Millicent
Ele
Environmental
and Public Health Law Consultant,
Lecturer,
Faculty of Law, University of Nigeria, Enugu Campus.
Email: millicent.ele@unn.edu.ng
The Environment is simply everything that surrounds us. Generally, a
safe and positive environment makes employees feel good about
coming to work, provides the motivation for doing the work and ultimately leads
to increased productivity.
A sustainable environment is characterized by a practice that attempts to
maintain, protect, and prolong the natural environment optimally. To
pursue sustainability in this sense according to the United States, Environmental
Protection Agency (EPA), is to create and maintain the conditions under which
humans and nature can exist in productive harmony to support present and future
generations. Therefore, sustainable environment can only be produced through
sustainable development.
The general misconception
out there is
that factoring environmental consideration into any business plan for the sake
of pursuing environmental sustainability is anti-profitability and growth. For
this reason, many companies attempt to increase their profit margin
and competitiveness by disregarding the environment. This of course, is wrong because when we pay attention
to our environment – keeping it safe and free from pollution, we are likely to
have a healthy workforce which will translate to increased productivity. We’ll
not have to worry about spending money on litigation or settlement of claims.
For instance, Bp had to pay a total of $20.8 Billion to settle
environmental and economic damages in the 2010 Gulf of Mexico Oil Spill. Also,
when we keep the environment safe and free from pollution, we will neither
worry about loss of earnings due to people staying home because of
ill-health, nor huge pay-outs on worker’s compensation etc. Avoidance of these will translate to a net increase in productivity and growth.
Global
economy is slowly but surely moving towards environmental responsibility of
producers, and energy efficiency of goods. In fact, environmental
responsibility indicators have long been incorporated in the ratings of
investment attractiveness e.g., the Dow Jones Sustainability Indexes
incorporated this indicator as far back as 1999. Also, international voluntary
environmental certifications are now popular among big corporations for
tracking environmental compliance e.g., the ISO14001 and the Global Reporting
Initiative (GRI). Corporate consumers and government procurement agents
particularly those from the developed countries are gradually rejecting goods
which do not meet adequate environmental standards. A 2013 study on the Implementation
of International Standards in Environmental Risk Management shows
that China is far ahead in the acquisition of ISO14001 certifications. This is
probably because Chinese companies, having realised the general misgivings
about Chinese goods due to the suspicion of being produced under lax
environmental conditions, saw the need to improve the reputation of their
products and increase their market share by going for ISO Certification in
large numbers. This helps them to meet international standards on
environmental responsibility and thereby improve their image and reputation.
Just like in China, the Russian companies are becoming aware of increasing
environmental demands in competitive global markets and are reacting by faster
relative growth in the number of ISO 14001 certifications obtained.
The rapid growth in the number of companies going for voluntary
certification in international environmental standards in countries with
relatively high rates of economic development is a testament to the fact that
it is a brilliant business strategy and a show of managerial competence to be
environmentally sensitive in an increasingly environmentally sensitive global
market. A study on UN Global Compact
(GC) suggests that reporting firms that voluntarily embrace corporate social
responsibility (CSR) have statistically significant higher return on assets,
return on equity, greater profitability and less systematic risk. Besides, both
the European Bank for Reconstruction and Development (EBRD) as well as the
World Bank now require reporting on sustainable development for participation
in some projects. So, refusal to strategize in line with this global trend may
eventually lead to the exclusion of products from global markets.
However, some have criticized the
concept of voluntary non-financial certification as promotion of box-ticking
and superficial compliance with the potential to mask actual non-compliance and
dishonesty in business practice. This is because companies have been known to
look good on paper in terms of environmental compliance but bad in actual
practice. There is no denying that some companies will cut corners and still
report that they took the highway. For this reason, third-party verification
and confirmation of compliance have been recommended to ensure that compliance
reports are accurate.
Advantages of being
environmentally compliant include cleaner process,
improved efficiency, fewer liabilities (less fines/penalties and clean-up costs),
reduced risks and better resource management. It promotes recycling
& reuse, and extended producer responsibility (EPR), leading to less waste
and pollution. It also improves public and environmental health as
well as worker safety thus, resulting in high productivity and profit margin; it
improves attractiveness to investors, access to credit and it strengthens brand
name, improves consumer loyalty, market share, profitability, and goodwill.
It is, therefore, recommended
that corporations
should adhere to policy options and mechanisms that address environmental
risks, pollution control standards and regulations. They should embrace
development policies that encourage renewables because climate
change and renewable energy developments are the next big things in
environmental and energy law. Environmental
considerations must always be factored into business decisions for better and
cleaner environment, improved public health, operational and worker-safety
procedures in the industry. Businesses especially those with
high capitalization, international in scope and which may need international
finance, should introduce environmental consideration into their corporate
governance and produce voluntary non-financial reports on a regular basis. Obtaining
international environmental certification should be made a condition for all
tender participants especially in sectors that are highly impactful on the
environment e.g., Mining, Oil & Gas, and the Power Generating Sectors etc.
In conclusion, it clearly makes better business sense to be environmentally
friendly and compliant than not to be. Environmental compliance leads to
environmental sustainability which indeed is [a] key to business development.
