Environmental Management

in the Energy Sector

Four corporate case studies

Course: Corporate Perspectives on the Environment

Submitted to: Professor Sonia Labatt

Submitted by: Rory O'Brien

Date: November 27, 1997


"You will be required to interview several firms in one industry, focusing on corporate environmental issues, policies, process and product modifications, which have been undertaken in response to pressures external to the firm. You will ascertain what problems are being encountered, and whether the initiatives are being effective or not."


The four case studies, two energy companies (Petro-Canada and Granger Energy), a pipeline company (Trans-Canada Pipelines) and an electrical utility (Ontario Hydro) were chosen to represent the spectrum of energy production, transmission and utilization. Three of the interviews were conducted over the telephone, and one in-person, and ranged from 15 minutes to 2 hours. While a standard set of questions (see Appendix B) provided a guideline for the conversations, the interviews were loosely structured, allowing the respondents to discuss their situations in their own way, and at their own speed.

The key findings of the four case studies are presented below, followed by a brief analysis.

Ontario Hydro

Ontario Hydro's current mission is "to make Ontario Hydro a leader in energy efficiency and sustainable development, and to provide its customers with safe and reliable energy services at competitive prices". Its sustainable energy development policy states: "Ontario Hydro will apply the principles of sustainable development throughout its business...We will implement this policy through an environmental management system, consistent with the International Organization for Standardization (ISO) 14001 Environmental Management System Specification".

Ten years ago Ontario Hydro was a 'compliance' organization - it complied with the letter of the law, and only spent money on environmental matters when charges were laid. Things have changed since then.

As public environmental concerns percolated throughout industry, several major polluting sectors of the economy began to be more proactive in their efforts to curtail pollution. Dow and Dupont began initiating programs voluntarily, and their chemical sector followed this lead with the industry-wide Responsible Care program. The upper management and Board of Hydro, responding to this 'peer pressure', wanted to be seen as leaders in their own sector, and introduced a number of corporate environmental initiatives, beyond what was required by law.

In 1991, a taskforce developed an environmental strategy and advised Hydro to be "leading edge, but not too far ahead - or you will become a target for criticism among your peers", and that change should be implemented gradually or the managers would become recalcitrant.

Maurice Strong, past convenor of two UN World Summits on the Environment, and one of the world's foremost business-oriented environmentalists, upon his appointment as CEO of Hydro, commissioned the Taskforce on Sustainable Energy Development, whose report in 1993 led to a number of innovations, most of which are now in place.

Full-cost accounting was recommended, but the Board felt it would be too costly, and that there would be an increased danger of liability. Some efforts in this area have resulted in the recycling or selling of waste byproducts.

It did establish a 'buy green' policy, in which preference is given to suppliers who incorporate sustainable development principles into their operations, and which involves consideration of life-cycle assessment of purchased products. This policy has had difficulty in being implemented due to lukewarm reception by managers, who are not convinced it is cost-effective for all the work it entails.

Although created upon a taskforce recommendation, the Renewable Energy Technologies (RET) division has just been dissolved. Since the recent decision to split Hydro into three separate corporations (generation, transmission, and marketing/sales), it was felt that the RET field was outside of the generation corporation's core competency.

Over the past few years, Hydro's Corporate Business Group has instituted an Environmental Management System, providing a model for the rest of the enterprise. It is 'equivalent to' ISO14001 (except for weaknesses in the area of documentation) Targets are set, responsibilities assigned, and support given to implement initiatives, as part of this system. Achieving targets is now put into managers' performance contracts. Darlington Nuclear is the only part of the company that is ISO14001 certified, but all divisions are now establishing plans for ISO14001 equivalency.

The Environmental Audit Group within Hydro is "very strong", with each business unit being audited every 2-3 years. An outside auditing firm (Arthur D. Little) does an "audit of the audits". Every unit prepares a yearly report to the Board on environment, health and safety.

A Director of Environment position was established, but this function has now been incorporated into the V.P. of Environmental and Corporate Affairs. Each business unit has its own Environment Manager.

There is a policy to subject all proposed capital projects over $100,000 to an internal environmental review. An Environmental Assessment department exists, but has been scaled back considerably since Hydro is no longer considering new sites.

Annual environmental reports are made available to the public.

