Travails of the unexpected: Managing your environmental risk

With the economy recovering, partnering with a trusted law firm can help companies prepare for growth by mitigating the environmental risk throughout the business lifecycle. According to solicitors Matthew Brandis and Diane Yarrow, it's all about 'avoiding the travails of the unexpected'.

The business landscape has changed irretrievably. The combination of changes to legislation and the Government’s attempts to alleviate the environmental impact of businesses has led to a wholesale shift in attitudes, approaches and expectations. Businesses are being encouraged to reduce, re-use and recycle where possible, even if they are not necessarily the subject of direct regulation. Some businesses and sectors find themselves more heavily regulated and targeted than ever before with regards to emissions, packaging, energy consumption and methods of disposal.

This changing landscape has affected the consideration businesses must have for environmental law – and it is changing their relationship with the legal profession accordingly.

Over the past few years, consumers have become more aware of the environmental impact that a business can have and many businesses have chosen to respond to this by putting environmental policies in place. In addition, many organisations have become aware that showing how they’re reducing their carbon footprint demonstrates to customers that they’re taking it seriously and can assist in building customer trust and respect.

Modern thinking

Oscar Wilde once claimed that ‘to expect the unexpected shows a thoroughly modern intellect’. Well, as UK businesses prepare for growth and the green shoots of recovery begin to take hold, it’s perhaps now time for some modern thinking.

Poor legal protection can be costly to business continuity, productivity and, ultimately, profitability. Yet despite this, many companies remain inadequately protected against some of the most common challenges. Insufficient attention to key aspects such as shareholder arrangements, standard terms and conditions and environmental obligations can have sudden and sometimes irrecoverable repercussions for any business. Moreover, the continued reliance on outdated processes, policies and documentation will almost certainly leave companies vulnerable to risks that could damage competitiveness and hinder growth.

However, with a little forethought, and the ongoing support of a trusted legal partner, companies can do much to safeguard themselves against the unwelcome or the apparently unexpected. By understanding their organisation’s legal and environmental requirements and regularly reviewing their existing operations, businesses can develop a robust yet flexible framework to minimise risk, improve resilience and optimise opportunities. Companies that routinely assess the challenges they face and proactively identify the challenges they may encounter will ultimately be well placed to grow through the recovery and well beyond it.

Senior executives: are your operations fit for purpose? Are your processes, policies and documentation aligned with the strategic challenges of your current business environment? Or could outdated paperwork and practices leave you exposed to unnecessary risk tomorrow? The marketplace is dynamic – but are you prepared for it?

Partner up

The most proactive practices are developing relationship models whereby legal services move away from the reactive bespoke approach, to one based on a trusted partnership. The relationship model is built around understanding and anticipating clients’ needs and matching them with appropriate services, which have been developed at competitive prices – right across the business lifecycle.

The partnership approach is ideally suited to the dynamic modern business environment. If a business is able to manage environmental risk proactively, then this is likely to be far more effective and much more cost-efficient; time spent on legal planning earlier in the cycle can prevent more damaging problems occurring at a later stage. Equally, an ongoing relationship with a trusted legal partner can help businesses respond to changing circumstances in a timely fashion as they move along the maturity curve.

So where are the potential environmental risks? In reality, these depend on the industry within which your business operates, whatever the industry; this will include both internal and external risks.

Firstly, the internal risks – the risks associated with the things that you can control. How sustainable is your business? An industrial company, for example, needs to consider the pollution, noise and smells that its business might omit and therefore impact on the environment. An office might wish to consider its user of paper, toner and energy to prevent unnecessary waste. One solution might be to consider going paperless to demonstrate ‘zero-waste’ values.

Then consider the external risks – those associated with the natural environment in which your business operates. The recent floods are a prime example of a risk that just cannot be predicted. However, businesses can be prepared for such an eventuality. Consider what the impact might be if the road on which your business is based were closed. How would it impact your business productivity? What would happen if your employees could not get into the office – do you have flexible working policies in place for this kind of occurrence? Having policies in place in case of such an event can alleviate the impact it can have on your business.

Be prepared

As companies grow and mature, the nature of your business challenges will inevitably change – and the need to review where you are in your business lifecycle continues. You may need to review and adapt your legal arrangements depending on what changes have taken place.

Of course there are certain legal measures in place that must be adhered to, to ensure you’re reducing environmental impact. For example, if you’re a business that buys electrical goods then there are requirements to ensure old appliances are disposed of correctly. But there is also the growing sense of corporate environmental responsibility and the need to be seen to be addressing these issues. How important this is may depend on the values of your business and where you are in your lifecycle. It is not always a business’ priority but it is an important one in terms of managing reputation, which can ultimately drive profitability.

In a modern, post-recession business, proactivity is critical. The most effective companies will be those that are aware of the challenges their industry and position within the business lifecycle may present and ensure they are well-placed to protect themselves against the dynamics of a changing marketplace. To succeed, businesses should develop a continual, long-term relationship with a strong legal partner. A trusted law firm can help prepare organisations for the common environmental challenges of modern business, as well as providing guidance and protection against the unexpected.

The best partnerships will begin with a comprehensive review of companies’ existing and potential risks – a legal ‘health check’ – and an assessment of whether current operations are both fit for purpose and future proof. Highlighting the risks allows those to be prioritised so that you can then look at if, and how, these can be alleviated. This is an important first step. Furthermore, the development of a sustainable and proactive partnership can help businesses ensure their operational infrastructure is appropriate, robust and current.

With the economy recovering, the need for that health check is more immediate. It is time for UK businesses to build on Oscar Wilde’s advice – and not only ‘expect’ the unexpected, but ‘prepare’ for it too. There are many common challenges along the business lifecycle, but through preparation and partnership, companies really can avoid the travails of the unexpected.

Matthew Brandis is a partner in the Litigation and Dispute Resolution Practice and Diane Yarrow is a partner in Corporate and Commercial at B P Collins LLP Solicitors.

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