the company’s environmental aspects.

Questions • What are its emissions to air, discharges to land, and/or wastewater

discharges to the river?

• Are these aspects and impacts significant?

• Does it throw away large amounts of contaminated solid wastes?

• Do the fumes create problems for its workers?

• Has it received any more complaints from the neighborhood?

Guide • Identify the significant aspects from the operations, such as the

finishing.

• Consider different criteria for determining which aspects are

significant using ecological (e.g., pollution, risks), legal (e.g.,

compliance, excesses), and/or business concerns (e.g., complaints,

costs).

2.2 Identify all laws and regulations that apply to the identified aspects, and those

that MD subscribes to.

Questions • Does MD emit airborne

pollutants?

• Does it use and buy chemicals?

• Does it discharge wastewater to

a river?

• Does it have contaminated solid

wastes?

• Are workers or surrounding

communities exposed to toxic

fumes?

Guide • Secure copies of current laws and regulations with the DENR-EMB

and other regulatory authorities in your area.

• Check out web sites of EMB at www.emb.gov.ph, or DENR at

www.denr.gov.ph., and other environmental organizations.

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2.3 Establish the company environmental policy.

Questions • What are the management’s major environmental concerns?

• Has the management shown commitment to address these

concerns?

Guide • The company must document the environmental policy stating its

commitment to prevention of pollution, legal compliance and

continual improvement.

• The policy must be communicated to all employees and interested

parties.

2.4 Set your environmental objectives and targets.

Questions • Have MD’s waste and emissions been measured?

• Does it have baseline data and information on its waste generation?

• Has noncompliance with applicable laws and regulations been noted

down?

Guide • Objectives and targets must be performance-based, measurable

and achievable.

• Objectives and targets must be documented.

2.5 Establish your environmental management program.

Questions • Are the programs consistent with the environmental policy of MD?

• Do they relate to MD’s significant aspects and impacts?

Guide • EMPs may consist of existing and proposed programs, such as

waste management, energy, water conservation, etc.

• EMPs must come from all levels of company operations.

3. Doing all things needed to achieve the environmental policy

3.1 Organize an EMS structure and identify responsibilities.

Questions • Has an EMR been appointed to handle the EMS?

• Has an organization been set up to ensure that all components of

the EMS are handled by authorized personnel?

• Are suppliers, contractors and subcontractors informed of their roles

and responsibilities?

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Guide • Involve all personnel at the different functional levels of the

organization.

3.2 Conduct awareness and competency trainings.

Questions • Have the critical operations with significant aspects been identified?

• Have personnel been identified for those critical operations?

• Have the competency requirements for critical operations been

identified?

Guide • Include in the training needs analysis personnel requirements in

critical operations.

• Conduct regular competency training for concerned personnel.

3.3 Establish a system of internal and external communication.

Questions • Does everybody know the company’s significant aspects and

impacts?

• Are the interested parties, such as the community, aware of the

company’s environmental policy?

• Are complaints from the public properly recorded and attended to?

Guide • All EMS-related information must be communicated to all employees.

• Environmental policy must be made available to the public.

3.4 Document all EMS activities and maintain a system to control them.

Questions • Is the procedure for handling external complaints being used to

address the problem?

• Is the procedure for carrying out the critical operations being

followed?

• Are procedures and work instructions easily retrieved?

Guide • Documents may be in print or electronic form, current and updated.

• File properly and appropriately all EMS documents.

3.5 Establish operational controls.

Questions • Are controls in place to avoid excessive discharge or fumes into the

air?

• Do procedures consider key operational parameters?

• Is the operator aware of pollution prevention or waste minimization

options?

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Guide • Identify all operations that create significant aspects.

• Know the key operational parameters to control.

3.6 Develop emergency preparedness and response procedures.

Questions • Is there a procedure to handle emergency environmental situations?

• Are there personnel competent to handle such situations?

• Are emergency equipment available and functional?

Guide • Identify all operations which have significant aspects occurring under

emergency situations.

• Conduct drills to test procedures, emergency equipment and

personnel competence.

4. Checking and ensuring that EMS activities are being carried out

4.1 Monitor and measure the key operational parameters.

Questions • Have quantities of emissions and discharges been quantified?

• Have key operational parameters and environmental performance

indicators been identified?

• Is there a procedure to monitor and measure the emission of fumes?

• Is there a competent person to monitor

and measure key operational

parameters?

Guide • Identify all operations that

have significant aspects.

• Determine the key operational

parameters.

• Record all monitoring data

and information.

• Make sure that all

instruments are calibrated.

4.2 Undertake preventive and corrective

actions for any nonconformities.

Questions • Are there non-conformities to the requirements of the EMS?

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• Are there significant aspects occurring in normal, abnormal and

emergency situations?

• Are immediate actions taken to prevent further generation of

aspects?

• Are these situations evaluated to prevent recurrence of problems?

Guide • Procedures should be in place to carry out preventive and corrective

actions.

• Document all occurrences of non-conformities with the system.

4.3 Conduct regular internal audits of the system.

Questions • Has the environmental policy been achieved?

• Are procedures and work instructions being followed?

• Is EMS still effective and appropriate?

• Are objectives and targets monitored?

Guide • Have trained and competent internal EMS auditors.

• Carry out internal audit of the EMS regularly or as necessary. May

not necessarily cover the entire organization.

• Document and report results of the audit.

4.4 Keep records of all EMS documents.

Questions • Is there a signed copy of the environmental policy?

• Has the emission of fumes been monitored and recorded?

• Have the complaints from the public been logged in; has feedback

been given to the complainant?

Guide • Ensure that all records are properly kept and up to date.

• Procedure should be followed for proper record-keeping.

5. Acting on the EMS programs

Questions • Has an internal audit been conducted on the system?

• Are there non-conformities reported?

Guide • Conduct a regular management review of the EMS.

• Use the results of the EMS audit as bases for discussion and action.

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6.2 P2/CP PROGRAM CASE STUDY:

Developing a P2/CP Program for Millennium Designs

With the decision to establish an environmental management system, MD

management decided to develop a P2/CP Program as part of the commitment to comply

with environmental regulations and other requirements, prevention of pollution and continual

improvement.

1. Planning and Organizing Phase

1.1 Organize and orient P2/CP Task Force.

Question • Who are the persons in the MD organization with the authority and

responsibility to carry out a P2/CP Program?

1.2 Set P2/CP program goal(s).

Guide • The P2/CP Program goal may be related to compliance, increased

productivity, improved quality, improved working conditions for

personnel and/or reduced waste generation.

1.2.1 Review corporate policies.

Question • Where can the P2/CP Program goal relate to the established

corporate environmental policy under the EMS?

1.2.2 Identify driving and restraining forces.

Questions • Do regulatory, financial, environmental, public image, employees’

welfare and competitiveness issues drive the establishment of a

P2/CP Program?

• Do financial, economic, policy-related, organizational, technical and

conceptual (resistance to change) issues hinder the implementation

of a P2/CP Program?

1.2.3 Set criteria for prioritization.

Guide • Criteria for prioritization may be based on the severity of a problem,

its frequency of occurrence, cost implications of possible solutions

and cost of not taking any action on the problem area.

