The importance of having an environmental compliance program

Fabiana Nitta

In modern society, the environmental sustainability is no longer a mere option, but rather a fundamental demand. Both the legislation and the growing social awareness urge companies to adopt practices to reduce the impacts of their activities. In this scenario, the formulation of an environmental compliance program is not only a preventive measure, but also a competitive advantage that add value to the brand and ensure the longevity of the business.

An environmental compliance program consists of a set of organized policies, procedures, and practices to make sure that the company is in conformity with the rules, laws, and regulations of the sector. More than simply complying with the legislation, the program aims at incorporating sustainability into the company’s day-to-day activities, promoting a culture of environmental responsibility.

The need of an environmental compliance program results from many factors, the first one being the mitigation of legal risks. The environmental legislation has been in continuous development, with increasingly stricter and wide-ranging rules, and violations that can result in tough penalties, including high fines, judicial lawsuits and even the suspension of the company’s activities. Furthermore, the legal conformity is essential for the obtainment of the environmental licenses and permits, the lack of which may be a hindrance for companies to legally operate.

Besides mitigating legal risks, an environmental compliance program is fundamental to protect the company’s reputation. In a market where consumers and investors are more and more mindful of environmental practices, where ESG has assumed a vital role, the public perception that an organization adopts sustainable practices may be key for the success or failure of the business.

Another important aspect is the competitive advantage obtained with creating an environmental compliance program. Companies that stand out due to their sustainable practices not only prevent penalties, but also tend to have a better position in the market. The preference for suppliers that strictly comply with environmental rules has become more common, mainly in international markets where the requirement for this sort of practice is yet higher.

In addition to the external benefits, the environmental compliance may also lead to significant internal gains by promoting operational efficiency. When mapping and managing environmental risks, the companies may identify wastage and implement practices to save resources like water and energy, which reduces operational costs and shows a concrete commitment with sustainability that may be used as a competitive differential.

Creation of the program

For an environmental compliance program to be effective, it must be well structured and adjusted to the company’s reality. The first step is to make an initial comprehensive assessment that must include a detailed analysis of the operation, in order to identify all the aspects that may have some environmental impact. This should be conducted by a qualified team that understands both the business’ particularities and the complexity of the environmental legislation.

Based on this assessment, the company must create policies and procedures that ensure the compliance with the environmental rules covering all the areas, from the waste management to the emissions control and the efficient use of natural resources. These policies must be clear, objective, and accessible so that all the employees can properly abide by them.

The success of an environmental compliance program largely relies on the qualification and involvement of the employees, so it is crucial that the company invests in continuous training and awareness practices adjusted to the needs of each specific sector. Every employee, from the top management to the production workers, must understand the importance of the environmental compliance and how their individual actions contribute for the business’ sustainability.

Besides, in order to make sure that the policies and procedures are respected, it is necessary to have mechanisms and regular audits in place, which enable to identify and correct deviations, as well as revise and enhance the already adopted practices, so that the company can be in compliance with the environmental laws at all times, even in the event of changes in the legislation.

Finally, the environmental compliance program must be dynamics, i.e., subject to reviews and improvements. The environmental legislation and the sustainability practices have been evolving continuously and the organization must be prepared to adjust to these changes, which requires a consistent analysis of the operations vis-à-vis the regulatory framework, as well as the willingness to adapt whenever required, so that the program remains relevant and efficient over time.

Therefore, the formulation of an environmental compliance program is a key strategic initiative to any company that intends to operate on a sustainable fashion and in conformity with the laws. Besides shielding the company against legal risks and reputation damages, it may bring relevant economic benefits, improve operational efficiency, and strengthen the position in the market. Ultimately, investing in environmental compliance is investing in the future of the company, the environment, and the society as a whole.