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SYDNEY, Australia -- Companies that want to prosper must succeed in an area that has proven difficult for them: controlling environmental liabilities, an environmentalist says.
The corporate sector needs to see environmental liabilities as opportunities to make money and win public favor at the same time, said Ian Kiernan, executive chairman of Sydney-based Clean Up Australia, an organization dedicated to improving the environment.
Mr. Kiernan launched a clean-up program in 1989 for Sydney because he was "horrified" at pollution on Sydney's beaches and in the water. When the operation became an annual event in Australia, he spearheaded Clean Up the World in 1993. The last world clean-up day had 40 million volunteers, he said.
Mr. Kiernan told the 21st national conference of the Assn. of Risk & Insurance Managers of Australasia, held last month in Sydney, Australia, that "sensible, practical environmentalism will affect the balance sheet." Risk managers must make the environment their No. 1 issue, because "without it, no other issues are relevant," he said.
Mr. Kiernan said examples of "sound environmentalism" in the corporate sector include Sydney's parks and gardens, which are involved in a $7 million Australian ($4.6 million) project to use runoff water and treated effluent to water the gardens.
The Homebush Bay site for the main stadium and facilities for the 2000 Olympic Games is another example, he said. "Homebush Bay has the largest collection of dioxins in the world," he said. "We're now cleaning the site. As industrial land it was an unknown liability, but using technology available now, we can increase its value as real estate" after the Games.
Australian businessman Dick Pratt, owner of Pratt Industries Ltd., a Melbourne, Australia-based paper and plastics producer, is another example. Mr. Pratt is buying waste paper for $15 a ton and converting it to a product with recycled content that was sold for $1,500 a ton, Mr. Kiernan said. Mr. Pratt is now investing $20 million Australian ($13.2 million) in a project to recycle plastics.
"Being green isn't easy, but it's not hard, either," he said.
Stephen Wilder, president of the New York-based Risk & Insurance Management Society Inc. and vp-risk management for The Walt Disney Corp. in Burbank, Calif., said corporations are becoming more environmentally sound.
"Industry thinking is changing; we are seeing waste as a business opportunity," he told the conference.
"For a company to be world-class, it must have environmental strategies at its core," said Mr. Wilder.
He warned that corporations that fail to implement "environmentality" will not survive. "No one wants to harm the environment; and they don't want bad public relations."
Paul Gilding, former executive director of Greenpeace International, now managing director of Sydney-based Ecos Corp. Pty. Ltd., an environmental consulting firm, said corporations are more likely to improve their environmental performance for profit, not social responsibility.
Ros Kelly, a former Federal Environment Minister and now Sydney-based group executive, Asia and Australia, for the global environmental consultant Dames & Moore, told the conference that Australian companies are good at managing market, financial, technical and sovereign risks but "consistently fall down with environmental and social issues."
The "green movement is well-organized globally, and companies that think they can ignore it will not be successful," she said.
Risk managers must understand people's perceptions, because they often are unrelated to the actual damage but can be damaging to a company, Ms. Kelly said.
Public anger has to be taken into account along with the magnitude and probability of specific risks, she said.
Farmers, for example, do more environmental damage than the mining industry, but are perceived as being "more natural than industry," she said.
She told risk managers to "talk and listen. How many of you try to put yourselves in the public's position?"
Good environmental management is "simple lessons you learned in childhood," Ms. Kelly added.
"Tell the truth, ask first before you do it, clean up your own mess, share with the community, and say you're sorry."