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A feature of noise pollution is that it is not persistent in the same way as
other pollutants; this means that it is more difficult to enforce standards. There
is little defined legislation on noise pollution and it tends to be covered by avi-
ation and road traffic regulations.

Case studies
Companies need to show evidence that they have listened to the concerns of
the public and changed their actions accordingly. The adverse consequences of
a company failing to address these types of concerns could be that they receive
fines and may find it difficult to obtain planning permission in other areas.
This may directly affect their licence to operate and expand.
The severity of these types of pollution incidents has been underestimated
to date. For example, exposure to excessive noise can cause hearing problems,
stress and poor concentration, productivity losses in the workplace, communi-
cation difficulties, fatigue from lack of sleep and a loss of psychological well-
being. It can also cause accelerated heartbeat, high blood pressure and
gastro-intestinal problems.
These health aspects of peripheral pollution are explored in more depth in
Chapter 18, but as an example the Health and Safety Executive have carried out
an impact assessment study in connection with Directive 2003/10/EC which
aims at determining the benefits and costs involved for UK industry to comply
with the new requirements of the Directive. The study put the total quantifiable
health benefits to UK society over 10 years at between £265.1 million and
£582.3 million. With these sorts of financial benefits from reducing noise pol-
lution there will be an increased level of government movement to internalise
organisations™ external impacts.
There are legal controls which include notices, stop provisions, and prod-
uct and specification standards on products and machinery. Industrial noise is
not often regulated as a specific control; however, there are elements of indus-
trial activity that attract more attention than others. Examples include:
Aircraft and airport usage noise levels. Standards have been set under the
1944 Chicago Convention and the issue of noise levels on neighbouring com-
munities that live near airports have been one of the main drivers for quieter
aircraft. Levels have become so high in total at many airports that night
flights have been banned and human rights challenges have been instigated.
The noise levels of Concorde have been mentioned as one of the possible rea-
sons it was retired from service;
Eco-design can help reduce these risks “ a new example is the design of a
silent, environmentally friendly passenger aircraft which researchers from
Cambridge University and the Massachusetts Institute of Technology (MIT)
began working on three years ago. The overall shape incorporates the
wings and engines into the body of the plane with air intake for the engines
mounted above the aircraft in long ducts, muffled with acoustic liners to
reduce the noise. It also has the potential to be more fuel efficient
(Environmental News Service, 9 November 2006).
Part D “ Overview of the Environmental Aspects of Business Risk
484



The construction sector is particularly vulnerable to these types of risks as their
activities take place outside and quite often in public areas. Their operations
can cause noise, dust and traffic disturbances and attract a lot of attention as
they usually occur in already inhabited areas. The following are some examples:
Construction noise and restrictions often imposed by local government
stakeholders on the behalf of nearby communities, businesses and resi-
dents. These can include controls on hours of operation, types of plant and
times of use and the levels at which noise is permitted. There are case stud-
ies where work has begun too early on building sites and this has war-
ranted fines for breach of agreements;
Odour pollution: local residents in Bransholme, UK, have concerns over
Persimmons Housing Development and the additional strain this would
put on their sewage system. The residents said that their gardens were regu-
larly flooded with raw sewage and felt that the developers and Yorkshire
Water had ignored their concerns. Councillors were told that ˜in theory™ the
existing sewerage system could cope with new demands (The Hull Daily
Mail, 6 June 2003); and
Noise pollution: a building firm was fined £8000 for causing noise and nuis-
ance to residents on a new housing estate, after workers arrived too early to
avoid traffic problems. Redrow Homes (Midlands) Limited of Flintshire
admitted eight charges under the Control of Pollution (Amendment) Act 1989
and fined £1000 on each count (Birmingham Evening Mail, 3 March 2003).

Risk management
Examples of positive risk management programmes and projects include the
following:
Traffic calming by Wilson Bowden in Ravenstone, UK: David Wilson Homes
has provided £70 000 so that traffic calming can be introduced on roads in
the village (Leicester Mercury, 14 February 2002); and
Noise pollution: Redrow Homes (Midlands) Limited of Flintshire have taken
appropriate risk action to ensure there is no reoccurrence of the fines outlined
above. The company have now warned subcontractors they will lose their jobs
if there are any further early starts (Birmingham Evening Mail, 3 March 2003).