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1.3. Identify focus area(s).

Questions • Is an area, process or activity at the facility contributing to the severity

of a problem?

• How often does the problem occur?

• How much will it cost to solve the problem?

• How much will it cost the company if no action is taken? Use steps

1.3.1 to 1.3.4 to validate these.

1.3.1 Collect and review data.

Guide • The following information can help in the

identification of the focus area(s):

process flow diagram, production

data (raw material and other inputs

and product and waste outputs),

plant layout, organizational chart,

initial environmental review, pollution

control officer’s report, engineer’s

report, utility bills, etc.

1.3.2 Verify and construct the process flow diagram through a facility walkthrough.

Questions • Is the process flow diagram on file reflective of what is actually

happening at the shop floor?

• Is it an accurate representation of the activities at the production

area?

1.3.3 Identify waste streams and waste management practices.

Question • What waste is generated in each production step? This may include

not only wastewater, solid waste and air emissions, but, also spilled

raw materials, fugitive emissions, leaking pipelines, production

rejects, etc.

1.3.4 Obtain overall materials balance.

Guide • What goes into the facility must come out of it, either as a product,

by-product or waste. Any discrepancy is an indication of

unaccounted input and/or output. In most cases, this is waste not

recorded.

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1.4 Plan P2/CP assessment.

Questions • When will the P2/CP assessment be done?

• Who will perform which task?

• What information shall be collected at the site?

• Who shall be interviewed during the visit?

1.4.1 Establish environment performance indicators (EPI)

Questions • What are the measures of the performance of the company’s inputs

and/or waste generated vis-à-vis its production?

• What data and cost can serve as measures for the performance of

the facility?

1.4.2 Schedule detailed P2/CP assessment.

Questions • At what time does the facility operate?

• How many shifts does it have? Of particular interest are times during

chemical addition, start-up, preparation for shutdown, cleaning and

maintenance activities.

2. Assessment Phase

2.1 Organize P2/CP Assessment Team.

Questions • Who are the operating staff directly involved in the identified focus

area(s)?

• Who are the facility personnel who have functions that may impact

or are impacted by the activities in the focus area(s)?

• Does the company need an external expert for the P2/CP

assessment?

2.2 Collect data for EPI.

Question • What data and cost information related to the figures identified in

step 1.4.1 should be collected?

2.3 Do materials and energy balance.

Guide • Actual measurements during operations may be necessary to obtain

the materials and energy balance of the focus area(s).

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2.4 Perform cause diagnosis.

Questions • What factors contribute to the generation of waste?

• Is it due to product specification, choice of raw materials, equipment

or facility layout, process control, use of old technology, and/or

operating and maintenance procedures?

• Are there raw materials, intermediates and/or valuable materials in

the waste stream?

2.5 Set objectives.

Guide • Objectives should be specific, measurable, attainable, relevant and

time-bound.

2.6 Generate P2/CP options.

Questions • Does the facility need to change product

specifications, change the raw material,

implement good housekeeping

practices, improve equipment or

facility layout, improve operating

conditions and/or use a new

technology?

• Can waste be used or reused?

• Can a valuable material in the

waste stream be recovered?

2.7 Classify P2/CP options.

Questions • Is the option impractical to implement?

• Is the option low cost/low risk that it can easily be implemented?

• Does the option require further technical and financial evaluation?

2.8 P2/CP Assessment Documentation (Record findings, develop

recommendations, prepare schedules and designate tasks).

Guide • The table on the next page (also referred to as the FIRST – Findings,

Recommendations, Schedules and Tasks – Report) can help the

P2/CP assessment team not only report their output, but, also guide

the P2/CP task force in making decisions.

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3. Feasibility Analysis Phase

3.1 Identify and fill up data gaps.

Questions • Are all information available?

• Is there a need to return to the facility to collect additional

information?

• Is there a need to first establish a monitoring program to validate

previous information collected?

• Can information be collected from secondary sources?

3.2 Perform feasibility analysis of P2/CP options.

Question • Is the P2/CP option viable in terms of technical, economic and

environmental factors?

3.2.1 Technical Evaluation

Questions • Is the P2/CP option functional?

• Will it impact on worker health and safety, and product quality?

• Will there be additional requirements of space and labor?

• Is it compatible with existing production processes?

Waste Cause Objective P2/CP Option Task

< 6 months > 6 months

Whichoperations orprocessesgenerate thiswaste?How muchis this waste?

What is/are theroot cause(s)of this wastegeneration?The objective

must bespecific,measurable,attainable,relevant andtime-bound(SMART)P2/CP options

that can beimplementedin less thansix months;in most cases,these are thelow-cost/low-risk optionsP2/CP options

that can beimplementedmore than sixmonths afterthe assess-ment; theseare generallythose thatneed furthertechnical andfinancialevaluation

Who will

implement theidentifiedP2/CP option?

Example of a FIRST (Findings, Recommendations, Schedules and Tasks) Report

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• Will there be a facility shut-down during its installation?

3.2.2 Environmental Evaluation

Questions • Is there a decrease or increase in the number and toxicity of waste

streams?

• Is there a transfer of pollution from one media to another?

• Will the P2/CP option consume more or less energy?

3.2.3 Economic Evaluation (ECA module discusses this item in more detail)

Questions • How much will have to be invested?

• What is the benefit-cost ratio of the option?

• What is the internal rate of return?

• What is the payback period?

4. Implementation Phase

4.1 Select P2/CP projects for implementation.

Question • Based on the feasibility analysis and prioritization criteria, which

P2/CP options must be carried out?

4.2 Obtain funding.

Questions • Will it be more profitable to finance the project internally?

• If internal funds are insufficient, can the facility secure a loan for the

project?

4.3 Install equipment / Implement P2/CP option.

Guide • The implementation of a P2/CP project does not differ from any

regular project. It may need conceptualization, planning, execution

(procurement, construction and installation) and termination.

4.4 Conduct training.

Question • What skills, knowledge and attitudes of staff involved in the P2/CP

project need change or improvement?

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4.5 Review and adjust.

Guide • The P2/CP project may need some fine-tuning once implemented;

thus, a review of the project is necessary and adjustments made, if

needed. As more information are gathered in its implementation,

the facility also increases its experience.

5. Monitoring and Evaluation Phase

5.1 Acquire and analyze data.

Question • What EPIs were identified before? Can these information and data

be collected in almost the same conditions as before?

5.2 Evaluate economic and environmental performance.

Question • How does the current EPI (after P2/CP program and projects)

compare with the EPI collected during the P2/CP assessment?

6.3 ECA CASE STUDY:

Applying ECA to the Financial Assessment of the P2/CPProposal of MD

MD’s production engineer and accountant organized and led a P2 team to develop

a comprehensive financial analysis of the proposed Aqueous (Water)-based Coating

System Project.

1. Planning and Organizing for ECA at MD

1.1 Management Support. Know what management wants in applying ECA.

Question • How do you get management authority to pursue an ECA?

1.2 Teamwork

Question • Which departments and personnel at MD will play important roles

in identifying and estimating environmental cost information?

