Environment: Industry Shackle or Opportunity to Profit?
With a considerable body of research being carried out into the financial effects of environmental stewardship on the profitability of industry, the UK’s largest environmental trade show, ET2001, highlights opportunities for business to convert good environmental practice into profitability.
With a considerable body of research being carried out into the financial effects of environmental stewardship on the profitability of industry, the UK’s largest environmental trade show, Environmental Technology 2001, highlights opportunities for business to convert good environmental practice into profitability. By edie staff.
To the casual observer, environmental regulation is booming: Businesses in the United Kingdom are being taxed on their greenhouse gas emissions; the polluter-pays principle forces companies to take responsibility for packaging waste and remediating contaminated land. Such high demands, which tend to be imposed particularly on companies in developed countries, are causing fears from some quarters that profits will suffer and that industries, unfairly, will lose their competitive edge.
However, increased environmental standards aren't handicapping companies; research suggests such standards can go arm-in-arm with increased market values. According to a report published in 2000 by the Institute for Operational Research and Management Sciences, large U.S. companies adopting strict environmental standards for their operations in developing countries tend to perform better on the stock market, as compared to companies with lower eco standards.
According to the report, Do Corporate Global Environmental Standards Create or Destroy Market Value?, good environmental stewardship means improved resource efficiency, greater productivity, and a positive public image. What’s more, developing countries that demand lower environmental standards from foreign companies in order to attract investment tend to draw in the poorer-quality, less-competitive firms.
The theory that environmental performance is a strong indicator of management quality is also borne out by a study of the water treatment industry by Innovest Strategic Value Advisors, a firm that specializes in international investment research. In analyzing more than 60 aspects of factors such as environmental risk and management quality, Innovest found that companies receiving above-average eco-ratings have outperformed those with lower ratings by 4.5% over the last three years. British-based companies Severn Trent Plc and AWG Plc, and French company Vivendi Universal, received the highest environmental ratings, and are predicted to outperform the rest of the water and waste management sector.
Furthermore, poor environmental stewardship tends to lead to poor financial performance, says Innovest. Following the Exxon Valdez oil spill, Exxon reported a long-term drop in returns through a number of effects including lost sales due to the company’s damaged reputation (see Innovest's report on the matter). Following the accident, which garnered huge publicity, firms with "green" reputations enjoyed a significant increase in their returns, with companies with poor environmental reputations experiencing a downturn in performance.
Financial penalties from poor stewardship
Poor environmental stewardship also can limit economic growth through damage or over-exploitation of natural resources. Australians have been warned that the continued mistreatment of water resources could limit the country’s economic growth, due to depleted supplies and increasing salinity, which threatens drinking water in some areas.
Innovest said it fears that President George W. Bush’s decision in March not to restrict carbon dioxide emissions from power plants in order to protect industry competitiveness may have dealt a blow to the industry. By insulating power producers from the need to address greenhouse emissions domestically, the administration may have reduced investment by U.S. companies in cleaner power generation technologies, decreasing their ability to compete abroad where climate change is viewed as being of critical importance to both environmental and economic well being.
According to Martin Whittaker, a managing director of Innovest, national policies in other countries, implemented in large part due to climate change fears, encourage rapid innovation in clean energy.
"We are concerned that if U.S. companies do not see carbon emissions performance as a competitive issue, they may be disadvantaged relative to their more proactive counterparts from Europe, Australia and elsewhere," Whittaker said.
And recently in Wales, the National Assembly of Wales’ economic development minister urged companies to become eco-friendly in order to be competitive, and to put behind them the unfettered industrial development that has scarred Wales.
Room to grow
However, there is still considerable room for improvement in the environmental sustainability of industries. According to a study of Europe’s largest companies, published in April by NIVRA, a trade group of Dutch accountants, although a number of companies are leading the way environmentally, a significant number of companies are quite some way adrift. The more difficult issues such as product stewardship and strategic financial planning have been largely untouched, the group says.
According to NIVRA, if there is to be a profound change in the way in which large business organizations approach environmental stewardship, business leaders must be compelled to feel a greater sense of urgency.
This, however, means that there is still considerable scope for growth for the environmental industry, which has a global value of US$335 billion (£230 billion), and is predicted by the UK Department of Trade and Industry to grow to US$640 billion (£440 billion) by 2010. Poor environmental stewardship also could limit economic growth through damage or over-exploitation of natural resources, Innovest reports.
