Member Article

Don’t Fear The Regulator

Environmental regulations are the bane of business. Or so the mainstream media, business lobbyists and certain politicians would have us believe. But that belief is based on two assumptions: first that improving environmental performance has a net negative cost, and second that regulation is always a burden, never an opportunity. I’d like to challenge both those assumptions.

But first let’s remember why we have such rules. Governments introduce legislation with the intention of making society a better place. They might get it wrong, sometimes badly, but the motivation is almost always in the right place. Over the last 60 years or so, environmental legislation has made pea-soupers a thing of the past, allowed fish back into our great industrial rivers including the Tyne, Wear and Tees, and has made a family trip to the beach a lot less hazardous than it once was. Not a bad record when you think about it.

To look at the impact on business, let’s take the CRC Energy Efficiency Scheme as an example. It is a truly dreadful piece of legislation – it is badly focussed, ill thought through and far too complex. But what it does do is give a large number of organisations such as public sector bodies and large service sector business a good reason to address their carbon footprint. This in turn produces a number of business opportunities for those with an entrepreneurial bent to help those companies along their way.

Take Protirus for example – a dynamic small software development company based in Newcastle. They have developed an answer to one perennial problem in these organisations – software which switches off users’ PCs overnight without losing any data and which integrates seamlessly with one of the major network management systems. Another good local example is Ecusol of Gosforth who import and install hyper-efficient LED lighting which can save their clients 76% of their lighting bill. The company also helps the client to negotiate the various grants and schemes to help spread the capital cost of upgrading.

But what of the regulated organisations themselves – going back to the first assumption, surely going green costs a bomb? Well, yes, if you take a reactive approach to regulation then you will spend a huge amount of money trying to keep your bosses out of hot water each time the bar raises. But proactive companies find something completely different. Marks & Spencer ploughed £200million into their flagship Plan A sustainability programme, without expecting a return – their motive was to protect the company’s position as the trusted brand on the high street. In practice, Plan A has made a tidy return on M&S’s investment, protects the brand and reduces the risk of the impact of future legislation.

Interestingly, some businesses have made a virtue out of supporting environmental legislation. Apple and Nike quit the US Chamber of Commerce over the latter’s stance on President Obama’s carbon legislation. British Airways led a consortium lobbying for the inclusion of airlines in the EU Emissions Trading Scheme. They support tighter environmental legislation as a point of principle and way of ensuring less enlightened businesses don’t benefit from dodging responsibility.

So next time you hear about some new environmental legislation, instead of reaching for the big book of hackneyed business responses, have a think about how you could turn it to your advantage.

This was posted in Bdaily's Members' News section by Gareth Kane .