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Current CostsThe financial analysis of the proposed project commenced with the

identification and estimation of the costs of the current coating system. The P2/

CP team identified the following cost of the company’s coating operations:

MILLENNIUM DESIGNS - CURRENT COSTS

Coating OperationsCoating materials ................................................ PhP250,000

Production labor .................................................. 340,000

Cleaning solvent ................................................. 48,000

Disposal cost (solvent, liners and rags) .............. 40,000

Electricity ............................................................. 60,000

Environmental compliance.................................. 5,000

1.3 Process Maps

Question • How will process maps help you in the ECA of MD?

1.4 Materials and Energy Balance

Question • Why are materials and energy balance important in the ECA of

MD?

1.5 Cost Checklist

Question • What cost checklist can you use in the ECA of MD?

1.6 Activity-based Costing (ABC)

Question • How will ABC improve management decision in the area of product

pricing and project analysis?

1.7 Internal Sources of Information

Question • Name the internal sources of environmental cost information at MD

1.8 External Sources of Information and Expertise

Question • Do you think MD needs outside expertise? Why?

127127127127127

The firm estimated that the Aqueous Coating System will require an

initial investment cost of PhP150,000 for the additional wastewater equipment

purchase, plus additional expenses for piping, training, and permitting. The

additional equipment will have a useful life of five years.

An analysis of the proposed project revealed the following operating

(period) cost impacts:

• Coating materials: the materials cost will increase by about 10%

• Production labor: no change - the same number of employees

would be required to apply the aqueous-based formulations

• Cleaning solvent: solvent use eliminated

• Disposal Cost: will be significantly reduced by the elimination of

solvent use. Cost of rugs and liner disposal will remain at about

PhP2,000 per year.

• Aqueous-based cleaner: estimated at PhP2,400 per year

• Electricity: Less ventilation requirements will reduce electricity

cost by 25 percent

• Environmental compliance: Compliance activities will be reduced

by 20%

Costs Under the Proposed Project

128128128128128

Cost Item Before Project After Project

Materials Cost:

Coating Materials PhP250,000 PhP275,000

Operating and Maintenance Labor:

Direct Labor - Coating 340,000 340,000

Utilities:

Electricity 60,000 45,000

Other Manufacturing Inputs:

Disposal Costs:

Cost to Dispose Solvent, Rugs and Liners 40,000 2,000

Environmental Fees:

Supplies:

Cleaning Materials 48,000 2,400

Others:

Environmental Compliance 5,000 4,000

Total Operating Costs PhP743,000 PhP668,400

Operating Cost Savings

Operating Costs Before Project - Operating Costs After Project =

Operating Cost Savings

PhP743,000 - PhP668,400 = PhP74,600

AQUEOUS COATING SYSTEM - MILLENNIUM DESIGNS

Capital Cost Summary

Cost Item Cost (PhP)

Equipment Purchased: prices, taxes, delivery PhP133,500

Installation: engineering, construction, etc.

Utility Connections: electricity, water, fuel, etc. 8,000

Start-Up Costs: training, test materials 5,000

Others: permits, licenses, clearances 3,500

Total Capital Costs PhP150,000

Operating Costs Summary

Sample Worksheet for the Financial Analysis of P2/CP Investment

129129129129129

2. Quantitative Analysis

2.1 Collection of P2/CP Project Cost and Savings Information

Questions • What cost items are included in MD’s Investment Cost?• What cost items are relevant to MD’s P2/CP proposal?

2.2 Application of Measures of Profitability

Guide • Using data from MD’s Aqueous Coating Project, recalculate thesimple payback and NPV of the proposed project under the followingscenarios:a) Scenario 1: Project investment cost increased by 20%b) Scenario 2: The net savings from the project increased by 10%

Guide • Determine the profitability of the proposed project using the NPVindicator in scenario 1 and scenario 2.

Sample Calculation of Measuring Profitability Based on the Above Given DataProject Profitability IndicatorsPresent Value of Cash Flow

Simple Payback Indicator Calculation:

Initial Investment Cost

Net Annual Cash Flow

PhP150,000 / PhP74,600 = 2.01 years

Simple Payback =

Net Present Value Indicator Calculation

After Tax Cash Flow Calculation

Net Annual Cash Flow (Savings) PhP74,600

Less: Tax (PhP74,600 x 32% income tax rate) 23,872

PhP50,728

Add: Depreciation Tax Shield 9,600

PhP150,000/5 years = PhP30,000 depreciation/year

PhP30,000 x 32% tax rate = PhP9,600 tax shield

After Tax Cash Flow PhP60,328

Note: Present value tables are found at the end of Chapter VI on pages 131 and 132. The tables are usedto determine the PV factor.

( PhP150,000 )

Cash Flow PhP 60,328

Multiplied by PV factor (5 years at 15%) 3.3522 PhP202,232

Add: Initial Investment Cost PhP150,000

Net Present Value PhP52,232

130130130130130

2.3 Consideration of Other Financing Issues

Guide • Recalculate the NPV indicator assuming that the income tax rate is

increased to 35%.

3. Qualitative Factors in P2/CP Project

Question • Why are qualitative factors important in the evaluation of the

proposed project of MD?

4. Sourcing Finance to Fund P2/CP Project Implementation

4.1. Internal Sources of Finance

Guide • List the possible internal sources to finance MD’s P2/CP project.

4.2. External Sources of Finance

Guide • List the possible external sources of funds for MD’s P2/CP project.

5. Sourcing of More ECA Information

Question • What are some of the best sources of current information on ECA

which can be accessed by MD?

131131131131131

PRESENT VALUE RATE TABLE A

10.

9524

0.94

340.

934

60.

9259

0.91

740.

9091

0.90

090.

8929

0.88

500.

8772

0.86

960.

8621

0.84

750.

8333

1

20.

9070

0.89

000.

8734

0.85

730.

8417

0.82

640.

8116

0.79

720.

7831

0.76

950.

7561

0.74

320.

7182

0.69

442

30.

8638

0.83

960.

8163

0.79

380.

7722

0.75

130.

7312

0.71

180.

6931

0.67

500.

6575

0.64

070.

6086

0.57

873

40.

8227

0.79

210.

7629

0.73

500.

7084

0.68

300.

6587

0.63

550.

6133

0.59

210.

5718

0.5

523

0.51

580.

4823

4

50.

7835

0.74

730.

7130

0.70

840.

6499

0.62

090.

5935

0.56

740.

5428

0.51

940.

4972

0.47

610.

4371

0.40

195

60.

7462

0.70

500.

6663

0.63

020.

5963

0.56

450.

5346

0.50

660.

4803

0.45

560.

3759

0.41

040.

3704

0.33

496

70.

7107

0.66

510.

6227

0.58

350.

5470

0.51

320.

4817

0.45

230.

4251

0.39

960.

3269

0.3

538

0.31

390.

2791

7

80.

6768

0.62

740.

5820

0.54

030.

5019

0.46

650.

4339

0.40

390.

3762

0.35

060.

2843

0.30

500.

2660

0.23

268

90.

6446

0.59

190.

