Evaluation of the environmental performance of the 50 worldwide
largest chemical and pharmaceutical companies
Table of contents
1.0 BACKGROUND OF THE TOP50-STUDY
2.0 GOALS OF THE TOP50-STUDY
3.0 METHODOLOGY OF THE TOP50-STUDY
3.1 METHODOLOGICAL BASIS OF THE TOP50-STUDY
3.2 TOP50 COMPANY QUESTIONNAIRE
3.3 ASSESSMENT METHOD
4.0 STAGES IN THE COURSE OF THE TOP50-STUDIES
5.0 RESULTS OF THE SECOND TOP50-STUDY 1994-96
5.1 THE RANKING
5.2 COMMENTS ON THE RANKING
5.3 MAJOR FINDINGS OF THE SECOND TOP50-STUDY
6.0 THE THIRD TOP50-STUDY 1996-99
9.0 ORDER FORM
1 Background of the Top50-Study
In the late1980’s the chemical industry published the first environmental reports after a series of highly publicized environmental accidents, such as those in Bhopal, India and Basel, Switzerland. Typically, the chemical companies presented information in these environmental reports mainly to reassure the public of their environmental practices; however, these documents rarely disclosed full accounts of their environmental activities, and they were rarely subjected to third-party examination. The Top50-Study was started with the intention to provide the public with a more extensive reporting and evaluation of corporate environmental information and practices.
2 Goals of the Top50-Study
A major motivation for the project was the fact that some companies in the chemical industry do have some positive ideas in the field of environmental protection, but these are not reflected externally. In terms of environmental issues, the chemical industry is often regarded by the public as functioning as a single, generic entity. No differentiation between companies is made. Through the Top50-Study, the Hamburger Umweltinstitut e.V. (HUI) wishes to inform the public on the environmental performance of different companies.
One goal of the project is to present to motivated people, such as recent and upcoming university graduates, one basis upon which to evaluate their potential future employers. These people represent a strong potential for a company, and companies showing a proactive approach to environmental matters are likely to benefit from such motivated and informed future leaders.
The Top50-Study presents a long-term perspective on the activities of the studied industry. This is a perspective that newspapers rarely provide in their headlines and daily articles. The study provides the public a unique overall picture of the environmental performance of the chemical industry.
Another goal is to supply the public with a broader disclosure of information so that the public can make choices in terms of better environmental quality of products, services, and corporate performance.
Furthermore, the Top50-Study has been designed to support people within the industry who show commitment to environmental matters. The study is based on a well-structured Top50-questionnaire that environmental managers and others can continue to use for self-evaluation. Furthermore, we have engaged environmental managers and other company personnel in feedback discussions regarding their environmental performance.
The ultimate idea of the study is to focus on positive examples for environmental performance in specific fields. The result is to create a kind of „ecological competition“ within the industry.
Finally, the study shows that environmentally intelligent solutions can also be economically efficient solutions.
3 Methodology of the Top50-Study
3.1 Methodological basis of the Top50-study
The Top50-study, especially the company questionnaire, is based on the „Intelligent Products System“. The IPS was developed by Michael Braungart and Justus Engelfried and was awarded the „Océ van der Grinten“-prize in 1993. The IPS represents a conceptual basis for a sustainable economy. The IPS is based on a division of all products into 3 categories, as shown in the following figure.
Intelligent Products System (IPS)
For each group of products specific criteria have been defined to ensure that consumption products are maintained in biological cycles, service products are maintained in technical cycles and unmarketable products are treated in an environmentally safe manner.
3.2 Top50 Company Questionnaire
The Top50-Study is based on an extensive questionnaire which is completed by participating companies. This questionnaire is mainly directed to the 50 largest chemical and pharmaceutical companies, as ranked by turnover, world-wide. The questions are split into the following categories with their respective weightings
|I||Environmental policy and its implementation in strategic long-term goals||10%|
|II||World-wide standards equivalence||10%|
|III||Internal management organization||15%|
|IV||Sustainability of products||15%|
|V||Process optimization towards sustainability||15%|
|VII||Dealing with waste and old products||10%|
|VIII||Environmental accident prevention||5%|
|IX||Contaminated site remediation||5%|
|X||External environmental activities||5%|
The most heavily weighted categories were „Internal Management Organization“, „Sustainability of Products“ and „Process Optimization Towards Sustainability“ (in total 45%). These three blocks have the highest potential to reveal the stage of implementation of policies, guidelines, commitments and goals into real measures for environmental protection.
