Environmental risk and business operations go hand in hand. Failure to comply with environmental regulations can lead to costly penalties that hinder your organization’s operations and processes.
Making a forward-thinking decision doesn’t mean an educated guess or the ability to see the future—although it can feel that way when your business faces complicated challenges. When it comes to informed decisions about your business, having a well-planned strategy is key, and this is especially true in assessing and managing environmental risks.
Corporate Environmental Risk Management (CERM) combines legal and financial tools with engineering and scientific services to address environmental risk. Threat comprehension, data collection, and environmental insight are put into context with legal, regulatory, and financial factors to protect your enterprise and your assets.
Environmental hazards that may require risk-reduction strategies include substance discharge into a body of water, releasing fuel oil from a storage facility, or determining permit levels for waste discharge or transport. The Environmental Protection Agency (EPA) offers extensive guidance and resources relating to corporate environmental risk management and appropriate mitigation strategies.
Proper training and expertise are essential to dealing with factors that jeopardize your operations. CERM can help you solve the environmental challenges and/or risks that your organization faces.
Broad Types of Risks
Risk #1 – Asset Impairment
Failing to adhere to local and federal environmental regulations is costly and can subject your business to fines. Facilities are subject to adhere to EPA standards such as the Clean Water Act (CWA), the Clean Air Act (CAA), and the Resource Conservation and Recovery Act (RCRA), to name a few. The EPA assessed over $1.6 billion in penalties to organizations that failed to meet their requirements in FY 2021 – the highest amount in four years. While local regulations vary by state, they follow the same principle of fines when failing to comply.
Risk #2 –Operations Impairment
Another risk of failing to comply to regulations is losing the ability to operate. Permit requirements are technically challenging and highly detailed. Operating within the bounds of a permit is highly regulated, and gaps can occur if your staff is not adequately equipped to recognize and implement permit standards. If the issue compounds over time, it can become more challenging and costly to remedy, resulting in a business closure mandated by the local, state, or federal government.
Risk #3 –Prosecution
The EPA operates a criminal enforcement agency to hold violators accountable for the costs of remedying environmental damage. In 2021, two individuals violated the RCRA by illegally transporting and disposing of hazardous substances at several apartment complexes. The defendants were sentenced to serve time in prison along with two fines: one for violating the RCRA and a separate restitution fine for the cost of emergency personnel response and cleaning efforts of the contaminated sites.
A large part of CERM efforts is ensuring you and your business operations are on the right side of the law. Third-party firms like Cameron-Cole can provide a comprehensive understanding of permit and regulation requirements, and can guide you through the proper training and investigation of all aspects of your business.
The Origins of Environmental Risk
Here are common sources of violations that may put your organization’s operations at risk:
- Acquisition of new land from a different business
- Redevelopment of property for a change in land use
- Inappropriate use of a site due to past spills and leaks
- Violations of handling and storing hazardous materials and fuels
- Inadequate recordkeeping of permits and documentation
- Neighboring properties that potentially affect your project site
- Minor leaks and spills that have not been addressed over time
A diligent review of past practices and current conditions is necessary to eliminate potential risks. Inappropriate use of a site due to environmental risk factors is dangerously common and a thorough review is always critical to uncover the hidden aspects of a property.
Working with a third-party could also save your company from substantial, unnecessary remediation. Consider this recent site assessment on an 8-acre site. When it was discovered that a coal gasification plant had previously occupied a portion of the property, experts investigated any potential impacts or health risks and determined no remedial action was necessary. This assessment saved the client $20 million in potential soil removal and disposal costs.
Environmental threats are difficult to detect without a trained eye. To ensure the smooth and continuous operation of your business, comprehensive investigation of your project site and procedures is a necessary strategy to avoid costly, time-intensive risks. CERM combines specialized experts with extensive knowledge regarding environmental policy to keep your projects on track.
Operational success is critical to your success. Our Corporate Environmental Risk Management team can assess and interpret the environmental risks involved in your business or property. To begin organizing your risk management procedures, contact us.