`Going green could keep businesses out of the red`

Businesses that fail to invest in good environmental practices put themselves at greater risk of collapse in the current economic crisis, said Environment Agency Chairman Lord Chris Smith.

Speaking at the organisation’s Board meeting, he said that waste and utility costs could directly affect the turnover of UK businesses and urged companies to adopt a 'green business is good business' approach to take advantage of new markets and financial incentives.

He also revealed that a risk based approach would increasingly be taken in the environmental regulation of business: businesses with good track records would see their charges reduced, but those that do not manage their environmental impacts properly could see their charges treble as a result. He also reported that the Advertising Standards Authority would continue to take vigorous action against companies using ‘greenwash’ to cover poor environmental practices.

The Board heard that last year the Environment Agency fined 284 companies for breaches of legislation - costing businesses a total of £3million.

Businesses that invested in environmental management systems consistently outperformed their less environmentally aware counterparts. Environment Agency-commissioned research showed that in the oil and gas sectors the shares of the top environmental performers outstripped the laggards in the same sector by 12%. Companies in the forest and paper products sector with good environmental management standards out-performed their rivals by over 43%.

Companies implementing good environmental practices will save money in the future, the Board was told, as compliance with environmental legislation will reduce the amount of inspections a company requires under the Environmental Permitting Regulations. Good environmental practice has meant that the Environment Agency has been able to:

  • Remove 23,000 low-risk water abstractors from regulation since 2007, saving business £1million per year
  • Release 500,000 low risk hazardous waste producers from registering with us, saving business £14 million per year
  • Reduce low risk waste inspections from 60,000 to 36,000, saving business £100,000 per year.

Lord Chris Smith, Chairman at the Environment Agency, said: 'In times of economic downturn, businesses cannot afford to put the environment last on the list.

'Consumers are increasingly scrutinising the environmental credentials of their purchases, and more public sector organisations now require environmental policy disclosure when suppliers bid for tenders. So failing to have a policy, or having an inadequate one, could affect the ability to win tenders or sell products and services. A record of prosecution for environmental offences can also deter potential investors and raise insurance premiums.'

'There are strong correlations between well-run businesses that demonstrate good financial performance and those who measure, manage and reduce their environmental impacts,' Lord Smith said.

'The tough economic climate means some companies will resist environmental investment but it is the companies who continue to put the environment at the heart of their business that will best survive the hard times.'

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