Once again, the Atlantic hurricane season has made many think of weather risk. New Orleans once more became a ghost town as residents were evacuated in anticipation of Hurricane Gustav, while Hurricane Ike roared into Cuba just days later pounding the country with its 105 mile per hour winds.
The intense weather conditions have once more raised the issue of climate change; a report issued by the National Oceanic and Atmospheric Association claims that the severe weather will continue and is a direct result of climate change.
Scientists are now in agreement that climate change is happening, and the onus is shifting firmly towards the private sector to pay for any environmental damage they cause. Organisations across the globe are being asked to implement carbon emission-reducing strategies.
By the end of this year, the UK Government plans to introduce the Environmental Liability Directive, which aims to prevent and remedy environmental damage. The directive reinforces the polluter pays principle—ie making operators financially liable for threats of or actual damage.
Environmental liability expert at the Economist Intelligence Unit (EIU) Rob Mitchell notes that there is also a wave of "strengthening" legislation on this matter coming through in Europe, which is causing many companies to become fearful of the impact of non-compliance.
He explains: "This is leading to greater board-level discussion of environmental risks, although our research suggests that, unlike many other aspects of risk management, environmental risks tend to be managed in an ad hoc fashion rather than in a systematic way."
Gareth Lofthouse, director of industry and management research at EIU, says that research conducted by EIU has found that organisations are worried about the cost implications of increasing environmental liability and are feeling the pressure of scrutiny on their environmental practices.
"As a result … it will be less attractive to find a way around the regulation," says Lofthouse. "They're more likely to try and fight and lobby for what is called 'smart regulation', which will enable them to remain competitive."
Environmental lawyer Paul Watchman says that information and communications technology (ICT) manufacturers will be among those who find this particularly tough. He notes that under the Waste Electrical and Electronic Equipment Directive, which came into force in January 2007, importers and manufacturers of new electrical goods have to take responsibility for the disposal of these products.
This legislation decrees that manufacturers and importers must collect equipment that is set to be discarded or is no longer operable and dispose of it at an approved landfill site.
Watchman says: "I think they've got a challenge. It is a big area for firms such as HP or Dell and other big computer companies. Landfill taxes and charges are increasing all the time." However, Watchman suggests that the solution to this problem is feeding the challenges back into the design of the product.
While computer giants such as Dell may be able to cope with such costs, Watchman claims that smaller firms may drown. Furthermore, schemes such as the polluter pays principle may be financial untenable. While large, high-profile polluters may be able to afford to engage in such schemes, medium-sized enterprises could find costs financially unworkable. Watchman advises that those companies need to take care they do not breach environmental law and end up with a back-breaking bill.