Regarding nuclear waste, there are no plans to dispose of it at present. Hydro stores its waste on-site, in full compliance with the law. There are no studies estimating the disposal costs of this waste, or the costs of decommissioning the out-of-service reactors.

Overall, Hydro has become a leader in environmental management, even earning consulting revenues on selling this expertise to its peers.

Trans-Canada Pipelines

Trans-Canada Pipelines has long been an industry leader where the environment is concerned, having had an Environment Department since 1974, well before most other corporations.

Being consistently proactive with respect to environmental issues had meant that the only pressures they have had to respond to have been those of the government regulators: the National Energy Board, the Alberta Energy Utility Board, the Ontario Energy Board, and the Federal Energy Review Commission in the U.S. Seven years ago, they were charged with non-compliance, but the charge, which was contested by TCP, was thrown out of court, ostensibly for being unwarranted.

They favour self-regulation wherever possible, and are strong supporters of the Voluntary Challenge and Registry (VCR), tying for first place for best performance in a recent study.

An environment, health and safety system is in place that is 'close' to ISO14001 standards, but TCP isn't seeking certification as it is required for each compressing station and that would be too expensive. They don't use the term 'sustainable development' as their industry is in non-renewable resources.

Life-cycle analysis is done "to the degree necessary", e.g., solvents are bought only from vendors that will recycle them. A buy-green policy states that a seller has to have an environmental policy in place.

Environmental assessments are done, externally to comply with legal requirements, and internally to perform due diligence when considering the purchase of another company.

Each business unit has a yearly action plan, as do each of five regional operations. There is strong commitment from management, with full financial support, and a "strong, positive approach" to training. Accountability is written into job descriptions. The President's Award and cash bonuses are examples of employee incentives for environmental excellence. Contractors have been "run off the site" for environmental infractions.

An internal unit performs an eco-audit every 3 years. Managers on each shift go through a formal checklist evaluation, and submit a report, on environment, health and safety conditions. Environmental accounting methods are used.

Automated monitoring technology alerts them of any breaches in the pipeline, and emergency corrective actions are performed according to severity of problem, e.g., 'spill kits', installed on trucks, allow for spills to be cleaned up often within hours.

Public consultation is a forte. They have over 7,000 landowners they must keep happy. New construction projects are monitored for two years, with reports going to government, stakeholders, and local clubs. In particular, they work with community groups to allow access to the right-of-way for hunting, ski-dooing, and archaeology.

They have always had a section on environment in their annual report, and while their corporate environmental report has only been for their Board, they are now going to start releasing it to the public.


Petro-Canada has had an environment department since it began in 1976. Over the years, it has moved gradually along with the tide of public pressure, and subsequent government regulations, to improve on environmental performance. The petroleum industry is the most visible in society, with gas stations in every neighbourhood, so public opinion must be followed closely.

In the late 1980s, in the wake of the Exxon Valdez, upper management became aware of the importance of the environment on the bottom line and moved to integrate environmental concerns into all aspects of corporate decision-making. "In every meeting, the first question is regarding the environment."

Petro-Canada has an Environment, Health and Safety system in place. Although it is considered ISO14001 compatible, certification has not been sought due to the 'over-emphasis' on paperwork, i.e., documentation.

Life-cycle analysis is part of their system, and the focus is primarily on toxic wastes. Packaging is not a big concern, except for ensuring that their lubrication products are in recyclable containers.

They are conscientious about obeying the law, and staff found not complying with regulations are fired. Though proponents of self-regulation, they are not averse to government regulation "if it is practical". They work with government and peers to set standards, especially to keep competition on a 'level playing field'. "Many small entrepreneurs can buy gas cheap in the States and influence the pricing system here in Canada."

Refineries liaise with local communities on an ongoing basis. Local government and civic leaders sit on Petro-Canada committees and meet once a month to keep abreast of issues. Open houses are held once a year.

Action plans are part of each business units' quarterly environmental reports to the Board, with measurable outcomes and responsibilities assigned to the appropriate managers. Repeated failure to perform is noted and corrective measures instituted.

Eco-audits are performed both internally by an ad hoc group, and by external auditors. These take place about every 4 years for large operations, and every 2 years for small ones. Environmental accounting methods are used.

A public corporate environment report is made part of the company's annual report, but not issued separately.

Petro-Canada has won several awards, including accolades from the Recycling Council of Ontario and the Canadian Wildlife Federation.