Environmental Technology trade fair expands
The opportunities and challenges brought by the need for environmental stewardship are highlighted by the expanding Environmental Technology (ET) trade fair, the UK’s largest forum for the environment industry, held annually in Birmingham. The show runs over three days, this year starting on June 5, World Environment Day, and is a mix of exhibits, workshops, seminars, debates and a conference, with the theme of resource efficiency.
According to Amanda Barnes, director of the ET Partnership, which sponsors the trade show, Environmental Technology is about management services and skills. Barnes said improved resource efficiency directly relates to improved bottom lines.
Free information
ET will be divided into a number of information zones, where advice will be given on topics such as air emissions, and environmental management. The Waste Information Zone, for example, is being jointly hosted by the Environmental Services Association and the Institute of Waste Management, both leading waste management bodies. They’ll be the ones to see for information on commercial trends, environmental legislation, and training opportunities.
Zero waste
ET also will tackle “zero waste,” a concept requiring 100% recycling. Currently, within the UK, the government has set targets for waste disposal authorities in England and Wales to achieve 33% recycling by 2015. Within the European Union, the Landfill Directive will also require the diversion of 33 million tons of biodegradable municipal solid waste away from landfill each year by 2020.
However unobtainable as these demands may seem to some, communities have set for themselves far higher targets. In Australia, for example, Canberra has already achieved 66% recycling, and is well on target to achieve its 100% recycling target by 2010.
In order to aid communities in their quest for zero waste, environmental consultancy Sustainable Environmental Systems is set to launch two waste systems at the ET2001 show. The Bedminster in-vessel composting system can process up to 1,100 tons of mixed waste per day, producing dry recyclables and pelletized organic compost. The alternative is the Plascrete process, which converts unsorted plastics into a lightweight aggregate for use as a building material.
Perfecting management
Other events at ET that highlight resource efficiency include breakfast briefings with Envirowise, a government organization which offers free, independent advice on practical ways to minimize waste and convert turnover into profit.
The British Standards Institute will highlight its responsible care initiative, in a conference named, "You can profit from managing risk." The scheme is a voluntary initiative developed by chemical companies around the world in order to continuously improve the health, safety and environmental performance of their operations and products. The scheme works through third party certification, resulting from the BSI Responsible Care audit which takes into account how the company operates, how it manages its impact on the environment, and may also include the quality of communication, training and operational procedures.
Carbon cuts
The ET2001 fair also will host the official launch of the Carbon Trust, an independent company initially funded by the UK government as part of its climate change program, and which will also be coordinating the Energy Information Zone. On the opening day of ET2001, senior members of the Carbon Trust will address approximately 100 senior representatives of UK business on the program’s objectives. The company is designed to accelerate the take-up of low carbon technologies with a long-term view of helping the UK develop into a low-carbon economy. The scheme will include money for research and development, and tax incentives to help businesses to invest in technology that will help reduce greenhouse gas emissions.
According to Ian McAllister, Carbon Trust Chairman, the government’s climate change program contains measures that could cut greenhouse gas emissions by 23% by 2010.
"ET2001 is the perfect opportunity to build on the UK’s strengths in innovation and technology and exploit the UK’s lead in the world’s financial markets to find new ways of financing investment in low carbon technologies," McAllister said.
Another response to climate change legislation, which is being presented at ET2001, is a new “in-practice” guide, developed by the Institute of Environmental Management and Assessment (IEMA). The organization will provide a detailed explanation of the Climate Change Levy package, together with negotiated agreements, the emissions trading scheme, and other UK and international policy measures. Greenergy, "the responsible energy company," will launch a service designed to assist businesses in their carbon asset management, in the form of a software package. Anyone interested in attending the launch should contact Melanie Diffey at +44 (0)20 7484 0500.
Talk to the environment leaders
One of the most popular events at the ET show is its discussion session, TalkBack, which this year asks, Is current corporate practice diminishing the wealth of nations? Panelists include Michael Meacher, environment minister; Mark Barthel of the British Standards Institute; Vic Cocker, chairman of the Waste and Resources Action Program (WRAP); and Barbara Young, Environment Agency CEO.
Amanda Barnes, director of the ET Partnership, said attendees would have plenty to think about:
"There can be no doubt that we have an interesting debate on our hands ... With members of the public and private sectors -- not to mention NGOs -- having something to say on this subject, we are sure that such a high profile panel will also both share and learn from this year’s TalkBack," Barnes said.