The maximum possible total score is 500 points. A score of 500 points is a difficult score to achieve because the evaluation is based on very high standards. This high standard represents activities that must be present in sustainable economy.
The questions aim at both quantitative and qualitative parameters. Some questions are designed to examine the implementation of methods reflecting environmental sustainability of a clear and proactive character.
3.3 Assessment Method
All information available - from a company as well as from external sources - was compiled into an internal working paper, a company profile. These profiles constitute the database for the assessment.
The main tool for the assessment is an assessment matrix. Performance criteria for each question in the matrix are associated with corresponding, fixed values of rating points. This rating matrix represents one measure designed to maintain consistency in the assessment of the environmental performance across different companies.
The company self-evaluations were not included in the assessment. The self-evaluations were designed to scaffold a company's internal environmental focus. Additionally, the company self-evaluations were not comparable across all companies, although it followed a standard scheme, a rating from zero to five points for each question, provided in the questionnaire introduction. Differences in the self-evaluations of across companies are the result of corporate cultural differences. These refer to nationality as well as to company philosophies, including public relations strategies. A comparison of the self-evaluation of companies with the HUI- assessment results in factors as wide-ranging as 1,7 to about 2,3. (Factors being the results of dividing the total number of points resulting from the self-evaluation of a company by the total number of points given by Hamburger Umweltinstitut.)
4 Stages in the Course of the Top50-Studies
- Design and review of questionnaire in co-operation with participating companies and independent institutes during summer 1994 (and subsequently) in workshops and individual meetings.
- Design and review of assessment matrix. Adapt to reviewed questionnaire.
- Build up and update database of company contacts in the Top50-companies.
- Distribute questionnaire to Top50-companies. Several contacts at every company participate in the project.
- Gather/Research information from companies and other sources. Non-company information comes from diverse sources, such as libraries, magazines, data bases, external contacts at other research institutes, environmental organisations, industry associations and individual experts from the industrial as well as from the environmental sector.
- Evaluate completed questionnaires and company information. Complement with information from external sources. The result: an internal „company profile“ which contains the data base for the assessment.
- Assess according to the assessment matrix, based on the company profile as data base.
- Draft written statements after completing the assessment. These statements contain the results of the assessment of the environmental activities of each individual company, a table containing the resulting score for each question and short explanatory comment.
- Send out draft results to all companies. Ask companies to comment on and update the draft results to ensure that the information underlying the assessment is correct and complete. About half of the companies gave a feedback on their draft results. All the companies welcomed the opportunity to comment on the assessment before publication. Review and finalise the study.
- During the whole project, company meetings took place for reviewing the questionnaire, while questionnaires were completed, and for discussion of the draft results. Company meetings took place with all companies who wished to have one. They were considered by the companies as well as by the scientists as a very efficient way to fulfil one goal of the study. This goal is to support the companies in their efforts to eco-optimise their products and processes and to make the company more sustainable.
Timetable of the Top50-Studies
5 Results of the Second Top50-Study 1994-96
5.1 The Ranking
The questionnaire was completed by nearly 50% of the companies. Furthermore, the information material on environmental performance which was sent to Hamburger Umweltinstitut by all companies except 15, was extensive enough to base an assessment on. This means that a very high number of companies have contributed to the study.
In comparison with the first edition of the Top50-Study (1990-94) some changes have occurred re. the active participation of the companies. All German companies included in the study have participated actively by completing the questionnaire. Companies like Monsanto, who were an opponent of the study with the first edition, became active participants. As mentioned above, most of the companies have participated in the study at least by giving information material to Hamburger Umweltinstitut. But still, there are some companies who are strictly against the Top50-Study, like Rhône-Poulenc.
The companies are split up into 4 groups: „proactive“, including a group of leaders within the group; „active“, „reactive“, „passive“. These names characterise already the environmental performance of companies within the respective groups. The groups are distinguished according to larger differences in the number of points. It has to be mentioned that differences are higher from „proactive“ to „active“ than from „reactive“ to „passive“.