5439

0.50

020.

4604

0.42

410.

3909

0.36

060.

3329

0.30

750.

2472

0.26

300.

2255

0.19

389

100.

6139

0.55

840.

5083

0.46

320.

4224

0.38

550.

3522

0.32

200.

2946

0.26

970.

2149

0.22

670.

1911

0.16

1510

110.

5847

0.52

680.

4751

0.42

890.

3875

0.35

050.

3173

0.28

750.

2607

0.23

660.

1869

0.19

540.

1619

0.13

4611

120.

5568

0.49

700.

4440

0.39

710.

3555

0.31

860.

2858

0.25

670.

2307

0.20

760.

1625

0.16

850.

1372

0.11

2212

130.

5303

0.46

680.

4150

0.36

770.

3262

0.28

970.

2575

0.22

920.

2042

0.18

210.

1413

0.14

520.

1163

0.09

3513

140.

5051

0.44

230.

3878

0.34

050.

2992

0.26

330.

2320

0.20

460.

1807

0.15

970.

1229

0.12

520.

0985

0.07

7914

150.

4810

0.41

730.

3405

0.31

520.

2745

0.23

940.

2090

0.18

270.

1599

0.14

010.

1069

0.10

790.

0835

0.06

4915

160.

4581

0.39

360.

3387

0.29

190.

2519

0.21

760.

1827

0.16

310.

1415

0.12

290.

0929

0.09

300.

0708

0.05

4116

170.

4363

0.37

140.

3166

0.27

030.

2311

0.19

780.

1696

0.14

150.

1252

0.10

780.

0929

0.08

020.

0600

0.04

5117

180.

4155

0.35

030.

2959

0.25

020.

2120

0.17

990.

1528

0.12

290.

1108

0.09

460.

0808

0.06

910.

0508

0.03

7618

190.

3957

0.33

050.

2765

0.23

170.

1945

0.16

350.

1377

0.11

610.

0981

0.08

290.

0703

0.05

960.

0431

0.03

1319

200.

3769

0.31

180.

2584

0.21

450.

1784

0.14

860.

1240

0.10

370.

0868

0.07

280.

0611

0.05

140.

0365

0.02

6120

Perio

d5%

6%7%

8%9%

10%

11%

12%

13%

14%

15%

16%

18%

20%

Per

iod

Pre

sen

t V

alu

e o

f $1

Rec

eive

d a

t th

e E

nd

of

n P

erio

ds

132132132132132

PRESENT VALUE RATE TABLE B

10.9524

0.94340.9

3460.9259

0.91740.9091

0.90090.8929

0.88500.8772

0.86960.8621

0.84750.8333

1

21.8594

1.83341.8080

1.78331.7591

1.73551.7125

1.69011.6681

1.64671.6257

1.60521.5656

1.52782

32.7232

2.67302.6243

2.57712.5313

2.48692.4437

2.40182.3612

2.32162.2832

2.24592.1743

2.10653

43.5460

3.46513.3872

3.31213.2397

3.16993.1024

3.03732.9745

2.91372.8550

2.79822.6901

2.58874

54.3295

4.21244.1002

3.99273.7908

3.79083.6959

3.60483.5172

3.43313.3522

3.27433.1272

2.99065

65.0757

4.91734.7665

4.62294.3553

4.35534.2305

4.11143.9975

3.88873.7845

3.68473.4976

3.32556

75.7864

5.58245.3893

5.20644.8684

4.86844.7122

4.56384.4226

4.28834.1604

4.03863.8115

3.60467

86.4632

6.20985.9713

5.74665.3349

5.33495.1461

4.96764.7988

4.63894.4873

4.34364.0776

3.83728

97.1078

6.80176.5152

6.24695.9952

5.75905.5370

5.32825.1317

4.94644.7716

4.60654.3030

4.03109

107.7217

7.36017.0236

6.71016.4177

6.14465.8892

5.65025.4262

5.21615.0188

4.83324.4941

4.192510

118.3064

7.88697.4987

7.13906.8052

6.49516.2065

5.93775.6869

5.45275.2337

5.02864.6560

4.327111

128.8633

8.38387.9427

7.53617.1607

6.81376.4924

6.19445.9176

5.66035.4206

5.19714.7932

4.439212

139.3936

8.85278.3577

7.90387.4869

7.10346.7499

6.42356.1218

5.84245.5831

5.34234.9095

4.532713

149.8986

9.29508.7455

8.2442 7.7862

7.36676.9819

6.62826.3025

6.00215.7245

5.46755.0081

4.610614

1510.3797

9.71229.1079

8.55958.0607

7.60617.1909

6.81096.4624

6.14225.8474

5.57555.0916

4.675515

1610.8378

10.10599.4466

8.85148.3126

7.82377.3792

6.97406.6039

6.26515.9542

5.66855.1624

4.729616

1711.2741

10.47739.7632

9.12168.5436

8.02167.5488

7.11966.7291

6.37296.0472

5.74875.2223

4.774617

1811.6896

10.827610.0591

9.37198.7556

8.20147.7016

7.24976.8399

6.46746.1280

5.81785.2732

4.812218

1912.0853

11.158110.3356

9.60368.9501

8.36497.8393

7.36586.9380

6.55046.1982

5.87755.3162

4.843519

2012.4622

11.469910.5940

9.81819.1285

8.51367.9633

7.46947.0248

6.62316.2593

5.92885.3527

4.869620

Period5%

6%7%

8%9%

10%11%

12%13%

14%15%

16%18%

20% Period

Presen

t Valu

e of an

An

nu

ity of $1 p

er Perio

d fo

r n P

eriod

s

ANNEXES

133133133133133

Annex 3.1Example of an Environmental Aspect Rating System (EARS)and Procedure

Annex 3.2Example of an EMS Program Matrix Indicating Objectiveand Target

Annex 3.3Example of Document Control Procedure

Annex 3.4Example of Chemical Management and Control Procedure

Annex 3.5Example of Laboratory Accidents Monitoring

Annex 3.6Example of Non-Conformance Action Report (NCAR)

Annex 3.7Example of an EMS Audit Plan

1010101010

1. PURPOSETo establish a system for evaluation of environmental aspects of the organization related to its processes,

activities and services and to determine those which are significant based on a set of pre-determined criteria

2. SCOPEThis procedure shall be applicable to the following:

a. all existing regular processes, activities and services of EMB related to the discharge of its functions

under Executive Order No. 192, PD 984, PD 1586, RA 6969, RA 8749, RA 9003 and other relevant

environmental laws

...3. DEFINITION OF TERMS

...4. REFERENCES

...5. RESPONSIBILITIES

...6. PROCEDURE

6.1 Each environmental aspect category is rated based on the Environmental Aspect RatingSystem (EARS) designed by the Planning Team. EARS is a comprehensive rating systemwhich considers the influence of each environmental aspect category to the following:

6.1.1 International Commitment6.1.2 Natural Resource Depletion6.1.3 Safety and Health Hazard6.1.4 Past Incidents6.1.5 Waste Generation6.1.6 Ecological Impacts (Air, Water, Land, etc.)6.1.7 Impact on Community6.1.8 Control for Abnormal Cases6.1.9 Coverage by National Law(s)6.1.10 Coverage by Bureau Policy(ies)6.1.11 Control on Disposal6.1.12 Annual Bureau Expenditure6.1.13 Annual Consumption

Items 6.1.1, 6.1.2., 6.1.3, 6.1.7, 6.1.9, 6.1.10 shall be scored as YES = 10; NO =0.

