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21 September 2011

Green Business Confidential: It's The Law!

Here's the latest in my Green Business Confidential podcast series. It's called "It's the Law" and it is all about our attitude to legislation.

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GBC9 It's The Law

You can get the whole podcast series here or subscribe on iTunes.

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8 August 2011

Never forget compliance!

Most of us in the green business world are very gung ho about "going beyond compliance", but I've started adding a caveat to that - "but don't forget about compliance". In my business case for sustainability model, compliance is the base of the pyramid - lose sight of that and everything else collapses - just ask BP.

You should note that "beyond compliance" and "compliance" often converge over time as the latter does not stand still. More and more gets added to the statute book every year and much which is there tightens automatically. Here in the UK, environmental permits for 'dirty' industries require the use of "Best Available Technology (BAT)" to prevent pollution - so the bar rises as technologies improve. For other large organisations, the CRC Energy Efficiency scheme is designed to tighten the screw on carbon emissions as the years go on. So incremental improvements may simply keep the wolf from the door for a year or two - another good reason to focus on step changes.

Another interesting recent development is business calling for increased legislation to punish environmental laggards - such as airlines calling for air travel to come under the EU's Emissions Trading Scheme. Far better to set the agenda than react to it.

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5 May 2011

Sustainability goes strategic

Interesting research from KPMG saying that almost 55% US companies have a sustainability strategy. KPMG go on to say:

When asked to identify the key business drivers for implementing sustainability-related business objectives within their companies, the U.S.  executives cited enhancing brand reputation (37 percent), regulatory or legal compliance (35 percent), reducing costs (34 percent), product or service differentiation (24 percent), and increasing profitability and managing sustainability risks (both 23 percent). Other business drivers included: customer retention (20 percent), staying competitive (15 percent), generating shareholder value (13 percent), and recruitment and employee retention (8 percent).

This research backs up three of the main points from The Green Executive:

1. That instead of an issue to be "managed" by environmental managers with environmental management systems, sustainability is a strategic leadership issue;

2. "Go green, save money" is for amateurs - the real benefit is competitiveness in the marketplace (which in turn should inform your entire strategic approach);

3. While everyone gets excited about going "beyond compliance", never forget about compliance. Compliance is the base of the business case for sustainability pyramid - if you get it wrong then the whole thing comes crashing down.

By the way, I'm planning a load of freebies for this month's Low Carbon Agenda to celebrate the publication of The Green Executive - sign up here to make sure you get them!

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16 June 2010

Never Forget Compliance

When I put together my model of the business case for sustainability (below), I um'd and ahh'd for a long time whether to include "compliance" in the model. My argument for putting it in is that compliance underpins the whole rest of the pyramid - if you miss compliance, it doesn't matter how well everything else goes, the whole pyramid will collapse. With BP's share value plummeting and Union Carbide staff getting jail sentences for the 1984 Bhopal disaster, I'm now glad I put it in there.

The Business Case for Sustainability

No matter how much we preach going "beyond compliance", many businesses will only move when they are forced to. With legislation like the UK's CRC Energy Efficiency scheme and the EU's WEEE directive, businesses who traditionally thought they were outside the compliance net are finding they have to get their act sorted out PDQ.

Going "beyond compliance" does not mean ignoring compliance issues. It can mean insulating a business from certain compliance issues by, say, eliminating toxic materials from production processes. As legislation moves from limiting the worst instances (eg Bhopal, Gulf of Mexico) to driving all businesses towards a greener future (eg CRC, WEEE), everyone is in the net. I got a nice quote from Paula Widdowson of Northern Foods in an interview for my forthcoming second book, The Green Executive: "Legislation will never lead you, but it will push you."

So the lesson is: "never forget compliance".

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22 February 2010

The True Cost of non-Compliance

I've long written, lectured and broadcast about the true cost of waste. Most businesses simply measure the cost of disposal, but to have something to throw away, you first need to have bought it, processed it and segregated it from non-waste - all of which costs. If it is waste product then you also need to factor in the cost of disruption to the production system to fulfill orders and the opportunity cost of not being able to sell it (or the cost of producing a replacement).

There are similar hidden costs to non-compliance with environmental legislation. The full cost can consist of many or all of:

1. Fines - for some companies these can go into 8 figures;

2. Remediation costs - then BP polluted groundwater in Leagrave, the remediation cost 40 times more than the fine;

3. PR/Brand damage - Union Carbide never recovered from the Bhopal disaster and DOW who bought the flailing company out still attracts flack from activists.

4. Disruption to business - Sony had a shipment of Playstations impounded by the Dutch authorities for having too high a level of cadmium. The resulting disruption has been estimated to be between $90-160m.

So, while I'm always urging clients to go way beyond compliance (which reduces the risk of non-compliance by removing hazards at source), I still emphasise - you'd better make sure you stay compliant too.

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