Benefits Of Implementing Environmental Action Essay

1113 words - 4 pages

Since the Bophal incident sparked the beginning of the Era of Beyond Compliance, companies have pondered about the benefits of employing environmental initiatives. Companies will enjoy financial benefits in return for environmental action, but whether a firm may see financial reward depends on several conditions that must be met. However, if conditions are not met, environmental initiatives will still benefit companies in a multitude of other areas.
Many companies are able to accept a win-win strategy towards adopting environmentally friendly practices, because of the positive correlation between environmental actions and financial returns (Frankel, 1998). A company can save costs by looking for eco-efficiencies; where companies decrease their environmentally harmful inputs and outputs. In 2009, Canadian Tire introduced the right-fit packaging program, which would reduce the amount of unnecessary packaging. While Canadian Tire was curtailing their environmental impact, 320 packaging changes between 2010-2011 saved the company $6.3 million in costs (Elm & Tyler, 2012). Eco-efficiencies clearly yields profit, while reducing the company's environmental impact. Furthermore, creating a product or service that offers unique environmental benefits for consumers is another way that environmental actions lead to financial gain. By creating an environmentally beneficial product, a company separates themselves from competition and will be able to capitalize on these environmental opportunities. Consumers are willing to pay a premium for greener goods: goods being made in an environmentally friendly way or by a company who is greener (Reinhardt, 1999). Besides capitalizing on environmentally differentiated products, companies can also achieve financial gains through environmental action as risk mitigation. By going beyond environmental compliance, companies are more likely to be able to prepare for changing regulations in the future. As environmental regulations are becoming more stringent, companies who go beyond compliance will be able to avoid future environmental regulation issues. Costs charged for falling short of regulations will be evaded. In summary, pollution prevention and eco-efficiencies benefits the bottom-line and environment.
However, a narrow focus on win-wins will lead to a depletion of "easy gains". As a result, implementing environmental actions will generate costs without financial benefits in the long term (Walley & Whitehead, 1994). Certain conditions must be met for a company to pursue environmental initiatives for financial gain. Using environmental initiatives to mitigate risk is an excellent way of saving on environment-related costs, if a company is successful in integrating sustainability risk into general risk management practices. Once sustainability risks are considered general risks, companies can assess, avoid and manage these risks (Reinhardt, 1999). In return, the avoidance of further costs to the business may be down...

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