ANNEX 3.1

Prepared by: Reviewed by: Approved by:

Staff EMR Director

ENVIRONMENTAL ASPECTRATING SYSTEM AND PROCEDURE

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

Item 6.1.8, 6.1.11 shall be scored as YES = 5; NO = 0

Items 6.1.4., 6.1.6 shall be scored as NONE = 0, Minimum = 5, Major = 10. For 6.1.4,Major = occurs more than 5 times, Minimum = occurs 5 times or less, NONE = NoOccurrence. For 6.1.6, None = No Pollution, Minimum = With Control and with Pollution,Major = With No Control

Items 6.1.5 shall be scored as LOW = 0, MEDIUM = 5, HIGH = 10. For item 6.1.5, HIGH= Daily Waste Generation/Consumption, MEDIUM = Weekly Waste Generation/Consumption, LOW = Monthly Waste Generation/Consumption.

Item 6.1.12 and 6.1.13 shall be scored as Up to PhP 0.5 Million = 5, PhP 0.5 - 1 Million =10, > PhP 1 million = 15.

The defined threshold is 65. This is the product of the mid-score of five (5) multiplied bythe above-mentioned thirteen (13) aspect categories.

6.2 For aspects below the defined threshold score (65), operational controls shall be consideredand implemented by each Division/Unit. The threshold score is determined by the PlanningTeam from discussion/brainstorming activities and may be changed in the future accordingto the Bureau’s needs and environmental aspect rating.

6.3 Aspects equal or above the defined threshold score shall be considered as significant.For significant aspects, the Planning Team shall propose to the EMR the formulation ofappropriate EMS Programs, Objectives and Targets.

7. ATTACHMENT/S

7.1 Aspect and Impact Matrix (AIM)7.2 Processes, Activity and Service Data Sheet (PASDS)

ENVIRONMENTAL ASPECTRATING SYSTEM AND PROCEDURE

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

ENVIRONMENTAL MANAGEMENTPROGRAM MATRIX

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

Initiating Team Prepared by: Reviewed by: Noted by: Approved by:

Staff Chief/OIC/Leader EMR EMB Director

Objective:

Target:

Activity Person In-Charge Timeframe ResourcesRequired1st Qtr ‘03 2nd Qtr ‘03 3rd Qtr ‘03 4th Qtr ‘03

Jan. Feb. Mar. Apr. May Jun. July Aug. Sept. Oct. Nov. Dec.

To reduce the quantity of solid waste discharge to land

15% from current levels by end of Dec.2003

Remarks/Update

Segregation of solid wastes ABC X 10,000.00 Done

AN

NE

X 3.2

DOCUMENT CONTROLPROCEDURE

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

ANNEX 3.3

Prepared by: Reviewed by: Approved by:

Staff EMR Director

1. PURPOSEThis procedure defines the system for issuance, review, approval, control, retention, distributionand disposal of EMB’s documents

2. SCOPEThis procedure shall be applicable to the following:a. all existing regular processes, activities and services of EMB related to the discharge of its

functions under Executive Order No. 192, PD 984, PD 1586, RA 6969, RA 8749, RA 9003and other relevant environmental laws

...3. DEFINITION OF TERMS

The definitions are valid only for this particular procedure. The following sample terms when usedin this Procedure shall apply:

3.1 DCC Refers to Document Control Center, the Office at EMBresponsible for the management of internal and externaldocuments

3.2 DC Refers to Document Controller, and is the Chief of theRecords Section

3.3 Controlled Copy Refers to documents photocopied from the master copystamped red color and octagon-shape “Controlled Copy” oneach page of the document

3.4 Master Copy Refers to the original document kept by the DCC from which“Controlled Copy” is generated. Only one “Master Copy” ismaintained and kept updated, marked or stamped on allpages with “Master Copy” in green color and flower-shaped

3.5 ...

4. RESPONSIBILITIES4.1 The DC is responsible for distribution, management, retrieval and disposition of documents

pertaining to EMB.4.2 The originators review new and revised documents and approved by the Director.4.3 Recipients of the documents are responsible for protecting and safekeeping of their respective

controlled copies from loss and damage.

5. PROCEDURE5.1 Preparation, issuance and approval of new or revised documents

5.1.1 The originator shall identify and validate the need for the document.

5.1.2 The originator shall prepare the draft document using the electronic DCC formfrom the DC with the accomplished DCCN Form as covering page.

5.1.3 The DC shall forward the draft document with the DCCN to Division Chief/UnitHead for review, comments and approval and to the EMR for endorsement to andfinal approval of the Director.

5.1.4 Once the DCCN is approved, each Division/Unit shall assign a Document No.,and the DC shall update the Document Master List.

5.1.4.1 Document Numbering System

EMB-Office Code -P-001-YYYY (Year Code)

DOCUMENT CONTROLPROCEDURE

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

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P for ProcedureEP for EMS Program ProcedureD for Document (Manual, EMB

Special Orders, EMB MemoCirculars, EMB Office Orders)

F for FormsS for Signages

�����

�����

Sequence No.

�����

Office/Source Reference Code

Bureau Code�����

The Office Code for each division/unit of the Bureau shall be as follows:D - Office of the EMB DirectorM - Management Information SystemsA - Administrative and Finance Division

Aa - AccountingAr - Records

Q - Environmental Quality DivisionQa - Air Quality Management SectionQh - Hazardous Wastes Management Section

G - General

DOCUMENT CONTROLPROCEDURE

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

5.1 Document Revision

...5.2 Document Distribution

...

5.3 Control of External Document

...

5.4 Control of Forms

...

5.5 Document Retention

...5.6 Document Disposition

...

6. REFERENCESISO 14001:1996(E)EMB EMS Manual

EMB Special Order No. 162 Series of 2002

7. ATTACHMENT/S7.1 Document Master List

7.2 DCC Stamps Sample

7.3 DCCN

7.4 Revision History

7.5 Retention and Disposition Register

7.6 Acknowledgement Slip

7.7 Document Request

CHEMICAL MANAGEMENTAND CONTROL PROCEDURE(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

ANNEX 3.4

1. PURPOSEThis procedure aims to ensure that the chemicals used in the Research and Development Division

(RDD) are properly managed and controlled.

2. SCOPEThis procedure covers the total approach to managing chemicals in the laboratory from purchasethrough acceptance, handling, segregation, storage, usage and disposal.