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© Faversham House Group Ltd 2001, all rights reserved. This article appears by permission. edie is a GreenBiz.com News Affiliate.
To the casual observer, environmental regulation is booming: Businesses in the United Kingdom are being taxed on their greenhouse gas emissions; the polluter-pays principle forces companies to take responsibility for packaging waste and remediating contaminated land. Such high demands, which tend to be imposed particularly on companies in developed countries, are causing fears from some quarters that profits will suffer and that industries, unfairly, will lose their competitive edge.
However, increased environmental standards aren't handicapping companies; research suggests such standards can go arm-in-arm with increased market values. According to a report published in 2000 by the Institute for Operational Research and Management Sciences, large U.S. companies adopting strict environmental standards for their operations in developing countries tend to perform better on the stock market, as compared to companies with lower eco standards.
According to the report, Do Corporate Global Environmental Standards Create or Destroy Market Value?, good environmental stewardship means improved resource efficiency, greater productivity, and a positive public image. What’s more, developing countries that demand lower environmental standards from foreign companies in order to attract investment tend to draw in the poorer-quality, less-competitive firms.
The theory that environmental performance is a strong indicator of management quality is also borne out by a study of the water treatment industry by Innovest Strategic Value Advisors, a firm that specializes in international investment research. In analyzing more than 60 aspects of factors such as environmental risk and management quality, Innovest found that companies receiving above-average eco-ratings have outperformed those with lower ratings by 4.5% over the last three years. British-based companies Severn Trent Plc and AWG Plc, and French company Vivendi Universal, received the highest environmental ratings, and are predicted to outperform the rest of the water and waste management sector.
Furthermore, poor environmental stewardship tends to lead to poor financial performance, says Innovest. Following the Exxon Valdez oil spill, Exxon reported a long-term drop in returns through a number of effects including lost sales due to the company’s damaged reputation (see Innovest's report on the matter). Following the accident, which garnered huge publicity, firms with "green" reputations enjoyed a significant increase in their returns, with companies with poor environmental reputations experiencing a downturn in performance.
Financial penalties from poor stewardship
Poor environmental stewardship also can limit economic growth through damage or over-exploitation of natural resources. Australians have been warned that the continued mistreatment of water resources could limit the country’s economic growth, due to depleted supplies and increasing salinity, which threatens drinking water in some areas.
Innovest said it fears that President George W. Bush’s decision in March not to restrict carbon dioxide emissions from power plants in order to protect industry competitiveness may have dealt a blow to the industry. By insulating power producers from the need to address greenhouse emissions domestically, the administration may have reduced investment by U.S. companies in cleaner power generation technologies, decreasing their ability to compete abroad where climate change is viewed as being of critical importance to both environmental and economic well being.
According to Martin Whittaker, a managing director of Innovest, national policies in other countries, implemented in large part due to climate change fears, encourage rapid innovation in clean energy.
"We are concerned that if U.S. companies do not see carbon emissions performance as a competitive issue, they may be disadvantaged relative to their more proactive counterparts from Europe, Australia and elsewhere," Whittaker said.
And recently in Wales, the National Assembly of Wales’ economic development minister urged companies to become eco-friendly in order to be competitive, and to put behind them the unfettered industrial development that has scarred Wales.
Room to grow
However, there is still considerable room for improvement in the environmental sustainability of industries. According to a study of Europe’s largest companies, published in April by NIVRA, a trade group of Dutch accountants, although a number of companies are leading the way environmentally, a significant number of companies are quite some way adrift. The more difficult issues such as product stewardship and strategic financial planning have been largely untouched, the group says.
According to NIVRA, if there is to be a profound change in the way in which large business organizations approach environmental stewardship, business leaders must be compelled to feel a greater sense of urgency.
This, however, means that there is still considerable scope for growth for the environmental industry, which has a global value of US$335 billion (£230 billion), and is predicted by the UK Department of Trade and Industry to grow to US$640 billion (£440 billion) by 2010. Poor environmental stewardship also could limit economic growth through damage or over-exploitation of natural resources, Innovest reports.
Environmental Technology trade fair expands
The opportunities and challenges brought by the need for environmental stewardship are highlighted by the expanding Environmental Technology (ET) trade fair, the UK’s largest forum for the environment industry, held annually in Birmingham. The show runs over three days, this year starting on June 5, World Environment Day, and is a mix of exhibits, workshops, seminars, debates and a conference, with the theme of resource efficiency.
