PRINCIPLE EIGHT

Businesses should undertake initiatives to promote greater environmental responsibility.

The Background to Principle 8

The Rio Earth Summit in 1992 acted as a 'wake-up call' for many parts of society,
not least of which the business sector. For the first time a comprehensive group of stakeholders gathered together to discuss the issues raised by the patterns of industrialisation, population growth and social inequality around the world. The conference highlighted the true fragility of the planet and in particular it drew attention to three concerns:

the damage occurring to many natural ecosystems,
the threatened capacity of the planet to support life in the future, and
our ability to sustain long term economic and social development.

The message to companies was spelt out in Chapter 30 of Agenda 21, in which the role of business and industry in the sustainable development agenda is discussed. And an outline of what environmental responsibility means for business is presented -

"[the] responsible and ethical management of products and processes from the point of view of health, safety and environmental aspects. Towards this end, business and
industry should increase self-regulation, guided by appropriate codes, charters and initiatives integrated into all elements of business planning and decision-making, and fostering openness and dialogue with employees and the public." (30.26)

"In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation."

In the ten years since "Rio", the imperative for business to conduct its activities in an environmentally responsible manner has not lessened. On the contrary, as recent analyses of the "state of the planet" indicate, despite progress in some areas
(e.g. ozone-depletion, air-pollution in many developed regions, or advances towards reducing greenhouse gases under the Kyoto Protocol) the overall trends are negative and much work still remains to be done. Scientists and experts are reporting disturbing global trends concerning not only vital aspects of our life support system, but also the foundation of our social development system.

Given the increasingly central role of the private sector in global governance issues, the public is demanding that business manage its operations in a manner that not only enhances economic prosperity and promotes social justice, but also ensures environmental protection in the regions and countries where it is based. Through Principle 8, the Global Compact provides a framework for business to take forward some of the key challenges made 10 years ago.

Towards Environmentally Responsible Business Practice

Business gains its legitimacy through meeting the needs of society, and increasingly society is expressing a clear need for more environmentally sustainable practices. One way for business to demonstrate its commitment to greater environmental responsibility is by changing its modus operandi from the so-called "traditional methods" to more responsible approaches to addressing environmental issues -

inefficient resource use		resource productivity
end-of-pipe technology		cleaner production
public relations		corporate governance
reactive		proactive
management systems		life-cycles, business design
one way, passive communication		multi-stakeholder, active dialogue

Such a change in business strategy brings with it a number of benefits. UNEP-DTIE has pinpointed the following reasons why a company should think about improving its environmental performance -

Application of cleaner production and eco-efficiency leads to improved resource productivity
New economic instruments (taxes, charges, trade permits) are rewarding clean companies
Environmental regulations are becoming tougher
Insurance companies prefer to cover a cleaner, lower risk company
Banks are more willing to lend to a company whose operations will not burden the bank with environmental lawsuits or large clean-up bills
Environmental stewardship has a positive effect on a company's image
Employees tend to prefer to work for an environmentally responsible company (such a company also often has good worker health and safety records)
Environmental pollution threatens human health
Customers are demanding cleaner products

However, once a company has decided to adopt a more environmentally responsible corporate policy, what initiatives does it need to undertake? 7 key elements that contribute to environmental responsibility are shown below -

apply a precautionary approach,
adopt the same operating standards regardless of location,
ensure supply-chain management,
facilitate technology transfer,
contribute to environmental awareness in company locations,
communicate with the local community, and
share benefits equitably.

And in order to turn these concepts into concrete, environmentally responsible actions, a company can choose to

implement the International Declaration on Cleaner Production [see below],
work with suppliers to improve environmental performance (supply chain management),
re-define company strategies and policies to include the 'triple bottom line' of sustainable development - economic prosperity, environmental quality and social equity,
set quantifiable objectives and targets,
develop sustainability indicators (economic, environmental, social),
measure, track, and report progress in incorporating sustainability principles into business practices, including reporting against global operating standard,
adopt voluntary charters, codes of conduct, codes of practice in global and sectoral initiatives, and
ensure transparency and unbiased communication with stakeholders.