3. DEFINITION OF TERMSChemicalChemical Control OrderMaterial Safety Data Sheet

CMCO

4. REFERENCE DOCUMENTSEMB Laboratory Manuals

5. RESPONSIBILITIESChemical Management and Control OfficerChemical Register OfficerLaboratory Waste Manager

Technical Inspector

6. PROCEDURE6.1 Purchase

Refer to RDD Laboratory Manual6.2 Selection and receipt of chemicals

Refer to RDD Laboratory Manual6.3 Inventory of chemicals

Refer to RDD Work Instructions per laboratory unit6.4 Staff development

6.4.1 The CMCO shall recommend and coordinate training on chemical managementand control including health and safety of EMB staff.

7. ATTACHMENT/SNone

Prepared by: Reviewed by: Approved by:

Staff EMR Director

Name ofChemical

Severity(Major/Minor)

Accidents Details Occurred Site Activity In-Charge InvolvedEmployee/s

LABORATORY ACCIDENTSMONITORING

(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

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YearCovered

Action Completed Action Verified Approved

_______________________________ _________________________________ _________________________________

Chemical Management Program Coordinator EMP Group Leader _______________ EMR

Date _____________________________ Date _________________________________ Date _________________________________

AN

NE

X 3.5

ANNEX 3.6NON-CONFORMANCE ACTION

REPORT(Environmental Management System)

Doc. No.:

Date:

Page No.:

Revision:

ENVIRONMENTAL

MANAGEMENT

BUREAU

Action Completed Action Verified Approved

Name & Signature / Date Name & Signature/IEA HEAD / Date Name & Signature/EMR / Date

Activity Description: Issued To: ____________________

Division/Office: ________________

CC: ____________________

____________________

Report No.:

Date:

Issued By

Description/Illustration of Non- Conformance Major

ObservationNature of Request

Root Cause

Corrective Action

Preventive Action

Answer Date ROOT CAUSE

CORRECTIVE ACTION

PREVENTIVE ACTION

CLOSING THE NON-CONFORMANCE

Auditor

Approved By

IEA Head

Minor����� ����� �����

�����

�����

�����

1. INTRODUCTION1.1 The EMB has installed and implements an Environmental Management System (EMS)

based on ISO14001 as part of its effort to attain global conformance towards environmentalprotection. One of the requirements of ISO14001 is the conduct of an internal audit basedon this Audit Plan;

1.2 The purpose of this Audit Plan is to define the methodology and responsibilities associated

with the conduct of an Internal Audit of the EMB.

2. AUDIT REQUIREMENTS2.1 The requirements to this audit are as follows:

1) Objective. The objective is to determine compliance to ISO14001 requirementsby the EMB

2) Scope. The audit will be at EMB Central Office in Visayas Avenue, Quezon Cityfrom June 5-6, 2003

3) Criteria. The audit criteria are defined in ISO14001: 1996 Environmental

Management Systems - Specification with Guidance for Use

3. REFERENCE DOCUMENTS3.1 The following reference documents will be used during the audit process:

1. EMS-related documents and records, if any2. ISO14001:1996 Environmental Management Systems - Specification with guidance

for use3. ISO14010 - Guidance for Environmental Auditing - General Principles4. ISO14011 - Guidelines for Environmental Auditing - Audit Procedures - Auditing of

EMS

4. AUDIT METHODOLOGY4.1 The methodology used to perform the audit will involve consideration of the following written

and oral information and the conduct of an on-site audit using the audit protocol defined inISO14010 and ISO 14011.

1. Review of the EMS documentation related to the EMS2. Interviews and discussion with staff

3. Physical observations

5. WORKING LANGUAGE5.1 The working languages of the audit are English and Filipino. Reports will be in English.

6. AUDIT TEAM MEMBERS6.1 The following are the internal auditors designated by EMB Special Order 162 Series of 2002.

1. ...

ANNEX 3.7

EMS AUDIT PLAN(Environmental Management System)

7. FUNCTIONAL RESPONSIBILITY7.1 The following functional responsibilities have been identified for the audit:

1. Office of the Director and Assistant Director2. Environmental Management Representative and Environmental Management

Coordinator

3. ...

8. AUDIT SCHEDULE

AUDIT NOTICE

This is to inform EMB employees that there will be an Internal EMS Audit on June 5-6, 2003.Please make yourself available on the said period.

Time ISO Element Auditee Signature Auditor Signature

June 5, 2003

9:00 - 9:30 Opening Meeting

9:30 - 10:30 4.2/4.3.2/ Director All Auditors

4.3.3/4.3.4/ Assistant

4.4.1/4.6 Director

Additional EMR

4.3.1/4.5.1 EMR

10:30 - 11:30 4.3.3.4.3.4/ Division Team A

4.4.1/4.4.2/ Chiefs Team B

4.4.3/4.4.4/ Unit Heads Team C

4.4.6/4.4.7/

4.5.1/4.5.2/

4.6

12:30 - 14:00 B R E A K

14:00 - ... ...

15:45 - 17:30 Audit Team Meeting

1. Preparation of Audit Report

2. ...

17:30 - 18:30 Closing Meeting

SOURCES OF INFORMATION ONEMS, P2/CP AND ECA

GOVERNMENT ORGANIZATIONS

☛☛☛☛☛ BOARD OF INVESTMENTS - Environment UnitDepartment of Trade and Industry

#385 Sen. Gil Puyat Avenue, Makati City

☎☎☎☎☎ 896-9239 • 896-8453 • 759-3422

Fax No. 895-3568 • website: www.boi.gov.ph

☛☛☛☛☛ BUREAU OF PRODUCT STANDARDS (BPS)Department of Trade and Industry

3rd Floor, Trade and Industry Building

#361 Sen. Gil Puyat Avenue, Makati City

☎☎☎☎☎ 890-5225 • 890-5129 • 897-6682 loc. 225/226

Fax No. 890-5225

☛☛☛☛☛ DEPARTMENT OF ENERGYEnergy Center, PNPC Complex

Merritt Road, Fort Bonifacio, Makati City

☎☎☎☎☎ 844-7214 • 840-0771 • 845-0853

Fax Nos. 840-0771 • 844-9505 • website: wwe.doe.gov.ph

☛ ENVIRONMENTAL MANAGEMENT BUREAU (EMB)Department of Environment and Natural Resources

DENR Compound, Visayas Avenue, Diliman, Quezon City

☎☎☎☎☎ 927-1517 • 925-2795 to 97

Fax Nos. 927-1518 • 920-2251 • website: www.emb.gov.ph

☛☛☛☛☛ INDUSTRIAL TECHNOLOGY DEVELOPMENT INSTITUTEDepartment of Science and Technology

Integrated Program on Cleaner Production Technologies

Environment Division, Annex Building

DOST Compound, Gen. Santos Avenue, Bicutan, Taguig, Metro Manila

☎☎☎☎☎ 837-2071 local 2273/2274

Fax Nos. 837-2071 local 2274 • website: www.cptech.dost.gov.ph

151151151151151

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☛☛☛☛☛ TECHNOLOGY AND LIVELIHOOD RESOURCE CENTER (TLRC)CityState Centre, #709 Shaw Blvd., Pasig City

