The environment – does corporate Britain really care?

At the ET2002 environment tradeshow at the NEC in Birmingham Barbara Young, Chief Executive of the Environment Agency; Jonathon Porrit, Chair of the UK Sustainable Development Commission and Programme Director of Forum for the Future; Environment Minister Michael Meacher; Policy Director of the Soil Association, Lord Peter Melchett; and Janet Asherson, Head of Environment at the CBI discussed whether British companies really care about the environment.

The consensus was that whilst the majority of companies do not care there are many that do, particularly amongst the most successful companies. “I’d really urge companies to see this as something that can benefit them,” she said. For example, only 13% of road haulage companies have taken government advice on improving environmental performance, but those that have have realised a substantial reduction in fuel use. However, only 80 of the top 350 FTSE companies produce full annual environmental reports, pointed out Baroness Young.

“Corporate Britain cares a great deal more than the Government understands,” said Jonathon Porrit. Many corporate leaders care, but are not prepared to stand up and be counted, he said. However, the smaller the company is, the less passion they have for the environment. SMEs don’t emote about the environment, but grudgingly acknowledge that they have to comply with governmental legislation, he said.

According to Janet Asherson of the CBI, environmental sustainability is a golden egg. “Corporate responsibility was invented by corporations,” she said. Those providing the solutions for environmental challenges are companies. However, there are those that are good, and those who can learn from the leaders.

Michael Meacher also purported to be optimistic about corporate attitudes. He pointed out that of the top 100 FTSE companies there is very detailed environmental reporting, and he added that there have been considerable improvements over the last decade. However, the problem is that although it has been easy to achieve change with the top companies, the mindchange has been slower elsewhere.

The fault, said Lord Melchett, lies with the attitude of the general public. “The public sets the terms of business, and determine whether companies can be profitable whilst polluting the environment.”

There has been one driver in particular that has forced a change over the last year. “Our experience is that the Climate Change Levy has brought the issue of energy efficiency onto the boardroom tables where they never were,” said Baroness Young. Regulation is good for changing business activities and puts everyone on a level playing field, she said, but she added that companies need to have a considerable amount of advance warning. Voluntary measures are less effective, producing very patchy compliance.

However, Asherson disagreed with the idea that taxation worked in changing activities.

Meacher agreed that the Climate Change Levy has been significant. Since privatisation of the energy industry and the introduction of the New Energy Trading Arrangement (NETA), energy prices have dropped considerably, resulting in energy costs becoming low on companies’ agendas. This meant that the Government had to do something to make energy efficiency more important, he said.

The issue of the financial importance of the environment was also raised by Baroness Young, who pointed out that under competition law fines can be over £1 million. “We’re lucky if we get a £20,000 fine [against a polluting company],” she said. However, the Environment Agency does not just want to punish companies that infringe environmental law. First of all, the Agency wants to work with companies to help them, and then come down on them hard if they do not co-operate, she said.

The fact that share prices are not affected by whether a company has a good environmental track record occurs because companies undervalue the savings that they achieve, says Porrit. For example, oil companies, BP and Shell, are not increasing their renewables portfolio in order to have a higher share price than Exxon now, but as option creation for the future.

However, environmental behaviour is being increasingly used as a proxy for assessing the standard of management. “Valuing management is an arcane art form,” said Porrit.

Finally, Michael Meacher spoke out about the need to get the US back into the Kyoto Protocol. “I think we have to use all our efforts to get America back on line,” he said. Claims from the US administration that the Kyoto Protocol would be a financial burden on the economy are unfounded, he said. It would cost 0.1 to 1% of GDP to comply, at a time when the US economy is forecast to grow 30%.

However, the major push against current US policy will come from companies, said Meacher. US companies want to be involved in the new markets for carbon credits and environmental technology. Porrit agreed, pointing out that the US is already spending more on environmental research than the whole of the UK and Japan together.