Gone are the days when environmental issues were thought of as ‘fluffy’ in our boardrooms, the incident at Deepwater Horizon put pay to that, and demonstrated very succinctly to the business world just how crucial environmental issues are.
The explosion at Deepwater Horizon killed 11 people and caused the largest oil spill in American history and as a result halved BP’s market capitalisation, wiping approximately $360 billion off its value in a couple of months. In the aftermath of the incident, large corporations around the world are in the process of reviewing their own business activities and systems with a view to avoiding a similar crisis happening to them.
Lots of issues have been highlighted by Deepwater Horizon, many of a technical nature, but also alleged poor corporate organisation, culture and communication both before and after the event.
But how can others learn from this?
A good starting point for companies is to thoroughly review their own environmental risks and to ensure that they have workable and robust systems in place to manage these risks. An Environmental Management System (EMS) is an effective way of achieving this.
An Environmental Management System should be part of a company’s overall management system and will include organisational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving and maintaining a company’s Environmental Policy. It is important to stress that successful Environmental Management Systems are those that get embedded in the business. They must be part of culture.
An EMS can be certified through schemes such as ISO 14001, BS 8555, Green Dragon or the Eco- Management and Audit Scheme, but this is voluntary. Certification of an EMS is however, a highly visible and demonstrable way or showing customers, suppliers, investors and the general public that a company is committed to meeting its environmental responsibilities.
An effective EMS should include:
- The development of an Environmental Policy, which is a statement of a company’s commitment to the environment and can be used as a framework for planning and action
- An assessment of corporate activities, products, processes and services that might affect the environment
- Details of environmental regulations and legislation that apply to the business and how to comply with these
- Written procedures to control and document activities that could have a significant environmental impact
- An environmental improvement programme, including policies and procedures to manage waste and resources
- Defined environmental roles and responsibilities for staff
- A formal and recorded staff training and environmental awareness programme
- Systems for internal and external communications on environmental management issues
- A record of environmental performance against set targets
- Systems to identify and correct problems and prevent their recurrence
- Emergency procedures to follow in the event of an environmental incident
- Periodic audit to verify that the EMS is operating as intended
- Formal review by senior management with a view to adapting and improving the EMS as necessary
- The buy in and support of all staff including the board
It is also important to consider the benefits of an effective EMS
For some organisations EMS is a moral and ethical issue but for others the return on investment calculation will be an imperative. Many argue that all these objectives can be achieved. Here are just some of the benefits:
- A reduction in environmental incidents and improved reputation
- A marketing advantage and in many tenders EMS is now a fundamental requirement
- An improvement in regulatory performance and therefore lower risk of fines for non compliance with environmental legislation
- A focused, knowledgeable and motivated workforce
- A reduction in waste, including raw materials, utility waste and waste disposal costs
- The opportunity of attracting more customers, investors and shareholders
- Increased profits from lower costs
Despite the economic climate one thing is for sure and that the environmental agenda will be here. Companies, big and small, need to take this subject seriously. We will see more regulation as the years pass and the earlier boards embrace the issue the better.