☎☎☎☎☎ 637-4018 to 22 • 637-4108 to 12 • website: www.tlrc.gov.ph

BUSINESS/INDUSTRY/PRIVATE INSTITUTIONS

☛☛☛☛☛ ENERGY COUNCIL OF THE PHILIPPINES11th Floor, Phinma Plaza

#29 Plaza Drive, Rockwell Center, Makati City

☎☎☎☎☎ 870-0253 • Fax No. 870-0433

☛☛☛☛☛ PHILIPPINE POLLUTION PREVENTION ROUNDTABLE (P3R)#90A West Tektite Towers, Philippine Stock Exchange Center (PSE)

Exchange Road, Ortigas Avenue, Pasig City

☎☎☎☎☎ 637-9537 • 631-4648 • Fax No. 637-9540

☛☛☛☛☛ THE PHILIPPINE ENVIRONMENT INDUSTRY ASSOCIATION (PEIA)Unit E, 9th Floor, Strata 100 Building,

Emerald Avenue, Ortigas Center, Pasig City

☎☎☎☎☎ 637-6626 to 27 • Fax No. 637-7316

NON-GOVERNMENT ORGANIZATIONS

☛☛☛☛☛ PHILIPPINE BUSINESS FOR SOCIAL PROGRESS (PBSP)Ground Floor, PSDC Building,

Magallanes corner Real Streets, Intramuros, Manila

☎☎☎☎☎ 527-7741 • Fax No. 527-3743

website: www.pbsp.org.ph

☛☛☛☛☛ PHILIPPINE BUSINESS FOR THE ENVIRONMENT (PBE)2nd Floor, DAP Building, San Miguel Avenue, Pasig City

☎☎☎☎☎ 635-3670 • 635-2650 to 51

Fax Nos. 631-5714 • 636-6014 • website: www.pbe.org.ph

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ADDITIONAL ISO14001 AND

POLLUTION PREVENTION SOURCES

EMS BOOKS AND OTHER REFERENCES

Bureau of Product Standards – Department of Trade and Industry. EnvironmentalManagement System – Specification with Guidance for Use or PNS1701/ISO14001:1996.

Bureau of Product Standards – Department of Trade and Industry. EnvironmentalManagement System – General Guidance and Principles, Systems andSupporting Techniques or PNS1704/ISO14004:1996.

Bureau of Product Standards – Department of Trade and Industry. Guidelines forEnvironmental Auditing – General Principles or PNS1710/ISO14010:1996.

Bureau of Product Standards – Department of Trade and Industry. Guidelines forEnvironmental Auditing – Audit Procedures – Auditing of EnvironmentalManagement Systems or PNS1711/ISO14011:1996.

Bureau of Product Standards – Department of Trade and Industry. Guidelines forEnvironmental Auditing – Qualification Criteria for Environmental Auditing orPNS1712/ISO14012:1996.

Cascio, Joseph, ed. 1998. ISO 14000 Handbook. Milwaukee: ASQ Quality Press.

Edwards, A.J. 2001. ISO 14001 Environmental Certification Step by Step. Oxford, U.K.:

Butterworth-Heinemann.

Global Environment and Technology Foundation. 2000. Final Report: The USEPA EMSPilot Program for Local Government Entities. Annandale: GETF.

Kanholm, Jack. 1999. ISO 14001 Manual and Procedures: EMS Manual, 21 Proceduresand Forms. Pasadena, Calif.:AQA Press.

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Kinsella, Hohn, Annette Dennis McCully, and David Burngasser. 1999. Handbook forImplementing an ISO 14001 Environmental Management System: A PracticalApproach. Bothell, Wash.: EMCON.

Roberts, Hewitt, and Gary Robinson. 1998. ISO 14001 EMS Implementation Handbook.

Oxford, U.K.: Butterworth-Heinemann.

Schoffman, Alan, and Allan M. Tordini. 2000. ISO 14001: A Practical Approach. Oxford,

U.K.: OUP.

Tever, Beth. 1999. ISO14001: Lessons from the Early Adopters. Arlington: Cutter

Information Corporation.

Woodside, Gayle, and Patrick Aurrichio. 1999. ISO 14001 Auditing Manual. New York:

McGraw-Hill.

POLLUTION PREVENTION

Bernstein, Janis D. 1993. Alternative Approaches to Pollution Control and WasteManagement: Regulatory and Economic Instruments. Washington: The World

Bank.

Cheremisinoff, Nicholas P. 2001. Handbook of Pollution Prevention Practices. New York:

Marcel Dekker Inc.

Chin, Shen-yann and Bob Peters. Industrial Pollution Prevention. Manila: Asian

Development Bank.

Environmental Protection Agency. 1997. Guide to Accessing Pollution PreventionInformation Electronically. Boston: U.S. Environmental Protection Agency —

Northeast Waste Management Official’s Association.

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Purcell, A.H. Hazardous and Solid Waste Minimization, ISBN/ISSN:0865871361.

Government Institutes Inc.

Waste Minimization Manual, ISBN/ISSN: 0865877319. Government Institutes Inc.

Wittman, Marlene R. Costing and Financial Analysis of Pollution Prevention Projects.

Massachusetts Office of Technical Assistance.

World Bank. 1999. Pollution Prevention and Abatement Handbook. Washington: The

World Bank Group.

EMS WEBSITES

• http://www.epa.gov

• http://www.epa.gov/owm/wm046200.htm

• http://es.epa.gov/partners/iso/iso.html

• http://www.ecologia.org/iso14000/

• http://www.iso.ch

• http://www.iso.ch/presse/presse12.html

• http://www.iso14000.com

• http://www.iso14000.net

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GLOSSARY

CLEANER PRODUCTION (CP) is the continuous application of an integrated, preventive

environmental strategy to processes, products and services to increase overall efficiency

and reduce risks to humans and the environment.

DEPRECIATION is the reduction in the value of a long-lived asset over its useful life.

ECO-EFFICIENCY was coined by the World Business Council for Sustainable

Development (WBCSD) in 1992 to denote the delivery of competitively-priced goods and

services that satisfy human needs and bring quality of life, while progressively reducing

ecological impact and resource intensity throughout the life cycle to a level at least in line

with the Earth’s estimated carrying capacity.

ENVIRONMENTAL ASPECT is the element of an organization’s activities, products or

services that can interact with the environment (ISO 14001, 1996).

ENVIRONMENTAL COST ACCOUNTING (ECA) is the innovative practice that seeks to

help identify and estimate environmental cost information for a host of business reporting

and management decision-making functions.

ENVIRONMENTAL IMPACT is “any change to the environment, whether adverse or

beneficial, wholly or partially resulting from an organization’s activities, products or

services”. These impacts are the effects arising from the causes of environmental problems,

and they could be significant.

ENVIRONMENTAL MANAGEMENT SYSTEM (EMS) is the part of the overall management

system that includes organizational structure, planning activities, responsibilities, practices,

procedures, processes and resources for developing, implementing, achieving, reviewing

and maintaining the environmental policy.

GREEN PRODUCTIVITY, a term used by the Asian Productivity Organization (APO), is

defined as a strategy for enhancing productivity and environmental performance for overall

socio-economic development.

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INDUSTRIAL WASTE means any liquid, gaseous or solid matter, or other waste substance

or a combination thereof resulting from any process of industry, manufacturing, trade or

business or from the development, processing or recovery of any natural resources which

may cause or tend to cause pollution or contribute to the pollution of the water, air and

land resources.

