EXECUTIVE SUMMARY

"Hey, there is a $100 bill on the floor over there!"
"That can't possibly be a real $100 bill. If it were, some one would have already picked it up."

Most environmental policy makers and business leaders believe that opportunities to reduce pollution while at the same time save money would be implemented without hesitation if such opportunities were ever discovered. The fact that such opportunities are seldom trumpeted leads to the belief that they must be very rare. Therefore, many people subscribe to the "dollar bills on the floor" theory, which holds that if such opportunities really existed, they would have already been seized.

This project, the Michigan Source Reduction Initiative (MSRI), shows that this widely-held impression is wrong. Over only a two-year time frame, the project found opportunities to reduce nearly 7 million pounds of wastes and emissions at the Dow Chemical manufacturing site in Midland, Michigan while saving the company over five million dollars annually. In the course of this project, Dow businesses committed capital to these projects, and the reductions and savings have already largely taken place.

Perhaps more incredibly, by the reckoning of Dow managers, the reductions and cost savings identified and approved in this project would not have occurred without the unique involvement of a group of outside environmental activists. Thus, this success defies a second piece of conventional wisdom, which holds that only company experts themselves accomplish pollution prevention successfully. To the contrary, the MSRI experience shows that companies can benefit substantially from interaction with informed critics drawn from the community and regional and national environmental organizations.

The Natural Resources Defense Council (NRDC), Dow Chemical, and a group of five community activists and environmentalists initiated the MSRI project in the fall of 1996 to achieve the following goals:

• To reduce waste and emissions of 26 priority chemicals at Dow's Midland site by 35 percent by April 30,1999 using only pollution prevention techniques;
  
  
• To foster institutional changes throughout Dow which would further shift the corporation's thinking from compliance to pollution prevention and further integrate health and environmental concerns into core business planning and decision making;
  
  
• To develop and rely upon a participatory process that leads to changes in business decision making throughout Dow and that provides an opportunity for the citizen participants to gain an understanding of the company's business decision making process; and
  
  
• To monitor waste reduction and pollution prevention accomplishments and provide accountability of the project results to the general public.

The MSRI project aimed to achieve its reduction goals using only pollution prevention. Pollution prevention is an approach that promises increased efficiencies in manufacturing operations and reduced reliance on toxic chemicals while often saving money. Pollution prevention is markedly different from the traditional techniques used to control industrial pollution in the United States. Rather than relying on end-of-the-pipe treatment devices, such as incinerators or wastewater treatment plants, it requires process improvements at facilities that will decrease waste at the source before it is generated. Savings come from reduced raw materials and treatment costs. Often, pollution prevention also reduces production down-time, and other manufacturing "headaches", which also saves money.

In this way, pollution prevention represents a new way of achieving environmental improvements, one which is consistent with traditional manufacturing cost reduction/process improvement initiatives rather than as a required "add-on" to core business concerns. Pollution prevention is also superior environmentally, in that it decreases reliance on toxic chemicals in manufacturing in the first place and reduces wastes prior to treatment. It thereby avoids undesirable by-products of treatment, such as dioxin creation during incineration and the shifting of pollutants from one environmental media to another during treatment.

Dow's Midland site is home to eight of Dow's 15 global businesses. It occupies 1900 acres, employs 4200 people, and manufactures more than 500 products, including pharmaceuticals, plastics, and pesticides. These products are manufactured by Dow by mixing various raw materials together and allowing them to react under very precise engineering conditions. Wastes and emissions are generated during manufacturing from: raw materials that are not consumed in the reaction, solvents used to dissolve the ingredients, unwanted by-products of the reactions designed to manufacture the products, and products themselves which do not meet specifications. At the start of the project, in 1996, the Dow Midland facility was Michigan's eighth largest emitter of publicly reported toxic releases (Toxic Release Inventory releases, or TRI) and the sixth largest generator of TRI wastes. Its TRI emissions had been approximately level for the prior 5 years.

The Natural Resources Defense Council (NRDC) and Dow Chemical agreed at the outset that it was critical to include local and regional environmental activists as an integral part of the project team. The opportunity for concerned members of the community to interact directly with business leaders was a key element of MSRI. Therefore, five local activists and environmental groups-Diane Hebert and Mary Sinclair, Midland residents; and Citizens for Alternatives to Chemical Contamination, Lone Tree Council, and Ecology Center of Ann Arbor-became involved in the project. (Appendix I) The group selected an expert pollution prevention assessor who was retained by Dow. NRDC also hired a second technical assistant to work with the activists and environmental participants. A professional facilitator was part of the process from the outset. Key Dow staff, including the Midland site manager, senior corporate business leaders, and Dow corporate and site environmental health and safety (EH&S) personnel, participated throughout the 21/2 years of the project.

In the fall of 1996, the activists and environmental participants selected 26 chemicals, based on their toxicity, persistence, and volume, as the target of the MSRI work. These chemicals represent 17.5 million pounds of waste and 1 million pounds of emissions. Chlorinated wastes were a priority because they generate dioxins and furans when they are incinerated under some conditions. The activists and environmental participants then proposed quantitative reduction goals of 35 percent and established a 2-year time frame in which to achieve those goals using only pollution prevention techniques. After some internal deliberation, Dow agreed on the chemicals, goals, and time frame, and the assessor began working with the individual businesses to develop reduction opportunities. The MSRI group met regularly to track progress, relying on an open and fully participatory meeting process to review progress and issues and set direction.

