Global concerns about the environment continue as natural resources diminish, global warming/climate change disputes continue and the population increases at an astounding rate. In a recent market research poll conducted by GMI, 91 percent of those polled were concerned about the environment and 79 percent worry about depleting natural resources. The overreaching issues are how future generations will be affected by our actions today and what measures businesses can implement to mitigate these future environmental risks and liabilities.
Over the last 25 years, the public has become more aware of how products and processes not only affect its environmental record, but also the financial performance of a company and its social efforts related to its workers and the community at large. All stages of a product’s life cycle play a role—energy, raw materials, packaging, by-products, emissions, wastewater and more. Regulators, shareholders, organizations, the media and the public have increasingly voiced their concerns and expectations.
Companies are taking steps to reduce their environmental impacts by employing sustainability risk management strategies. These include meeting environmental rules and regulations, developing International Organization for Standardization environmental management systems, reducing consumption of water and energy, incorporating recycling, re-use and waste minimization techniques and exceeding expectations by going “beyond compliance.” Companies are implementing changes in their operations to not only protect the environment but also to improve their processes. To establish trust and credibility with the public and shareholders, many companies are including environmental policy information in their annual reports, issuing Corporate Social Responsibility reports or providing sustainability reports.
As companies take steps toward “strategic environmental management,” they strive to operate in a sustainable manner, continuing to produce goods while not adversely affecting the environment that future generations depend upon. These actions make good business sense by improving process efficiencies, lowering costs to increase cash flow to fund capital expenditures and addressing customer’s increasing “green label” requirements. Many companies are able to reduce risk by decreasing their environmental and safety exposures through their sustainability programs —often resulting in increased access to lines of credit.
While not all companies have embraced risk management strategies, the incorporation of risk control strategies is inevitable in the future business climate. Previously, most businesses viewed sustainable risk management programs as zero value, or not adding to the bottom line. Today, the benefits of an aggressive risk management program will reduce risks and liabilities from lawsuits, reputation damage, shareholder discourse and regulatory enforcement. This will ultimately decrease sustainability risk costs for the business, while increasing value to the shareholders.
To solve complex environmental issues and assist in managing environmental risk exposure, companies are turning to consultants to assist with program, system and tool development that provide solutions to environmental business issues by incorporating risk management as part of the business culture. Firms are also seeking engineering solutions, such as implementing clean technologies, reducing greenhouse gas emissions and investing in renewable energy. This will ensure less impact on the natural environment/ resources for future generations. IBI