INFLATION refers to the decline in purchasing power of the peso, causing the cost of

goods and services to rise.

INTERNATIONAL ORGANIZATION FOR STANDARDIZATION (ISO) is a non-governmental

organization founded in 1946; based in Geneva, Switzerland. It has over 130 member-

countries, represented by their national standard bodies. Its objective, among others, is to

develop management system standards. Standards developed are voluntary and reviewed

every five years.

INTERNATIONAL ORGANIZATION FOR STANDARDIZATION 14000 (ISO14000) is a

series of international standards that provide guidance to organizations wishing to develop

and implement an effective environmental policy. It provides a framework for setting and

measuring environmental performance.

INTERNATIONAL ORGANIZATION FOR STANDARDIZATION 14001 (ISO14001) specifies

requirements for an environmental management system to enable the organization to

formulate a policy and objectives, taking into account legal requirements and information

about significant environmental impacts and aspects.

INTERNAL RATE of RETURN (IRR) is a profitability measure, expressed in percentage

terms, that is analogous to an average rate of return from an investment; IRR is the

discount rate that will yield a net present value of zero for a given stream of cash flows.

PRESIDENTIAL DECREE NO. 984, otherwise known as the Pollution Control Law, defines

pollution as “any alteration of the physical, chemical, and biological properties of any

water, air, and/or land resources of the Philippines, or any discharge thereto of any liquid,

gaseous or solid waste as will or is likely to create or to render such water, air and land

resources harmful, detrimental or injurious to public health, safety or welfare or which will

adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational

or other legitimate purposes.”

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POLLUTION PREVENTION (P2). The United States Environmental Protection Agency

(USEPA) defines Pollution Prevention (P2) as “the use of materials, processes or practices

that reduce or eliminate pollutants or waste at the source.” It includes practices that reduce

the use of hazardous materials, energy, water or other resources, those that protect natural

resources through conservation or more efficient use. Meanwhile, Environment Canada

defines P2 as the use of processes, practices, materials, products or energy that avoid or

minimize the creation of pollutants and waste, and reduce the overall risk to human health

or the environment.

SOURCE REDUCTION is any practice that reduces the amount of any hazardous

substance, pollutant or contaminant entering any waste stream or otherwise released to

the environment. Source reduction may be achieved through either product changes or

process change.

WASTE MINIMIZATION is the reduction, to the extent feasible, of hazardous waste

generated or subsequently treated, stored or disposed of. It includes any source reduction

or recycling activity undertaken by a generator that results in either (1) the reduction in

total volume or quantity of hazardous waste, or (2) the reduction of toxicity of hazardous

waste, or both, so long as the reduction is consistent with the goal of minimizing present

and future threats to human health and the environment.

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ACRONYMS

APO - Asian Productivity Organization

AusAID - Australian Agency for International Development

CDO - Cease and Desist Order

CFLs - Compact fluorescent lamps

DBP - Development Bank of the Philippines

DOST - Department of Science and Technology

ECA - Environmental Cost Accounting

EMA - Environmental Management Accounting

EMAN-AP - Environmental Management Accounting Network for Asia Pacific

EMB - Environmental Management Bureau

EMP - Environmental Management Program

EMS - Environmental Management System

FIFO - First in-First out

IPCT - Integrated Program on Cleaner Production Technologies

IRR - Internal Rate of Return

ISO - International Organization for Standardization

ITDI - Industrial Technology Development Institute

IWEP - Industrial Waste Exchange Program

LBP - Land Bank of the Philippines

MD - Millennium Designs

PBE - Philippine Business for the Environment

PD - Presidential Decree

PICPA - Philippine Institute of Certified Public Accountants

PNS - Philippine National Standard

P2/CP - Pollution Prevention/Cleaner Production

QMS - Quality Management Systems

SME - Small-to-medium enterprise

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UNEP - United Nations Environment Programme

USEPA - United States Environmental Protection Agency

WBCSD - World Business Council for Sustainable Development

WWTP - Wastewater Treatment Plant

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SELECTED BIBLIOGRAPHY

Acharya, Anjali, et. al. 2000. Philippines Environment Monitor 2000. The World Bank.

Bishop, Paul L. 2000. Pollution Prevention: Fundamentals and Practice. McGraw-Hill Book

Co.

Clean and Competitive: Environmental Management Accounting for Business. United

Nation’s Division for Sustainable Development.

Environmental Cost Assessment: Profiting from Cleaner Production – A Training Course

of the Philippine Institute of Certified Public Accountants (PICPA). 2000. PICPA,

700 Shaw Boulevard, Mandaluyong City, Philippines.

Environmental Management Bureau – Department of Environment and Natural Resources.

1994. Market-Based Instruments to Promote Pollution Reduction in the Philippines.

Quezon City: Industrial Environmental Management Project.

Environmental Protection Agency Government of Victoria. 1994. Guidelines for PreparingWaste Assessments. Melbourne, Australia.

Higgins, Thomas E. (editor). 1995. Pollution Prevention Handbook. Lewis Publishers.

Improving Your Competitive Position: Strategic and Financial Assessment of PollutionPrevention Investment. Northeast Waste Management Officials’ Association, U.S.A.

Integrated Program on Cleaner Production Technologies. 2002. Cleaner ProductionAssessment Training Manual. ITDI/DOST.

LaGrega, MD, et. al. 1994. Hazardous Waste Management. McGraw-Hill Book Co.

New South Wales Environment Protection Agency. 2000. Profits from Cleaner Production:A Self-Help Tool for Small to Medium-Sized Businesses. NSW, Australia.

Oposa, Antonio A., Jr. 2002. A Legal Arsenal for the Philippine Environment. Batas

Kalikasan Foundation.

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United Nations Industrial Development Organization and United Nations Environment

Programme. 1991. Audit and Reduction Manual for Industrial Emissions andWastes. UNEP.

United States Environmental Protection Agency. 1992. Facility Pollution Prevention Guide.

Washington, D.C.

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GUIDEBOOK PROJECT STAFF

Engr. Julian Amador - EMB DirectorAtty. Fernandino Concepcion - EMB Assistant DirectorMr. Manuel Sabater - Project Manager, IISE and

Lead Coordinator, GuidebookProjectMs. Elenida del Rosario-Basug - Chief, Environmental Education and

Information Division, EMB andCo-coordinator, Guidebook Project

Ms. Ritchie Anne Guzman - Project Staff, IISE andAsst. Coordinator, Guidebook Project

Members:Environmental Education and Information Division (EEID) - EMB

Mr. Harry QuiaoitMs. Carmelita PasseMs. Cristina FranciscoMs. Gerarda MeriloMr. Virgilio SantosMs. Bernardita BondocMs. Alicia Laplana-Sabater

Industrial Initiatives for a Sustainable Environment (IISE) ProjectEngr. Leonie Lynn RuizMr. Nasser Lawrence LuminogMr. Rey SalvadorMr. Marlon GenoviaMs. Marjorie Balogo

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