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Ignoring the environment is bad for business.

Companies that fail to consider how their actions can hurt the environment could be in for trouble.

Consider: gasoline or chemicals leaking from an underground tank can contaminate ground water, leading to a lawsuit if neighboring wells are affected. Old pipe insulation may contain asbestos - and serious penalties can result if the problem is not corrected.

In our ever more regulated and litigious society, indifference to the environment can be costly. The public has become less tolerant of environmental misdeeds, and regulators - notably the Ontario Ministry of the Environment - are increasingly looking for ways to make examples of corporate polluters.

The ministry's recent prosecution of Bata Industries executives for a toxic spill jolted Canadian industry. For the first time, directors and officers were held personally liable for a company's environmental problems - and they were even forced to pay the resulting penalties out of their own pockets.

While some big companies are getting the message, small businesses generally are less aware of the consequences of poor environmental behaviour. Especially at risk are gasoline stations, welding and metal fabricating shops, car maintenance outlets, and building contractors. Often, such companies don't take proper precautions when disposing of their polluting waste materials - and they're vulnerable to lawsuits or government penalties as a result.

Environmental problems can also choke off a business's access to financing. Today banks are much less willing to lend to companies that are potential environmental risks, because in Canada lenders can be retroactively held liable for clean-up costs if they take possession of properties held as security. Banks are also understandably concerned about a decline in the value of collateral if environmental contamination turns up after a loan is advanced.

Environmental issues can become bargaining chips in buying or selling a business. Today, a purchaser routinely requires an environmental investigation of the property, and an indemnification against possible future problems.

To protect themselves against these environmental risks, company owners, directors and managers need to show that they have exercised all reasonable care to prevent any environmental problem from occurring. That's why every company should consider establishing an Environment Management System, which provides the necessary documentation for defense against government prosecutions. Such a system also demonstrates to lenders, shareholders, insurers, employees and customers that the business is being managed in an environmentally responsible manner.

Beyond avoiding penalties, companies should also look into the business benefits of good environmental citizenship. Recycling waste, for example, can reduce disposal and raw materials costs. Energy conservation pays off in lower fuel bills. And a number of high-profile Canadian businesses have used "corporate greening" strategies to take advantage of market opportunities.
COPYRIGHT 1993 Canadian Institute of Management
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Moneycare
Author:Harris, Richard (Irish actor)
Publication:Canadian Manager
Date:Sep 22, 1993
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