Magazine article Risk Management

Creating Environmental Programs

Magazine article Risk Management

Creating Environmental Programs

Article excerpt

Corporate concern for environmental liabilities is at an all-time high. The specter of large fines and penalties, as well as the Environmental Protection Agency's (EPA) threat to increase criminal prosecutions for environmental statute violations, has created a pressing need for corporate environmental risk management programs, said Lynne M. Miller, president of Environmental Strategies Corporation in Reston, Virginia. "Many governmental agencies such as the EPA will look at how good a program a company has in place as a mitigating factor for fines and penalties," she said. "Also, there is now much better data sharing between the various environmental regulatory agencies. This points out the need for a good environmental program."

Besides ensuring regulatory compliance and reducing penalties, environmental programs also prevent the negative publicity that comes with not having a program. Additionally, at some firms, "shareholder pressures and Securities and Exchange Commission (SEC) disclosure issues are the driving force behind the creation of environmental policies," said Ms. Miller. "More and more, shareholders want to know what kind of programs companies have in place, and what they are doing to prevent expenditures for pollution problems."

Although these reasons for creating an environmental program are valid, companies should ensure that their programs go beyond regulatory compliance. "You want to be proactive in anticipating and preventing environmental risks," said Ms. Miller. "Prevention of pollution in the first place should be a big part of this strategy."

In a large corporation, many departments will be involved in environmental risk management. Regardless of the size of the organization, however, "you don't want to have a program where only risk management is involved," said Ms. Miller. "It's necessary to get the buy-in and participation of many departments within the company." Top management, the financial department (specifically for SEC issues), the public relations office and plant management should all be involved, she added.

A good environmental program will include clearly stated goals. The program should also increase corporate awareness of environmental issues. "This can be important, because employees may have good suggestions for preventing pollution problems," said Ms. Miller. Another worthy goal is to use the program to incorporate environmental concerns into all phases of corporate planning.

An effective environmental program begins with a strong policy statement that outlines the program's objectives. …

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