The tables below show the performance of the companies in the topics covered. Roman numbers marking the columns indicate the different topics covered in the questionnaire (please see methodology). In the second column the main industry of each company is indicated with the categories consumer products, health care, pharmaceutical, base chemicals. „Mix“ means that a company is present in these industries with no clear focus on one of it.
Marks were given for the performance level of a company in a specific field. These show how many percent of total points possible have been reached by a company:
|Company||Main industry||I||II||III||IV||V||VI||VII||VIII||IX||X||Total points|
|Dow Chemical Company||Base||l||l||l||l||l||l||l||l||l||l||243|
|Baxter International Inc.||Health||l||l||l||l||l||l||l||l||l||l||231|
|Bristol-Myers Squibb Company||Health||l||l||l||l||l||l||l||l||l||l||216|
|Company||Main industry||I||II||III||IV||V||VI||VII||VIII||IX||X||Total points|
|Union Carbide Corp.||Base||l||l||l||l||l||l||l||l||l||l||177|
|W. R. Grace&Co.||Consumer||l||l||l||l||l||l||l||l||l||l||173|
|Toray Industries, Inc.||Base||l||l||l||l||l||l||l||l||l||l||171|
|Quantum Chemical Company||Base||l||l||l||l||l||l||l||l||l||l||171|
|Showa Denko K.K.||Base||l||l||l||l||l||l||l||l||l||l||167|
|Shell Chemical Company||Base||l||l||l||l||l||l||l||l||l||l||164|
|Rohm and Haas Company||Base||l||l||l||l||l||l||l||l||l||l||163|
|SmithKline Beecham plc||Pharma||l||l||l||l||l||l||l||l||l||l||161|
|Company||Main industry||I||II||III||IV||V||VI||VII||VIII||IX||X||Total points|
|Eastman Chemical Company||Base||l||l||l||l||l||l||l||l||l||l||150|
|Akzo Nobel N.V.||Base||l||l||l||l||l||l||l||l||l||l||146|
|PPG Industries, Inc.||Base||l||l||l||l||l||l||l||l||l||l||145|
|Mobil Chemical Co., Inc.||Base||l||l||l||l||l||l||l||l||l||l||143|
|Takeda Chemical Industries Ltd.||Pharma||l||l||l||l||l||l||l||l||l||l||142|
|Company||Main industry||I||II||III||IV||V||VI||VII||VIII||IX||X||Total points|
|BP Chemicals Ltd.||Base||l||l||l||l||l||l||l||l||l||l||135|
|The BOC Group||Base||l||l||l||l||l||l||l||l||l||l||133|
|Sekisui Chemical Co., Ltd.||Consumer||l||l||l||l||l||l||l||l||l||l||131|
|GE Plastics B.V.||Base||l||l||l||l||l||l||l||l||l||l||123|
5.2 Comments on the Ranking
The large group of companies around average is striking. This group contains companies with their environmental performances reaching from „active“ to „reactive“. This „Responsible Care-belly“ consist of companies who understand and implement the Responsible Care Program at the lowest level possible.
In this field, the positions in the ranking are not statistically significant, as differences in the number of total points are often very small. Nevertheless, it is possible to distinguish companies being at the top, in the middle or at the end of this field.
Companies belonging to the proactive group have a considerable interest in keeping their lead ahead of companies in the active and reactive group. A typical characteristic of this proactive group is their willingness to innovate and to discuss their activities.
Companies in the „reactive“ group show efforts to reach at least the minimal standards of Responsible Care (see above). Many of those companies, who formerly showed a rather passive attitude are now attempting to catch up at least to the „active“ group.
It can be assumed that some companies’ environmental performance are better than they are willing and able at the moment to document externally. These companies could improve the public perception of their environmental activities through better communication. These companies are: Toray, Rohm&Haas, Hoffmann-LaRoche, BP Chemicals, GE Plastics, Quantum and Merck. All these companies are very restrained with regard to release of information.
