Environmental management outsourcing for small companies

An attractive alternative at a time of increasing environmental regulation.

Small companies face a dilemma as a result of more stringent environmental controls and demand from clients for environmentally responsible suppliers.

With the move towards "green" supply chain management driving demand for better environmental management, contractors increasingly expect to deal with companies that have certified their environmental management systems to ISO 14001.

Today, even banks and insurance companies undertake a determination of environmental credibility within "risk-based" assessments of their clients.

Additionally, there is the constant flow of environmental legislation and ever present threat of prosecution as a result of non-compliance.

The Environment Agency, Scottish Environment Protection Agency and Local Authorities are the main arbiters of environmental law in the United Kingdom. Their function is to create necessary checks and balances which are essential for protecting the natural environment. Breaches of environment law can be very costly, both in monetary and non-monetary terms. Magistrates' Courts have imposed fines of up to £50,000 and imprisoned company directors for up to 12 months for single offences of causing - or knowingly permitting - pollution (as in the case of Father and Son v Environment Agency which was brought for illegal waste activity and resulted in a fine of £40,000). Furthermore, if pollution charges are prosecuted in the Crown Court, companies can face unlimited fines and Directors imprisonment for up to 5 years (earlier this year, chemical manufacturer and packaging company Safapac, was fined £100,000 in a prosecution brought by the Environment Agency for water pollution).

Indeed, entire communities are becoming increasingly aware of threats to the environment and expect companies which operate in their vicinity to conduct business in an environmentally responsible manner.

In a recent case, the Environment Agency prosecuted a poultry unit, resulting in a £50,000 fine after residents complained to authorities. And, with local residents increasingly voicing their concerns publicly, companies are being required to demonstrate good corporate governance.

In light of these developments, the role of the environmental manager is taking on renewed significance.

Are environment managers an expensive addition for small firms?

Some argue the cost of appointing an environmental manager as a permanent member of staff in a small company has the potential to outweigh any perceived benefits.

Nevertheless, the costs of failing to address environmental issues at all can be unquantifiable and outsourcing the environmental management function to a specialist company may well represent the best compromise (with fees typically amounting to one-third of a full time employee's salary).

Is outsourcing environmental management a valid alternative?

Different companies will have different requirements, however, the following "checklist" will help to determine whether an in-house or outsourced solution will deliver the best value:

1. Environmental legislation - Do you hold (or are you required to hold) environmental consents and permits?

2. Are you involved in small- or large-scale construction activity?

3. Is your company required to submit pre-qualification questionnaires (PQQ)?

4. Are you or your clients subject to noise management ("Section 61") regulations?

5. Water management - Do you discharge to land or sewer under permit held by your company or client?

6. Energy management - Do your clients require you to reduce energy usage or report and reduce consumption onsite?

7. Building design services - Are you familiar with the acronyms, BREEAM, LEED and BIM (or even the Code for Sustainable Homes)?

8. Waste management - Do you produce, store, transport or dispose of waste under a permit or consent?

9. Transport/Delivery - Does your company transport or deliver raw material, waste or spoil?

10. Procurement - Do you procure goods and services on behalf of clients with strict environmental requirements?

10. EMS/ISO implementation - Are you under increased pressure to implement ISO 14001 or have you failed to win new contracts for no apparent explanation?

11. Environmental reporting to main contractors - Has your main contractor introduced new environmental requirements against which you need to report with supporting evidence?

12. Training & Awareness - Do you have an appointed environmental representative within your organisation who takes ownership of all environmental matters?