Bolstering the board's environmental focus.

• Author: Cahill, Lawrence B.
• Position: Leadership in Environmental Initiatives

Adding environmentalists to the board and establishing environmental committees are two trends that are becoming more prevalent.

Consider the following: You are a board member for a Fortune 500 company. You have been on the board for some time and feel comfortable dealing with complicated and important business issues. However, in the past year the meeting topics have taken a disturbing turn. The six most recent issues, in particular, are helping to keep you awake at night:

* Should the company ask its facility managers in developing countries to comply with U.S. environmental standards, even if it places the operations at a competitive disadvantage? (We use the term environmental to imply safety and health matters as well.) You fear the possibility of a Bhopal-type incident if certain facilities only have to meet the almost nonexistent local standards.

* Should the company buy another company that fits extremely well into the corporate strategy, even if the purchase brings with it known, substantial, but mostly unquantifiable environmental liabilities?

* Does it make sense for the company to simply comply with known rules and regulations or, consistent with the company's "world-class" strategy, should best management practices be adhered to? Is it appropriate to consider cost-benefit trade-offs in making this decision?

* Should the company participate in the U.S. Environmental Protection Agency's voluntary waste and energy reduction programs (e.g., the "33/50" Program) if the subsequent public reaction, should the established goals not be met, result in worse community and investor relations than at present?

* Should the company's environmental goals be independent of the state of the profitability of the business? Should all business units be asked to meet the same goals?

* Should the company discontinue a product line that generates unacceptable quantities of toxic waste and byproducts even though it is one of the company's most profitable lines?

These and similar thought-provoking, largely ethical questions are being raised frequently at the board level of most major U.S. companies. And the answers are not straightforward for even environmentally experienced people, to say nothing of those who have no relevant training or experience upon which to draw. The possible consequences of making the wrong decision can be quite substantial. Not only is it possible to have an incident occur, but the results of the incident can be loss of life...