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.