ERM-BC-COOP: Risk of not "going green"

 

"Going Green" is good PR, good for the environment, and good for the bottom line.

FAILING to go green might be a serious risk to the bottom line.

I was reminded that "environment as a risk" means more than just protecting against floods, hurricanes, tornados, earthquakes, sink holes, and the like when I read an article from AdvisenFPN at http://tinyurl.com/2fcv5lc titled "Biodiversity Inches Up the Corporate Agenda".

The article cited a study that is part of a series titled The Economics of Ecosystems and Biodiversity , a joint initiative by industrialized nations and the United Nations Environment Program intended to draw attention to the global economic benefits of fostering biodiversity.

The leed (cq) paragraph gave four examples of companies profiting by being kind to Mother Nature:

"The report said that Wal-Mart, for example, had sought to eliminate excess product packaging, reducing its disposal expenses while increasing its customer numbers and business revenues. The mining company Rio Tinto has made progress by starting offset projects in Madagascar, Australia and North America, news-media materials accompanying the report said. The energy company BC Hydro was singled out for a policy of no net incremental ecological impact, and Coca-Cola aims to become water neutral by 2020, the materials said."

As governments, both national and "world" become more and more "environmentally aware," they are insisting that organizations that have a cavalier attitude toward nature clean up their act "or else"; the "or else" often being hefty fines.

This is not particularly new in the U.S., but the enforcement seems to be stricter; the governments are trying to avoid future Love Canal situations (see http://www.epa.gov/history/topics/lovecanal/01.htm).

Even when penalties are too small to seriously impact an organization's budget, there is another issue to consider: public relations; image.

Wal-Mart is very PR conscious. It has to be not only to retain its fickle customer base - after all Target and Kmart are more than willing to accommodate Wal-Mart shoppers - but in order to win community support for new stores in otherwise mega-mart free areas, a problem it encountered on several occasions recently.

While it may be true that enforcement levels vary by jurisdiction and the party in power, the environment-friendly laws are on the books and can be enforced.

The PR value of environmental concern is a two-sided coin.

Failing to implement good environmental practices can lead to fines and, more importantly, loss of stock holder and lender confidence and loss of customers.

Having, and promoting, good environemntal practices - much like having and promoting an enterprise risk management plan or SOx effort - can enhance the bottom line by giving customers and stock holders a "warm fuzzy feeling" about the organization.

Having good environmental practices, like having a viable enterprise risk management plan, is just good business, and one that could enhance the bottom line.

John Glenn, MBCI
Enterprise Risk Management practitioner
Hollywood - Fort Lauderdale Florida
JohnGlennMBCI at gmail dot com