According to Amanda Barnes, director of the ET Partnership, which sponsors the trade show, Environmental Technology is about management services and skills. Barnes said improved resource efficiency directly relates to improved bottom lines.
Free information
ET will be divided into a number of information zones, where advice will be given on topics such as air emissions, and environmental management. The Waste Information Zone, for example, is being jointly hosted by the Environmental Services Association and the Institute of Waste Management, both leading waste management bodies. They’ll be the ones to see for information on commercial trends, environmental legislation, and training opportunities.
Zero waste
ET also will tackle “zero waste,” a concept requiring 100% recycling. Currently, within the UK, the government has set targets for waste disposal authorities in England and Wales to achieve 33% recycling by 2015. Within the European Union, the Landfill Directive will also require the diversion of 33 million tons of biodegradable municipal solid waste away from landfill each year by 2020.
However unobtainable as these demands may seem to some, communities have set for themselves far higher targets. In Australia, for example, Canberra has already achieved 66% recycling, and is well on target to achieve its 100% recycling target by 2010.
In order to aid communities in their quest for zero waste, environmental consultancy Sustainable Environmental Systems is set to launch two waste systems at the ET2001 show. The Bedminster in-vessel composting system can process up to 1,100 tons of mixed waste per day, producing dry recyclables and pelletized organic compost. The alternative is the Plascrete process, which converts unsorted plastics into a lightweight aggregate for use as a building material.
Perfecting management
Other events at ET that highlight resource efficiency include breakfast briefings with Envirowise, a government organization which offers free, independent advice on practical ways to minimize waste and convert turnover into profit.
The British Standards Institute will highlight its responsible care initiative, in a conference named, "You can profit from managing risk." The scheme is a voluntary initiative developed by chemical companies around the world in order to continuously improve the health, safety and environmental performance of their operations and products. The scheme works through third party certification, resulting from the BSI Responsible Care audit which takes into account how the company operates, how it manages its impact on the environment, and may also include the quality of communication, training and operational procedures.
Carbon cuts
The ET2001 fair also will host the official launch of the Carbon Trust, an independent company initially funded by the UK government as part of its climate change program, and which will also be coordinating the Energy Information Zone. On the opening day of ET2001, senior members of the Carbon Trust will address approximately 100 senior representatives of UK business on the program’s objectives. The company is designed to accelerate the take-up of low carbon technologies with a long-term view of helping the UK develop into a low-carbon economy. The scheme will include money for research and development, and tax incentives to help businesses to invest in technology that will help reduce greenhouse gas emissions.
According to Ian McAllister, Carbon Trust Chairman, the government’s climate change program contains measures that could cut greenhouse gas emissions by 23% by 2010.
"ET2001 is the perfect opportunity to build on the UK’s strengths in innovation and technology and exploit the UK’s lead in the world’s financial markets to find new ways of financing investment in low carbon technologies," McAllister said.
Another response to climate change legislation, which is being presented at ET2001, is a new “in-practice” guide, developed by the Institute of Environmental Management and Assessment (IEMA). The organization will provide a detailed explanation of the Climate Change Levy package, together with negotiated agreements, the emissions trading scheme, and other UK and international policy measures. Greenergy, "the responsible energy company," will launch a service designed to assist businesses in their carbon asset management, in the form of a software package. Anyone interested in attending the launch should contact Melanie Diffey at +44 (0)20 7484 0500.
Talk to the environment leaders
One of the most popular events at the ET show is its discussion session, TalkBack, which this year asks, Is current corporate practice diminishing the wealth of nations? Panelists include Michael Meacher, environment minister; Mark Barthel of the British Standards Institute; Vic Cocker, chairman of the Waste and Resources Action Program (WRAP); and Barbara Young, Environment Agency CEO.
Amanda Barnes, director of the ET Partnership, said attendees would have plenty to think about:
"There can be no doubt that we have an interesting debate on our hands ... With members of the public and private sectors -- not to mention NGOs -- having something to say on this subject, we are sure that such a high profile panel will also both share and learn from this year’s TalkBack," Barnes said.
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© Faversham House Group Ltd 2001, all rights reserved. This article appears by permission. edie is a GreenBiz.com News Affiliate.
