Since the mid-1990’s there is growing worldwide pressure, especially from environmentalists, for us to stop making the lead additive via our subsidiary, Octel Associates, because a scientific study in the 1960’s found that lead caused brain damage in children, respiratory problems in the elderly, and damaged the air and soil quality. Lead additives have been banned in the U.S. and other developed countries, but are still used in developing countries. We have publically admitted that our lead additive is our biggest money maker, that it is extremely harmful, and that we are a committed to environmental responsibility. We have stated that many of the chemicals that we produce were replacements for many existing chemicals that are far more harmful and noxious than lead. Environmentalists have suggested that we contribute some of Octel’s profits towards subsidizing a more rapid transition away from TEL.
If Great Lakes decided to continue supplying lead additives to developing countries, environmental opposition would grow stronger, and developing countries would eventually reach the point where it was more economically feasible to transition to unleaded.
Ending production immediately would have a negative impact on profits and on countries that have not made the transition yet from leaded to unleaded gasoline for their cars and machinery. Outside the industrialized world, there are not enough refineries capable of producing unleaded gas, many cars had no catalytic converters, and if the cars ran on lower-octane unleaded gasoline, it would create more pollutants.
The best option is for us is to aggressively phase out of the market place with a five year deadline. In the meantime, we will push the governments in these developing countries to change their policies and switch to unleaded gasoline. The possible draw backs are that these governments could resist the change and stall or make sure it does not happen. This could hurt our reputation for being environmentally and responsible and severely hurt profits. We will deal with any opposition by providing incentives to these governments to make the transition and partner with competitors in the region, unleaded refineries, and auto makers who ship to these regions, and manufacturers of catalytic converts to make sure the change happens.
We will also look for new markets for our current products and develop new products for our current markets. We will need to be developing alternative revenue streams to replace the profits from leaded gasoline in developing countries.
From this point forward we need to make environmental responsiveness a part of our mission of satisfying customer needs. We can be profitable and eco-friendly without being pushed in that direction by environmentalists. We need to back up our claims that we are environmentally responsible. I am recommending that we take a systems approach to incorporating eco-friendly products and services into our marketing mix. From this day forward we will conduct periodic environmental audits, needs assessments, environmental impact assessments, risk/ benefit analysis, project planning, and environmental pilot programs. I am also recommending that we implement a Total Quality Environmental Management program that will include: energy conservation, resource reduction, pollution elimination, waste reduction, recycling, and composting.
Great Lakes is wise to capitalize on Shrivastava’s four global trends: customers prefer more environmentally friendly products and services,
companies are using going greens as a competitive advantage, ecologically sustainable economic growth, and an enormous expansion of technology and environmental risk. Esty and Winston also see the upside of benefits of being ahead of the environmental curve, the management of downside costs and risks, and the value-based concern for environmental stewardship.