Advertisement

Environment on Business’s Agenda

</i>

For many top executives, environmental management until now has been an issue for someone else in the organization to handle.

Not anymore; the risks are simply too high.

Some companies have had the foresight to view environmental control as a risk-management issue. Operating more out of enlightened self-interest than altruism, these companies are defining and advancing environmental, health and safety management. Their actions not only help protect the environment but also themselves, their shareholders and other constituencies from present and future liability.

Environmental management starts at the top. Senior managers make certain they have among them, or reporting to them, people with the expertise to deal with environmental regulatory, technical and marketing issues. A corporate officer or director who does not have all the information necessary for corporate protection should be seriously concerned.

Advertisement

Companies that are successful at environmental management also consider the environment in all aspects of long-term strategic planning. In the future, more companies will be able to gain a competitive advantage based on environmental issues. Already, many companies are reducing, eliminating and replacing those processes and products that are not environmentally friendly (or planning to do so soon). And because their customers see the entire product as coming from one source, these companies are pushing their suppliers to do the same.

Managers of these companies have also set up systems to educate employees about using resources wisely, recycling where possible and discharging as little as possible into the environment. These responsibilities are understood to the point where environmental objectives are written into performance goals and reviews.

To give everyone in the company a better idea of what’s expected of them, there must be a clearly written environmental policy. This policy should indicate that the company will meet--and where possible, go beyond--all regulatory requirements and will take the measures needed to reduce the impact of its raw materials, processes and products on the environment.

Another powerful component of environmental management programs is environmental auditing: the process of determining whether all or selected levels of an organization are meeting regulatory requirements and internal policies and standards. Independent environmental audits were quite unusual when they were first conducted in the late 1970s but are now commonplace among major industrial corporations and are beginning to be adopted by a number of smaller companies.

Advertisement

Moreover, the environmental audit--particularly through the written audit report--is taking on an expanded role as an important vehicle for providing assurance and informing corporate officers about the company’s environmental progress, or lack thereof.

Several indications suggest that the public is beginning to expect, even demand, more corporate disclosure concerning environmental practices. A recent case is the initiative by a coalition of investors and other environmentally concerned groups that is attempting to pressure companies into committing to a code of environmental conduct, including working toward the establishment of an annual environmental audit. And, perhaps ultimately, to pressure companies into providing independent “certification” of their environmental performance.

What we have seen in the evaluation of corporate environmental stewardship during the past 20 years just touches on the shape of things to come. We expect this corporate role to expand far beyond our expections of even a few years ago. By 2000, the strategic profile of corporations, as well as the nature of their internal cultures, will likely be heavily influenced by environmental, health and safety issues.


Advertisement