UK: IM SOUNDING BOARD - OUR BUSINESS TO SAVE THE PLANET.

UK: IM SOUNDING BOARD - OUR BUSINESS TO SAVE THE PLANET. - The communications revolution has fundamentally altered our society. On the whole, the explosion of multimedia and information technology has served us well - and that includes the business commu

by
Last Updated: 31 Aug 2010

The communications revolution has fundamentally altered our society. On the whole, the explosion of multimedia and information technology has served us well - and that includes the business community. It has highlighted important issues and brought information to a much wider audience. But it has had a less beneficial effect too - particularly as competition in the media has grown. Too often the line between hard facts and opinions has been blurred. Nowhere is this more true than in the reporting of environmental issues.

Sometimes the media seem to feel that to sell more newspapers and increase audience share, they have to compete on sensationalism, stretching the bounds of truth ever further. Perhaps it is simply that pressure groups are more adept at imposing their opinions on the media than large corporations. But in my experience, even when the facts of a contentious environmental issue are on the side of the company, it is the pressure groups who usually win the media battle.

This is a shame because industry has made great progress in facing up to environmental responsibilities. But it has not been good at communicating its achievements to the public. The truth is, business has moved on from the days when companies felt they could carry on with irresponsible environmental processes unless they were caught out. Now there is a greater awareness of the need for pre-emptive action - most organisations realise that the most efficient way of dealing with an environmental problem is to avoid creating it in the first place. In short, good environmental performance means good business performance. There is actually no truth in the old adage that 'where there is muck there is brass'. In fact, where there is waste, there is inefficiency.

There are five constituencies with whom business has to deal - investors, customers, employees, suppliers and the community. The environment is relevant to all five. A company ought to be able to have the same environmental message for these five constituencies. If you have to change your tune for a different audience, then there's something wrong with your message.

Let's take each constituency in turn. If a company has a poor track record on the environment, the investor's concern will be whether that company will be fined. The stock-market value of such companies can suffer. And the customer's power has been proven time and again. For example, CFC-based aerosols disappeared from supermarket shelves years before legislation came in because customers had read their newspapers and stopped buying CFC-based goods.

Employees don't want to work for environmental laggards. They know how genuine or otherwise is their company's enthusiasm for environmental issues. The most enlightened companies introduce an element of competition within the company. Different locations compete against each other to show who is making the most environmental progress. And increasingly, young potential employees ask recruitment officers about their company's environmental policies.

As for suppliers, you have to be sure of your facts if you are making environmental claims for your product. Therefore you need to know how suppliers behave all the way along the production chain. Companies have been doing a huge amount of work in this area in recent years.

The community attitude is perhaps the most important of all. If you are running a plant, you don't want those living around it to complain about, say, water pollution. At some point in the future, you may want planning permission to expand the plant. If you have got a bad reputation, you will be opposed. The lesson is clear: evade your environmental responsibilities and they'll come back to haunt you.

My interest in the environment stems from more than my chairmanship of AEA Technology, which has a significant environmental services business. I am also chairman for Business in the Environment (BiE), a subsidiary of Business in the Community. BiE was set up in 1989 to raise corporate awareness of environmental issues and we have seen huge shifts in attitudes in that time. For instance, a recent survey from KPMG showed that 77 of the FTSE 100 have addressed environmental issues in their annual report. And well over a third of these are producing specific environmental reports with data and targets for progress, which marks a huge change in business culture.

There continues to be debate about whether companies should be forced by punitive legislation to become more environmentally responsible or whether the voluntary system is sufficient. In the last five or six years, British industry has made massive progress on environmental issues within a (mostly) voluntary framework. And it is working. The experience of the US is a salutary lesson for those who want to do it differently. There, environmental laws were brought in without sufficient business consultation.

The result? An adversarial approach between legislator and entrepreneur.

Companies have had an incentive to avoid full disclosure of their production processes for fear of crippling fines.

Of course, there is a role for legislation in punishing persistent offenders. But the difference between legislation in this country and the mistakes of the US is that here businesses are at least given time to put things right of their own accord and to play a full role in shaping any legislation that is deemed necessary. For example, ACBE, the Advisory Committee on Business and the Environment, recommended a landfill tax four years ago. This is only just passing into law but at least business was allowed to debate the issue thoroughly - and to good effect. Some aspects of the bill when it was first drafted would have had serious side effects, damaging the environment. After discussion with industry and environmental groups, these problems were ironed out. The law is better for that and so is the environment.

Extra legislation need not mean extra cost and most environmental improvements are also economically superior. Knowing that environmental action makes sense for your company's bottom line is the best incentive for business both to act and to communicate more effectively just how much it is doing.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today