You’ll need to consider different areas of risk management, such as health and safety, financial and quality control. And one area that’s becoming increasingly important is environmental risk management.
There’s currently a growing level of environmental awareness, on a global scale. New environmental laws are coming into force and there’s a global shift towards eco-conscious consumerism.
Prioritizing environmental risk management can help you stay ahead of the curve and meet both legal obligations and customer/client expectations. Here are some of the benefits of managing risks to make your business more eco-friendly and sustainable.
Comply with important environmental legislation
Managing the environmental impact of your business is your moral and legal responsibility. You will need to comply with legislation and demonstrate your environmental responsibility to avoid fines, penalties and reputational damage. So risk management in this area is hugely important in order to achieve compliance.
The environmental laws and regulations applicable to your business will depend on your business operations and your industry. You may need to control emissions and water pollution, implement hazardous substance control (COSHH) measures and ensure waste is appropriately stored, disposed of and, where possible, recycled.
Appeal to eco-conscious customers and clients
Going above and beyond compliance can set you apart from competitors. Many customers and clients want to purchase from or work with businesses that prioritize sustainability. In 2017, a study found that 87% of consumers have a more positive image of companies that support social or environmental issues, with many consumers willing to pay more for goods or services that they know have minimal impact on the environment.
Safeguard your business’s reputation
Businesses without effective environmental risk management policies and procedures in place face the risk of reputational damage. As a result, they may lose support and loyalty from customers, investors, stakeholders and the general public. And while it can take a single environmental incident to damage a company’s reputation, it can take years to recover from the reputational damage.
However, by making sure you and your employees are aware of the environmental risks posed by your business’ operations, you can implement effective control measures to stop these risks from being realized. And by avoiding or reducing these hazards, you can safeguard your firm’s reputation.
Environmental risk management ties into health and safety
Health and safety is, without a doubt, one of the most important aspects of risk management. You have a responsibility to control health and safety risks in your workplace and protect yourself, your employees and members of the public from harm. And environmental risk management ties into health and safety, making it even more crucial.
Environmental hazards can also cause work-related injuries and ill-health. For example, emissions and fumes cause air pollution, and exposure to emissions can also be a public and occupational health issue, potentially causing health conditions such as cancers and respiratory diseases. Similarly, hazardous substances can contaminate water, land and air, but they can also cause serious health hazards. So managing environmental risks can help you keep people safe in the workplace.
Good environmental practice can improve recruitment and retention
Just as customers and clients often prefer to support businesses that minimize their environmental impact, many employees consider the sustainability of a company when deciding where they want to work. A total of 76% of millennials (who will make up three-quarters of the workforce by 2025) consider the social and environmental commitments of companies when making employment decisions.
This means environmental risk management can be an effective recruitment tool. By making your business as green as possible, you’re more likely to attract eco-conscious talent. And improving the sustainability of your business operations can also improve the satisfaction of your current employees, increasing your retention rate.
Environmental risk management can have financial benefits
Taking measures to reduce your environmental impact can also come with a range of financial benefits. Eco-friendly practices such as recycling, minimizing water usage and using energy-efficient processes and equipment can help you cut back on the cost of your business utility bills and waste disposal fees. Some businesses may be able to save money through tax incentives and relief schemes, by minimizing their environmental impact.
If your risk management strategies also attract eco-conscious customers or clients, you may benefit from increased sales or work opportunities, further improving your profitability.