BY DR. WISDOM DLAMINI
MBABANE– The private sector can play a pivotal role in saving the fast-dilapidating environment.
Industries and its products have an impact on the natural resource base of civilization through the entire cycle of raw materials exploration and extraction, transformation into products, energy consumption, waste generation, and the use and disposal of products by consumers.
These impacts may be positive, enhancing the quality of a resource or extending its use or they may be negative, as a result of process and product pollution and of depletion or degradation of resources. The negative environmental impacts of industrial activity were initially perceived as localised problems of air, water and land pollution.
Industrial expansion, following the Second World War, took place without much awareness of the environment and brought with it a rapid rise in pollution. These problems are widespread in Eswatini as industrial growth, urbanisation and the use of automobiles spreads. In the light of this and the growth trends projected through the next century, it is evident that measures to reduce, control and prevent industrial pollution need to be greatly strengthened. If they are not, pollution damage to human health could become intolerable in certain cities and places of residence and threats to poverty and ecosystems will continue to grow.
Industries’ response to pollution and resource degradation has not been and should not be limited to compliance with regulations. It should accept a broad sense of social responsibility and ensure an awareness of environmental considerations at all levels. Towards this, all industrial enterprises, trade associations and labour unions should establish company-wide or industry-wide policies concerning resource and environmental management, including compliance with the laws and requirements of the country.
Corporate Environmental Management
Corporate Environmental Management is key element in achieving sustainable development of both industrialised countries and developing countries. Environmental protection should be integrated into all managerial functions with the aim of reaching an optimum between economic and ecological performance of a company. The key question for a manager “how to make money and protect the environment at the same time?” can be answered in a variety of ways according to the setting. It applies not only to “Greening and cleaning” existing businesses, but requires entrepreneurial creativity to turn the so-called environmental constraints into new business opportunities. The attraction of polluter-intensive industries from the developed countries formed, and continues to form, part of the industrial development strategy for a number of developing countries and newly industrialized countries. It is now becoming clear, however, that this development strategy is not negatively affecting the long-term competitive advantages of a country.
In contrast, industries which have to comply with strict environmental regulations have developed the know-how in “Green and Clean” products and processes, resulting in competitive advantages in national and international markets. As the pressure for stricter environmental regulations on a global level mounts, those countries and industries which were among the first to implement environmental protection measures now have considerable growth opportunities.
A manager would like to know how his business will be affected as a consequence of the increasing environmental consciousness of consumers and the government. Will the environmental challenge present an opportunity or a threat to the business?
An estimate to this can be reached by assessing the present scale of a company using the following profile.
Sector of the Economy
The threatened company
Environmental friendly and growing company
Products
Non-renewable, polluting, high consumption of resources
Renewable and recyclable materials, non-polluting, low energy consumption
Processes
Polluting, hazardous wastes, high energy consumption, health hazards to workers
Non-polluting, low waste, low energy consumption, efficient use of resources, no health hazards to workers
Environmental consciousness
Consumers not environmentally conscious
Environmentally conscious consumers
Environmental standards
Low standards or non-compliance with standards.
Compliance with environmental standards
Management and staff commitment
No commitment
Committed to environmental protection
Skill level of staff
Low, highly specialized in old technologies
High, good general education
Research and Development
Low R&D profile
Creative team; short development cycle
Capital
Capital shortage
Environmentally conscious financing institutes.
Barriers
Managers are already facing a new kind of trade barrier. Industrial policies and regulations in favour of sustainable development can constitute a trade barrier for products which do not fulfill the environmental standards of the importing country. Requirements for recycling of products or packaging materials may result in such a high level of costs that the advantage of low-cost production is a developing country is lost. A manager, however, who is now responsible to the shareholders or owners of a company could be inclined to disregard medium and long-term consequences of the company’s activities, particularly if there is a danger of a take-over bid from a hostile predator. As a taxpayer, the company already shares, to some extent, the costs of sewage, waste treatment, pollution control at local, regional and international levels. If the company is a main polluter, this policy may still pay off but, in any case, tougher regulations will have to be faced, especially as the concept of internalisation of environmental costs is increasingly applied. The required retrofitting will most likely be more expensive than preventive measures would have been. Those working for environment-friendly companies would benefit the most if the “polluter pays” principle is applied: these companies would not then have to pay for the environmental damage caused by others.
As more and more companies are adhering to the new paradigm of “clean business”, pressure on the major polluters by fellow industrialists, consumers, environmental groups and government is mounting. The insight is growing that we cannot afford not to change. One of the many proofs is the increasing number of publications and well-attended international seminars, conferences and workshops on “How to make your business lean, Green and clean”.
Financial statements only provide a very partial assessment of the full monetary and environmental operating costs and give little insight into the state of the natural resources upon which companies are economically dependent. The inclusion of environmental concerns into the financial accounting involves a very different consideration of environmental expenses, liabilities and resources costing. Financial and accounting managers should be aware of the external, community and economic effects of pollution and environmental degradation, and to consider the implications for national economic growth of their enterprise and the specific financial implications as well.
Benefits of environmental management for a company
Cost savings:
Savings due to reduced consumption of energy and other resources
Savings due to recycling, selling of by-products resulting in decreased waste disposal costs.
Reduced environmental charges, pollution penalties, compensation following legal damage suits.
Revenue Savings:
Increased marginal contribution of environment-friendly products which sell at higher prices.
Increased market share due to product innovation and less performative competitors.
Completely new products open up new markets.
Increased demand for a product which contributes to pollution abatement and environmental sustainability.
Strategic benefits
Improved public image:
Renovation of product portfolio
Productivity improvement
Higher staff commitment and better labour relations
Creativity and openness to new challenges.
Better relations with public authorities, community and environmental pressure groups.
Ensured access to foreign markets
Easier compliance with environmental standards.