Companies which were not able to document their environmental activities or to communicate with Hamburger Umweltinstitut in any other way, are listed in the so-called „negative list“ (see table below). Hamburger Umweltinstitut did not assess the environmental performance of these companies, as information was too little to provide an objective assessment. A special case in this list is Abbott. This company took part in the study by completing a questionnaire. Abbott could not be considered in the ranking, as there were too many gaps in the information material presented to Hamburger Umweltinstitut.
|Abbott Laboratories||L’Air Liquide|
|Aijnomoto Co., Inc.||Mitsubishi Chemical|
|American Home Products Corporation||Pfizer Inc.|
|Asahi Chemical Industry Co., Ltd.||Rhône-Poulenc|
|Dainippon Ink & Chemicals, Inc.||Schering-Plough Corp.|
|EniChem S.p.A.||Sumitomo Chemical|
|Exxon Chemical Company||Warner Lambert Company|
5.3 Major findings of the Second Top50-Study
Standards for corporate policies on environmental matters are mostly set by US companies. One reason for this fact is the Freedom of Information Act implemented in the US. An important contributing factor influencing corporate policies is also the Responsible Care Program. Especially 3M, Johnson&Johnson and Procter&Gamble have to be mentioned in this context. In Europe, Henkel shows progressive approaches.
The long term environmental goals in all four groups of companies are mainly influenced by governmental programs for reductions of waste and emissions. Many of the US companies, like Eli Lilly and Company and W.R. Grace&Co. orient themselves mostly to the 33/50 program of the US EPA, which lead to reduction of toxic emissions. If goals in these fields are formulated only quantitatively this could easily lead to the use of end-of-pipe technologies. Companies like 3M and Johnson&Johnson developed more comprehensive goals and programs, which are directed to more fields of company operations.
About one third of all companies manufacture their goods according to equivalent environmental standards at all production sites, regardless of geographical location of sites. These are companies like Henkel, Baxter and Johnson&Johnson. Other tendencies can be observed at Bayer or Hoechst which shift their research in genetic engineering and especially outdoor experiments with genetically engineered plants to other countries if public perception is negative in the home country.
Most companies haven taken first steps in implementing an environmental management system (EMS) or have already completed implementation. The efficiency - in terms of eco-optimization of products - of the EMSs implemented still has to be proved. This is especially true for companies like Monsanto, Union Carbide, Dow Chemical and Unilever. Their EMSs will have to show their positive impact on environmental properties of their products first. Degussa and Hüls, reacting to external pressure, developed good EMS. They will have to show how far these EMS will influence the product portfolio and optimise it towards product sustainability.
The responsibility for environmental matters is given on the level of the Board of Directors in most companies. Most of the people responsible for environment are at the same time responsible for health and safety. E.g. at Bayer, the responsibilities for environment and safety are connected, at Chevron Corp. it is environment and health. Ciba Geigy connected the responsibility for environmental protection with the four fields of staff, production, technology and safety.
Some companies already have internal data bases containing more environmentally relevant information on products and ingredients than legally required. E.g. 3M and Bristol-Myers Squibb have such extensive data bases containing environmentally relevant information. E.g. Unilever prefers living expert system to data bases with the advantage that departments requesting information can be supplied with specific information, backed up with explanations.
Lean production which is combined with global sourcing leads to a strong externalisation of costs. A striking example is transportation: products can be manufactured cheaper (e.g. in developing countries) but need long-distance transportation. Negative impacts on the environment rise dramatically. The cost of these impacts needs to be internalised in order to avoid this combination and respective damage to the environment. Dow Chemicals is a partner in a European initiative relating to transports of hazardous substances. The initiative is a partnership of several producers and provides delivery of hazardous substances from the closest production site to any customer. Any order e.g. made at Dow is supplied by any of the partners, regardless whether it is a competitor.
The LCA (life cycle assessment) is established as a methodology by now. Many companies state to conduct LCAs on a routine basis for new product developments. But LCA does not lead yet to eco-optimizations of products in general. But there are examples as Procter&Gamble, Johnson&Johnson and Henkel where LCA methodology implemented led to optimization of products.
Environmental certificates such as EMAS and ISO 14000 are considered by companies as 3M, Unilever and Bristol-Myers Squibb a competitive advantage now and a necessity in the future. A real influence of these certificates on product development cannot be seen. Products are not part of eco-audits.
When it comes to products there are large differences between companies oriented to short term and those oriented to rather long term concepts. Characteristics of a proactive long-term approach can be seen as: source reduction, design optimization, internalisation of costs, closed loops for materials and products, service concepts and audits. E.g. Henkel has already implemented a leasing-concept. External environmental costs are considered so far by Ciba-Geigy, 3M and Henkel.
