Do large company have the responsibility to protect the environment
Environmental Responsibility of Large Companies
Large companies built their investments through projects. These projects though may have serious implications on the environment and companies must take responsibility for it. City investors have become increasingly concern about the environmental risks brought by large companies. As such many companies have acknowledged their responsibility by providing reports not only on their financial performance but as well as their environmental performance.
Some governments support these environmental initiatives by assisting companies in assessing their environmental exposures and rewarding them for their efforts. Additionally, there are existing legislation against environmental crimes which are often committed by large companies and business. Stiff penalties are given and may extend to the management.
Ultimately, the increasing awareness towards the financial risks of environmental impacts drives businesses and investors to take the issue seriously. This prompted companies worldwide to adopt environmental programs addressing environmental protection. They have come to acknowledge the value of environmental responsibility not only as part of their public relations but as a competitive advantage.
The government and large companies must work collectively to reduce the environmental hazards through the careful analysis of future environmental damages. For instance, large companies conduct environment analysis prior to the implementation of the project. The quality of the decision making is improved by incorporating the projects with environmental impacts and policies. Environmental analysis seeks to determine the possible damages to the environment. It is provides an evaluation of the costs for rehabilitation to guarantee that the damages are contained and controlled. The government on the other hand must ensure that the project complies with environmental safeguards.
Governments may also aid businesses in adopting environmental measures. In Hong Kong, for example, a waste scheme is implemented to help business in reducing and managing their waste as well as to reward them for their initiative. Hong Kong’s Environmental Protection Department organize and coordinate the Wastewi$e Adviser to assist the companies joining the scheme. There are three areas of waste reduction which the business can target; (1) waste avoidance and reduction (2) recycling of materials (3) purchasing and producing recyclable materials (, 2007).
This kind of government initiative presents opportunities for the businesses to benchmark their dedication to environmental protection through the proper management of waste. Members of the scheme also enjoy benefits including the use of logo which demonstrates exemplary leadership in the environment and can be used to promote the accomplishments in waste reduction.
In Brazil, companies are becoming more active in using environmental programs to acquire a competitive advantage. At the end of 2004, about $500 million was spent on equipment and facilities to control pollution. About 90% of the large companies that are tied with Multinational Corporations have adopted environmental programs and safeguards. The compliance of large companies is higher as compared to small and medium sized companies (‘’, 2004). Whether these initiatives are driven by legislation or pressures from the society, environmental management shows a positive strategy.
Undeniably, legislation plays a crucial role to achieve results from the environmental perspective. In various countries, there are regulations dealing directly with environmental crimes. Organizations that are responsible for environmental disasters are penalized and penalties are even extended to the top management. Even so, environmental responsibility originates from the individual companies’ action rather than the requirements of the government though the latter prove to be helpful.
Generally, managers can undertake environmental initiatives beyond the requirement of regulations. They have the discretion to use the resources of the corporation in means they deem necessary. The practice of environmental responsibility may lead to a good sense of business by reducing the effects of the industry before the restrictive legislations are introduced. Additionally, they may be used to add value to the products and services or improve the image of the corporation in the public. Most companies have their corporate social responsibility (CSR) in which they voluntarily adopt environmental initiatives intended to enhance their image (, 2005). At best, these initiatives provide a starting point for businesses towards sustainable development.
Among the challenges for companies operating under the concept of CSR is the ability to balance environmental responsibilities to its economic responsibility to gain profit. It is therefore important for companies to recognize that the cost of being environmentally responsible often outweigh the benefits. With this, firms will be less willing to implement initiatives. Fortunately, companies are starting to perceive the strategic value of CSR more than a public relations effort (, 2005). Waste reduction and the improvement of environmental performance are examples of CSR which may cost the company in the short term but will also make it competitive in the long term.
Aside from the CSR, there is also the Natural Step framework which has been adopted by over 100 corporations in the world including Nike and McDonald’s. In Sweden, McDonald’s has started incorporating this step by recycling 97 percent of its wastes and reducing packaging by shifting to smarter packaging (, 2005). This step guides businesses towards sustainable development and the long term competitive advantage for corporations.
These initiatives arise not only from the company’s desire to build their image but also out of the investors’ requirement. Investors around the world are putting pressures on companies that fail to take account of their environmental impacts. This is brought about by the growing concern of the global business community of the financial risks associated with climate change and greenhouse effects. In fact, investors urge companies which they have shares to account their risk exposure. According to the study conducted by () in Canada, there are around 50 companies who addressed the issues relating to climate change (‘’, , 2004).
There are also international standards on environmental management. The IBM which is one of the multinational firms in the world has been the first to earn a worldwide registration of the ISO 14001 Environmental Management System Standard. Its environmental directives cover chemical and waste management and supplier environmental evaluation. Employees are expected to comply with the environmental policies and report any environmental concern to the management. IBM also has a variety of programs relating to different environmental issues and policies. It continuously conducts dialogues with investment groups regarding environmental concerns. These dialogues are important for the company to acquire feedback regarding their activities and performance. Furthermore, IBM collaborates with government and non governmental agencies. During the past five years, it has spent about $277 million in capital and $550 operating expense to establish and develop infrastructures for environmental protection (‘’, 2007)
Like IBM, many companies are also conducting environmental evaluation of their suppliers. By Supplier Environmental Management (SEM), suppliers are assessed for their environmental performance and provided with training to improve their capacity for environmental management. Companies that have undertaken this program realized the benefits of working with suppliers on environmental issue as an opportunity to contain costs and foster competitive advantage.
The adoption of this program is rooted from the idea that suppliers‘involvement in environmental initiatives will help companies achieve their goals and shareholders expectations. Companies such as Starbucks came up with their Preferred Supplier Program to promote the sustainable production of coffee beans. It provides incentives such as a preferred status for the suppliers. Sony also encourages suppliers to produce environmentally sensitive products. In 2001, Sony created the Green Partner Standards which introduces the environmental management to its suppliers (‘’, 2007).
The protection of the environment is part of the companies’ responsibility to the larger community where it operates. This responsibility has long been acknowledged by various companies by adopting environmental program as part of their Corporate Social Responsibility. The compliance of Multinational Corporation to international standards also demonstrates their commitment towards environmental protection. Indeed, they have come to realize the strategic value of these initiatives in fostering corporate image and acquiring a competitive advantage. The government must also do its part in assisting the businesses in their initiatives and implementing regulations that penalized environmental crimes.
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