Granger Energy Corporation

Granger Energy is a small oil company, with 15 wells and only $2.5 million in yearly revenues. It has no distinct management system for dealing with the environment, yet considers itself to be an environmentally responsible company.

In its three years of operation, it has had no specific environmental initiatives, and feels there has been no pressure to implement any.

They have received environmental guidelines from the Canadian Association of Petroleum Producers (CAPP), of which they are a member, and this suffices for their environmental policy.

On-site operations are under the purview of individual well operators, who are primarily concerned with health and safety. The Alberta Energy Utility Board conducts random site inspections, and point out any deficiencies, though to date they have not had any infractions of the law.

They are registered with the Voluntary Challenge and Registry (VCR) and have drafted a plan to minimize flaring and to give priority to purchasing equipment that reduces emissions.

They do not have any kind of environmental reporting.

Their senior management is concerned about the environment, but they do not have the resources to invest in operational changes to accommodate those concerns, nor do they feel they have the need at present.


There did not seem to be specific instances of outside pressure catalyzing organizational changes. Rather, most of the impetus has come from enlightened upper management, with an eye to 'keeping ahead of the Joneses' in their industry, as well as to improve the bottom line.

Since the large companies have extensive environmental management systems in place, while the small one does not, it could be inferred that, since formal environmental management systems require a certain amount of organizational resources to implement, only firms of a certain size feel they are cost-justifiable.

Managerial responsibility for the environment generally includes health and safety as well.

Management in each instance is very supportive, and, except for Granger Energy, has allocated sufficient resources to maintain the systems, including personnel dedicated to the task.

With the exception of one business unit in Ontario Hydro, none of the companies is IS014001 certified, though all three of the larger ones feel they are compliant. It appears that one of the more difficult aspects of full compliance with ISO14001 is the documentation requirement, and the cost of certifying several operational units individually seems to be another factor.

Consistent with advanced environmental management systems, the larger companies all have instituted action plans, environmental auditing, and reporting procedures. Life-cycle analysis and 'buy green' policies seem to be difficult to implement well. Stakeholder and public liaison is also important and extensive.

The respondents, except for Granger Energy, were all senior managers responsible for environmental matters, and were likely to have been very biased toward the positive in their responses. However, the end result is that the companies who have embraced environmental management practices are receiving accolades, and consulting contracts, for their efforts.


Ontario Hydro


John Grieve (in-person interview)

Senior Environmental Advisor

Environmental and Sustainable Development Division

Energy Services and Environment

Tel: (416) 592-6809

Trans-Canada Pipelines


Al Glassco (telephone interview)

Director Corporate for Environmental Affairs

Tel: (403) 267-8756



Fared Saif (telephone interview)

Manager of Environment, Health and Safety

Tel: (416) 730-2000

Granger Energy Corporation


Rick Shultz (telephone interview)

VP Production and Operations

Tel: (403) 237-0083


1. What can you tell me about the following aspects of the company's environmental management?

a) environmental management system in place

     i) codes and standards (e.g., CERES, ISO14000)

     ii) life cycle analysis

     iii) industrial ecology

     iv) design for disassembly

b) policy

     i) policy instruments (legal compliance, industry self-regulation)

     ii) buy-in from top management

     iii) sustainable development a part of the corporate culture

c) assessment of impacts

     i) environmental assessments

d) action plans

     i) setting goals and objectives

     ii) buy-in from middle managers and other employees

e) procedures

     i) change in company organization, or production procedures

     ii) community/stakeholder consultations

f) assign responsibilities

     i) someone accountable for each action

g) support given to enable actions to be implemented

     i) training

     ii) resources (e.g., budget)

     iii) recognition

h) performance measures and assessment

     i) targets established

     ii) rewards and/or penalties in place

     iii) assessment procedures and frequency

     iv) awards (internal and/or external)

i) audit systems

     i) eco-audits

     ii) internal and/or external

     iii) environmental accounting

j) corrective action and follow-up

     i) beyond the letter of the law

     ii) usual timeframe

k) reporting

     i) internally and externally

     ii) in annual report

     iii) corporate environmental report

     iv) toxic releases

2. What are the major environmental initiatives undertaken in response to external pressures? Which pressures?

3. To what extent have these initiatives been successful? Why?

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