Weighing the Anchor - Drivers for Environmental Performance

Four main trends drive current business efforts on Environmental Performance: Competitive pressure in global markets; increasing cost for waste, energy and materials; supply chain pressure; and stakeholder pressure.

Implementation problems in government regulation resulted in a trend towards flexible and efficient regulation. Market-based measures such as pollution charges provide strong incentives to reduce life cycle impacts. However, companies can be forced to develop their own answers to environmental and social problems rather than just implementing governmental policies. Increases in these problems as well as in public awareness over the last decades make increasing regulation in the future more likely.

Environmental boundaries lead to an increase in the cost of certain resources as well as services such as waste disposal. The more expensive these goods get, the more valuable are environmental improvements in terms of competitiveness and cash-flow.

As multinational companies globalise, the importance of supply chains increases. Real achievements therefore have to comprise environmental and social improvements along the entire product life cycle, including suppliers and users.

Companies are also subject to claims from various stakeholders, among them many NGOs, financial institutions, customers and local neighbourhoods. Understanding and balancing these claims is crucial, since the quality of relationships affects business performance in a variety of ways such as customer trust, "license to operate", image and possibilities to attain capital for investment. Life Cycle Management can help to handle the multiple demands and thereby improve stakeholder relationships.