The paper, garbage and other solid waste that your company generates not only harms the environment but also costs the company a lot of money. Still, because few Canadian environmental laws require companies to implement waste reduction programs, senior management may be reluctant to put time, effort and—most importantly—money into a program that’s not legally mandated. But if you could show senior management that solid waste reduction programs can literally save the company millions of dollars each year, you’ll be much more likely to win their support.
How do you demonstrate to senior management the positive impact a solid waste reduction program can have on the company’s bottom line? Answer: By citing examples of other companies that actually improved their financial performance as a result of implementing a solid waste reduction program. But where do you find such examples? Here’s a case study on a California medical device manufacturer that you can use to show senior management that the economic benefits of such programs aren’t just theoretical but real.
The Case Study
Baxter Healthcare Corp.’s Cardiovascular Group (CVG) specializes in the development and manufacturing of cardiovascular medical devices. CVG has a totally integrated pollution prevention program, including energy conservation, hazardous waste reduction and solid waste reduction. The case study focuses on its solid waste reduction program, which the company started to implement in 1990.
CVG’s solid waste reduction program has four key components:
Source reduction. First, CVG wanted to decrease the amount of waste it generated. One form of source reduction is packaging reduction, which has been a part of CVG’s solid waste reduction program since 1991. An example of a successful initiative in this area is the Swan-Ganz Packaging Automation Project, which reduced the weight of packaging by 40% and the cost of packaging material by $.72 per unit.
Another source reduction policy that CVG implemented was a 25% two-sided copying policy. By copying 25% of its documents on both sides, CVG was able to save 5,440 reams or 13.6 tonnes of paper per year. In addition, like many companies, CVG has switched to using e-mail for its inter and intra-office communication. This policy has saved CVG an estimated 15.6 tonnes of paper waste for disposal between 1994 and 1996 alone.
Reuse. Reusing a waste stream component is another way for a company to reduce waste disposal. One such typically large component of a company’s waste stream are wood pallets. CVG reuses the majority of its wooden pallets. In fact, since 1991, CVG has reused an estimated 80.3 tonnes of wood pallets, in the process avoiding a substantial amount of disposal costs.
Another way to reuse waste is through donating used office equipment and furniture. For example, CVG donates much of its used office equipment, including computers, desks, chairs, tables, lamps, etc., to local schools and charities. Since 1993, CVG has donated an estimated 25 tonnes of used office equipment. By doing so, CVG not only benefits the local community but also reduces its disposal costs.
Recycling. CVG has comprehensive paper, cardboard, scrap metal, plastic and aluminum recycling programs. Since 1992, CVG has been able to recycle an estimated:
- 686.9 tonnes of mixed paper;
- 407.7 tonnes of cardboard;
- 189.9 tonnes of scrap metal;
- 82.6 tonnes of plastic; and
- 1.3 tonnes of aluminum.
Composting. Composting is another form of solid waste reduction that CVG uses. CVG’s landscaper participates in “grasscycling,” which is the process of leaving cut grass on the lawn where it decomposes and adds nutrients to the soil. CVG hauls all of the excess green waste to a green waste facility where it’s composted or mulched and then reused. In 1997 alone, CVG diverted an estimated 42.6 tonnes of grass clippings and green waste.
The Program’s Costs
Initially, CVG didn’t have to outlay any money on its solid waste reduction program to achieve these impressive savings. But the program doesn’t run itself. CVG’s Environmental Manager supervises the overall program, spending about five percent of his time on it. In addition, one worker is assigned solely to recycling duties. Based on the salaries paid to these workers and the time they spend on the solid waste reduction program, CVG spends an estimated $16,440 a year on the program.
In 1997, CVG conducted a solid waste assessment of its operations, which involved a thorough analysis of ongoing source reduction, recycling and disposal activities. The purpose of the waste assessment was to identify:
- How and where waste is generated;
- The composition of the waste; and
- What’s currently happening to the waste.
The data gathered from this assessment was then compared to the same data from 1989, the year before the solid waste reduction program was implemented. The results:
Reduced production costs. Due to CVG’s packaging reduction project, it was able to save an average of $1,240,000 a year in production costs.
Reduced waste disposal costs. Solid waste has to be disposed of, which costs money. CVG’s source reduction, reuse, recycling and composting programs reduced its disposal costs considerably by drastically reducing the amount of waste that had to be disposed. In 1989, the company’s disposal costs were $99,190. The solid waste reduction program reduced these costs by an average of $68,865 a year.
Program’s annual costs: $16,440
Program’s annual savings: $1,308,865
Program’s net annual savings: $1,292,425
What It Means to You
The case study clearly illustrates the economic benefits of a solid waste reduction program. From 1989 to 1996, CVG was able to reduce its solid waste by 957 tonnes per year. Through source reduction, reuse, composting and recycling activities, CVG also achieved diversion rates as high as 59%. As a result, it was able to save nearly $1.3 million per year in production and waste disposal costs.
You can show this case study to senior management to debunk the misconception that a program that’s good for the environment is bad for a company’s finances. As demonstrated in this study, solid waste reduction is good for both the environment and the company’s bottom line. Perhaps if more companies were aware of CVG’s experience, there would be less apprehension and resistance to implementing solid waste reduction programs and similar environmental policies.
Insider Says: If you succeed in convincing senior management to implement a waste reduction program, you’ll first need to conduct a waste reduction audit. For more information on how to do so, see “Why You Should Conduct a Waste Audit—and How to Do It,” Insider, Oct. 2009, page 1.
“Baxter Cardiovascular Group: The Economic and Ecological Implications of a Solid Waste Reduction Program,” California Department of Resources Recycling and Recovery
Environmental Benefits of Solid Waste Reduction Program
CVG’s bottom line wasn’t the only thing that benefited from its solid waste reduction program—the environment benefited, too. For example, due to its paper reduction policies alone, in 1997, CVG saved an estimated:
- 3,865.8 trees;
- 1,845,600 gallons of water;
- 682.2 cubic yards of landfill space;
- 1,128 lbs. of pollution effluents; and
- 1,058,018 Kilowatt-hours of electricity.
Solid Waste Disposal Savings
CVG began implementing its solid waste reduction program in 1990. Using 1989 as the baseline year, the chart below demonstrates CVG’s success in reducing municipal solid waste disposal. In 1989, CVG disposed of 1350 tonnes of municipal solid waste. This amount was reduced to 393 tonnes by 1995.
* The data for 1997 was projected at the time of the case study.