A very important goal of the project was to foster broader institutional changes within Dow that would further shift the company's thinking from traditional environmental compliance to pollution prevention and further integrate health and environmental concerns into core business decision making. These goals, which were difficult to quantify or track, were addressed too late in the project. Although the activists and environmental participants group raised a wide range of environmental issues and concerns during the course of the project, the broader institutional change issues proved difficult to develop into an explicit action plan or milestones and benchmarks.

Ultimately, the activists developed and conducted a survey to better understand Dow's thinking on both pollution prevention and environmental issues beyond pollution prevention, such as product stewardship, life cycle assessment, and the health and environmental impacts of some of the chemicals that comprise the backbone of Dow's business. Although some progress was made through conversations about these topics, considerable additional work will be necessary and a wider range of programs will be needed for dramatic change at Dow in these areas.

MSRI ACHIEVEMENTS

The MSRI project exceeded its aggressive 35% reduction goals. It reduced targeted emissions by 43%, from 1 million to 593,000 pounds and targeted wastes by 37%, from 17.5 million to 11 million pounds. Some chemical wastes and releases, such as formaldehyde, were nearly completely eliminated. This accomplishment gives credence to the conclusion that MSRI provided both new incentives and new techniques to achieve pollution reductions that Dow had not seriously considered previously in its routine business and environmental operations. In addition to the total quantities of reductions achieved, the types of waste reductions are particularly significant, because approximately two-thirds of the wastes reduced-4 million pounds-were chlorinated.

The cost savings and process improvements that MSRI delivered were similarly significant. The reductions will be paid for in less than one year. This translates to an overall rate of return of 180%. The rate of return for some individual projects was spectacular. One project, for example, required $330,000 and will return $3,300,000 per year in raw material savings and lowered production costs alone. Eight other projects paid for themselves in three to 12 months. All but one of the projects easily met business hurdle rates, the amount of profitability required to be achieved by a project for a business to invest in it, and the project that was an exception was undertaken for other reasons by the plant.

A total of 17 projects delivered these reductions. The details of these projects reveal important insights into pollution prevention:

• First, the vast majority of MSRI projects required relatively small amounts of capital. These small projects face fewer obstacles than large projects when competing for capital within a firm. For example, most Dow businesses have small capital project funds that will allow projects costing less than approximately $300,000 to go forward with an abbreviated business capital approval process. Thirteen of the seventeen projects fell below this cut-off point.
  
  
• Second, some of the MSRI projects reducing the greatest quantities of wastes/emissions cost the least amount of money. There was no consistent correlation between amount of money required and pounds reduced.
  
  
• Third, opportunities were broadly available in the various businesses in the plant. They did not confine themselves to either "new" or "old" production processes or a particular type of manufacturing. Good reduction opportunities were found in almost every production process.
  
  
• Fourth, several projects focused on basic process changes and yet were designed and implemented in a relatively short time frame.
  
  
• Fifth, confidentiality agreements between activists and Dow were not necessary; it was possible to explain both processes and engineering opportunities for reductions with an amount of detail that supported informed conversations about opportunities without disclosing any business-sensitive information.
  
  
• Sixth, the most readily identified and adopted strategies were those that involved making process changes or internally recycling solvents. No business achieved its MSRI reductions by reformulating a product or substituting a product on the market with a service-based alternative. This experience suggests that product changes are the most difficult for businesses.

WHAT LED TO THE SUCCESSES OF THE MSRI PROJECT?

All parties entered the MSRI project skeptical that it would reach its reduction goals. Dow businesses doubted they would uncover good opportunities. Activists and environmental participants worried that Dow would not implement the opportunities the project found. Much of the skepticism on both sides derived from the fact that participants did not know of a single example of successful similar work. For this reason, participants dedicated considerable time at the end of the project to identifying critical factors that led to project successes. Some of the most important factors include:

• Direct connection of informed activists with manufacturing managers and engineers
• Specific goals and deadlines for the project
• Expert assessment by an experienced pollution prevention assessor
• Technical assistance to inform the environmental participants
• Active direct participation by the Dow Midland site leader and various Dow business leaders
• Genuine, active, and fully participatory process mediated by a facilitator
• Tracking methods for public accountability of project results
• Availability of information, particularly data to track wastes and emissions to specific production processes

LESSONS LEARNED

The project produced 4 key lessons:

1. Significant opportunities exist both to reduce wastes and emissions and to save companies considerable money.
   
   
2. Barriers to the identification and implementation of these opportunities are largely institutional: the projects are generally too small to capture the attention of businesses on their financial merits (despite high rates of return). Staff is not sufficiently rewarded for achieving pollution reduction goals. Larger projects must compete with other capital priorities within the company and individual businesses. It is no one's "job" to do pollution prevention per se: environmental staff priorities are to comply with environmental laws, and production staff priorities are to get the product out the door. In addition, companies generally do not have the opportunity to understand the concerns held by activists drawn from the community and environmentalists regarding chemicals used and produced at their sites in the manner that was made possible through MSRI.
   
   
3. The two most important ingredients for success in projects such as these are: 1) innovative engineering focused exclusively on pollution prevention and 2) direct connection of informed activists with manufacturing managers and engineers. The pollution prevention assessor dedicated 100 percent of his time to looking only for pollution prevention opportunities, and his considerable experience gave him insights into where to look. The activists and environmental participants created the motivation for businesses to focus on these opportunities by a date certain and provided Dow a clear rationale for implementation that went beyond dollars and cents alone.
   
   
4. Institutional change on the part of the manufacturer is far more difficult to achieve and measure than individual reductions at a given plant. For true institutional change to take place, the same intense focus that was needed to find pollution prevention breakthroughs at Midland will need to be applied to creating and directing lasting institutional change.