The sustainable development journey
Growing environmental concerns, coupled with public pressure and stricter regulations, are changing the way people do business across the world. Industry is on a three-stage journey from environmental compliance, through environmental risk management, to long-term sustainable development strategies.
In the initial phase of the journey, the need to comply with environmental regulations drives improvements in environmental performance.
Businesses adopt a more proactive approach in the next phase. Environmental risk management is introduced, to reduce environmental liabilities and to minimize the costs of regulatory compliance.
A substantial number of companies recognize that the implementation of sustainable business strategies can lead to new opportunities and improved results - the business and sustainable development phase.
Step 1: regulatory compliance
The first step on the journey is compliance with regulatory measures.
The introduction of new environmental regulations, both national and international, forces businesses to improve their environmental performance. But compliance often creates unexpected costs that threaten profitability. The most significant financial liabilities for companies are those associated with remediation, clean-ups and penalties for breaches of legislation. Businesses can face difficulties if they fail to anticipate their environmental liabilities.
To comply with legislation and to avoid liabilities, businesses put in place remediation and abatement measures. However, this reactive approach often prevents them from establishing efficient cost control systems and growth strategies.
Operating in 'compliance' mode, businesses commonly regard environmental protection as an unnecessary burden, a costly undertaking that decreases a company's competitiveness and adversely affects market performance and business results.
Faced with the increasing burden of regulation, some businesses choose to go beyond compliance towards comprehensive environmental programmes and sustainable development.
Step 2: environmental risk management
Environmental risk management is the next stage on the journey towards sustainable development.
Liability - both corporate and personal - for the cost of environmental clean-ups and claims prompts business executives to adopt more proactive strategies in dealing with environmental issues. Driven by the need to minimize risk, some businesses adopt a precautionary approach which involves anticipating potential risks and preventing environmental hazards. This approach offers a greater flexibility of response than is available through regulatory compliance.
To improve their control of environmental performance, some companies conduct environmental health and safety (EHS) assessments, develop environmental policies, and implement environmental management systems (EMSs). Techniques such as pollution prevention or recycling are used to translate policy objectives into practice.
The risk management approach allows companies to save money by anticipating and avoiding expenditures arising from environmental damage, and by minimizing the cost of complying with future legislation. In addition, operating costs can be reduced through waste minimization, pollution prevention and the elimination of health & safety hazards.
Step 3: sustainable business strategies
Business strategies for sustainable development mark the final phase in the journey. The aim is to seek win-win situations which can achieve environmental quality, increase wealth, and enhance competitive advantage.
Companies integrate sustainable development into their business strategies. Sustainable development is a natural extension of many corporate environmental policies. In the pursuit of economic, environmental and community benefits, management considers the long-term interests and needs of the stakeholders.
Sustainable development strategies uncover business opportunities in issues which, in earlier stages of the journey, might be regarded as costs to be borne or risks to be mitigated. Results include new business processes with reduced external impacts, improved financial performance, and an enhanced reputation among communities and stakeholders.
For the business enterprise, sustainable development means adopting strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future.
This website explores different strategies, concepts, methods and tools developed globally to assist business on its path towards sustainability. The methods presented are intended to facilitate regulatory compliance and risk management.
Sustainable development and environmental protection compared
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