Session: Corporate Use of LCA

Using Total Business Cost Assessment to Link Sustainability to the Bottom Line
Dickson de la Haye,   The Dow Chemical Company
Lise Laurin,^*   EarthShift

For many, protecting the environment, employees, and communities has been considered an expense, requiring equivalent return on investment to any other expense taken on by a company. In the last few years, this approach has been recognized to be unsustainable. While shareholders have begun demanding sustainable actions from corporations, they have not reduced the pressure on profitability. So how does a company justify expenditures toward more sustainable management practices when traditional cost accounting shows a negative return on investment? Total Business Cost Assessment (TBCA) successfully shows return on investment in areas not considered in traditional cost accounting: areas such as potential legal liabilities, employee morale, community and regulator relations, and brand value--areas that affect profitability, even if the effects are difficult to measure.

The Dow Chemical Company has been using TBCA to evaluate its EH&S goals and to enable better decision making Utilizing the TBCA methodology, Dow estimated a total value of $950 million generated from the EH&S 2005 incident reduction goals. Furthermore, Dow estimated spending close to $1 billion on the resource productivity goals and achieved an overall value of over $5 billion. The TBCA process and the results of the analyses are opening the eyes of participants and reviewers to new ways of approaching decisions, business, and the marketplace.

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