Some few companies, like e.g. Bristol-Myers Squibb, consider in the framework of total quality management supplier-audits of production and transport of input factors manufactured by third parties. This inclusion of the production of raw materials in the responsibility of the company is not yet the norm. Rather, there is an opposite trend to transfer production of environmentally dangerous substances to other companies. Some companies, like e.g. Hoechst no longer produce certain hazardous substances by themselves but show up only as a customer with no responsibility for this production.
Generally, it can be said that almost no chemical company is independent. Each chemical company depends in different ways on many others, in most cases for the supply of raw materials. In this way alliances are constructed on a large scale. This can negatively affect the implementation of environmental sustainability if an agreement is reached to produce based on minimum environmental standards. But this also contains the possibility for these alliances to develop further into „alliances for the environment“.
The communication style of the chemical companies with regard to environmental matters has generally become more friendly and in particular more factual. E.g. companies like Monsanto and Degussa or showed with their participation in the project by completion of the questionnaire the willingness for constructive discussions. Environmental matters are no longer a provocative topic for most of the companies. This could hint at a diminishing relevance of environmental matters following the implementation of environmental management systems.
6 The third Top50-Study 1996-99
In January 1999 we invited the Top50-companies for the third time to participate in Top50-Study. The questionnaires were returned by the end of March. The draft evalutation was received by the companies at the beginning of June. The results of the study, also include a summary of the development of the last 10 year in the pharmaceutical and chemical industries and will be publised in the September 1999 issue of the German language Manager Magazin.
The activities of the chemical industry have a tremendous impact on the environment and human health. Their production bears many ecological risks. Their products are widely spread because almost every other industry needs them as input for their own products. One important requirement for "sustainable development" is a change towards new products and production processes to avoid further environmental damages. This is the background of the Top50-studies.
The Top50-Studies assess and evaluate the environmental performance of the world´s 50 largest chemical and pharmaceutical companies by means of an extensive company-questionnaire and external assessment. During this process, the companies have the possibility to describe their own activities with relevance to the environment. Additionally, the Top50-project also researches information from various other sources.
The goals of the Top50-studies are to emphasize positive examples of the chemical companies, in order to create a kind of „ecological competition“ within the industry which encourages them to improve their environmental performance. Furthermore, the companies are supplied with external feedback on their environmental performance from discussions and gain an instrument for self-evaluation from the Top50-questionnaire. The study wants to support those persons within industry who show commitment to environmental matters. Also, the HUI-ranking provides a decision tool for potential investors, customers, and future employees.
The Top50-survey assesses and evaluates the following topics:
- environmental policy and its role in implemen-tation of strategic long-term goals
- equivalence of worldwide standards
- internal management organization
- environmental sustainability of products
- process optimization towards sustainability
- information policy
- waste and used products
- environmental accident prevention
- contaminated sites remediation
- external environmental activities
The second Top50-Study was carried out with the support of the Alton Jones Foundation and in cooperation with environmental institutes in Japan and in the US.
The results of the first Top50-Study have been published in the German language „Manager Magazin“ (1/1996). The results of the second Top50-study have been published in the „Manager Magazin“ (5/1996), the „UE - Umwelt und Energie“ (6/1996) and in Chemical & Engineering News (May20/July 8, 1996). The results of the third Top50-study have been published again in the „Manager Magazin“ (9/1999).
The study shows that environmental topics are no taboo anymore in the chemical industry. Most chemical companies have taken first steps in implementing an environmental management system (EMS) or have already completed implementation. However, from the goal of environmental sustainability the leading companies are still far away.
The results of the third Top50-Study will be published in the September 1999 issue of the German language Manager Magazin (9/1999). The results of the second Top50-Study have been published in the May 1996 issue of the Manager Magazin (5/1996), in the Haufe Verlag UE - Umwelt und Energie / Handbuch für die betriebliche Praxis, no. 6/17.10.1996 and partly also in the English language Chemical & Engineering News C&EN (May 20, 1996 and July 8, 1996).
The results of the first Top50-Study have been publised in the January 1994 issue of the Manager Magzin.
Single copies of back issues are available from:
Manager Magazin (Issue 1 / 1994) "Experimente in Grün"
Manager Magazin (Issue 5 / 1996) "Sieg in Etappen"
Manager Magazin (Issue 9 / 1999) "Chemische Reinigung"
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