U.K. RISK MANAGERS TAKE POLLUTION PREVENTION MEASURES

British companies are beefing up their environmental risk management procedures, risk managers agree.

"There has been a vast improvement in environmental risk management over the last five years," said Graeme Lee, chairman of the Assn. of Risk & Insurance Managers' environmental task group.

The main driving forces for greater environmental responsibility have been social and economic pressures, followed by new pollution legislation in the United Kingdom, said Mr. Lee, who is director of risk management for London-based Waste Management International P.L.C.

"No large companies would wish, in this day and age, to have their name associated with sloppy environmental practices," he said.

And while public image has been a driving force behind many of the environmental risk management practices adopted, "a lot of companies have surprised themselves with the economic benefits" to be obtained, Mr. Lee added. Those benefits could include saving on energy costs, for example.

British companies, particularly large multinational companies, are taking environmental issues much more seriously, agreed Jenny Barker, policy adviser on the environment and health and safety for the Confederation of British Industry in London, a trade group that represents British industry.

This has been largely driven by public pressure, she said.

"There is increasing public and corporate awareness of the environment. For a company to survive and succeed, it needs to have good relations with its customers and community. The environment has become a bottom-line issue for many companies. They have to be perceived to be doing a good job environmentally," Ms. Barker observed.

During the past decade, about 80% of the country's 100 largest companies have introduced publicly available environmental reports, she said. This move has been encouraged by the government, though no legislation mandates companies to provide such environmental disclosure, Ms. Barker pointed out.

One major British company keenly aware of its environmental responsibilities is British Telecommunications P.L.C.

The London-based international telecommunications company is fully aware of the beneficial publicity associated with good environmental practices.

And "there is a fine difference between public relations and business. We're defending our position in a heavily competitive industry, and good PR is good for business," said Kevin Currie, BT's environment manager.

BT, which publishes an annual environmental report, participates in several environmental organizations, such as Forum for the Future, Greenpeace and Friends of the Earth.

It is very important for companies to avoid a "them and us" situation with environmental pressure groups, as several companies already have found out to their cost, said Mr. Currie.

"The tide is turning; green issues are very important. Companies are aware that a lot of business depends on their image," he noted.

Environmentally friendly policies also can offer companies cost savings, he noted, pointing out that BT's decision to remove chlorofluorocarbons from its telephone exchanges because of concerns over CFCs' effect on the atmosphere "saved our energy bills as well as being good for the environment."

Mr. Currie pointed out that U.K. environmental legislation also has influenced corporate behavior.

BT, he said, "spends time looking at legislation coming up and tries to get ahead of it."

The group also works closely with the Environment Agency, the U.K. government's principal environmental enforcement agency.

"There is no doubt about it: The Environment Agency is working well with industry. We are happy with our relationship with them," said Mr. Currie.

Environmental legislation and enforcement is putting more pressure on companies, said Peter Kerridge, a member of AIRMIC's environmental task force.

Mr. Kerridge, a risk manager of a chemical company he did not want named in this story, is visited regularly by the Environment Agency because of the company's business.

Regulation and enforcement is "getting more complex and becoming more rigorous," he said.

"Regulations are changing company practice," observed Mr. Kerridge, noting that it often makes a risk manager's jobs easier because new legislation "helped persuade management to fund changes, and the fear of prosecution of directors has a sobering effect."

Evidence of corporate awareness of environmental issues can be found in the huge acceptance of a recently introduced international environmental management standard. Since the British Standards Institution adopted ISO 14001 on environmental management systems in 1996, more than 500 companies in the United Kingdom have been accredited, according to the Confederation of British Industry.

And many of those accredited companies also are encouraging their suppliers to adopt similar environmental management systems.

The standard is designed to help companies evaluate and control their impact on the environment as cost effectively as possible, according to the British Standards Institution. It requires companies to set up an environmental policy; introduce planning with targets for environmental improvement; establish implementation and operation procedures; employ checking and corrective action, including regular environmental audits; and undertake management reviews of the system.

One company that already has adopted ISO 14001 is Warwick-based car manufacturer Rover Group Ltd. The company also is encouraging its suppliers to adopt it.

"We have run ISO 14001 workshops for our key suppliers and have been undertaking regular reviews of our suppliers to see how they are implementing the standard," said Roger Twiney, director of environmental programs for the Rover group.

Mr. Twiney, who noted that several other auto manufacturers also are encouraging suppliers to adopt the system, said adoption of the environmental standard has "been good for the company in terms of risk reduction and cost benefit."