Resource usage risk “ materials
Risks resulting from resource usage
Research and analysis into resource usage risk shows that:
Raw material risk is 0.4% of market value of the top 500 EU and US com-
panies; and
This risk exposure has been reduced from 0.6% of market value by good risk
management techniques (the risk reduction/management factor).
This concerns the extent to which a company is attempting to reduce its con-
sumption of natural resources by replacing raw materials with either industrial
Chapter 19 “ Aspects of environmental risk 485



or consumer waste products (or recycled materials). The measurement is the
percentage of waste products used as raw materials. It refers to both post-con-
sumer recycled material and waste from industrial sources.
Raw material is defined to exclude fuel and water, which are measured
elsewhere.
Recycling is defined by SERM as ˜processed or unprocessed wastes from
sources external to the reporting organisation (tonnes or kilograms)™.
Excessive consumption by the world™s richest nations is making life even
more difficult for the world™s least fortunate. The US research group Redefining
Progress says that the wealthiest nations are depleting global resources at an
unprecedented rate (with the US leading the way) and are mortgaging the
future at the expense of today™s children, the poor and the long-term health of
the planet (www.ens-newswire.com/ens/mar2004/2004-03-30-10.asp).
Resource costs are increasing and will continue to do so “ there are rising
costs of fuel (oil has hit $40 a barrel and gas prices have doubled), water, waste
disposal (landfill costs have tripled in one year), and insurance premiums are
also on the rise in order to cover increased flood and ˜natural™ disaster
incidence. Environmental resource use has an impact on our economic stabil-
ity as interest rates are set to rise to counteract the inflationary pressures of
energy ˜supply™ problems. Surely more attention should be paid to ˜demand™
management. Most financial analysts did not predict these circumstances, or
the rapidly spiralling resource demand from China where car sales hit a 60%
increase over the previous year. This raises important questions as to how this
situation is to be made sustainable and what the impacts on companies are.

Raw Materials
1.4%

REAL ESTATE
1.2%
MINING
1.0%
AEROSPACE & DEFENCE
Net (Residual) Risk




CONSTRUCTION & BLDG
0.8%
MATERIALS
PHARMACEUTICALS &
0.6% BIOTECH
MEDIA & ENTERTAINMENT
0.4%
SECTORS
0.2% FTSE 350 AVERAGE


0.0%
0.0% 0.5% 1.0% 1.5% 2.0%
Gross (Inherent) Risk

The graph above shows the environmental risk (net) from material resource
usage by sector.
Part D “ Overview of the Environmental Aspects of Business Risk
486



Case studies
The metal processing and mining sectors are becoming more involved with
recycling and take-back programmes, but are not fully addressing the primary
industries™ reliance on taking the majority of their raw materials from the earth,
quite often in turbulent parts of the world.



Food sector
The food sector has had a large number of difficulties with its supply chain and
environmental health issues: BSE in cattle and humans; foot and mouth affect-
ing the UK pig herds; Salmonella; SARS and Asian flu in poultry; toxicity from
above safety limits of pesticides in fruit, vegetables and farmed fish; contamin-
ation of tuna and other fish with high levels of mercury and other heavy metals;
and general issues like the large-scale nitrate pollution of water, or the over-
application of antibiotics, which is reducing human resistance to infectious
diseases.
Arguably, these happened because of several key factors:

People: there were no individuals ultimately responsible (the government
blamed the farmers, the farmers blamed the government). This has
been partially addressed by the establishment of the Food Standards
Agency (FSA);
Policies: the only policy was a short-term economic one (encouraged by the
EU and state subsidies) to maximise output at the detriment of all other con-
siderations (society and customer feedback with the option of quality pro-
duce as well as a segment wanting low priced food “ this can be seen in the
growth of organic produce demand);
Processes: there are few brands in farming. The lack of brand building
processes means the farming sector is less concerned about an individual
organisation™s loss of reputation, thus risk management processes are also
less developed; and
Performance: overall performance has led to thousands of farmers going out
of business; incomes being slashed, diversifying of the remaining businesses
and farmers investing in creating stakeholder value by going to meet the cus-
tomers directly. There has also been a change of direction in governments
with the introduction of grant schemes to support farmers who wish to have
a lower impact on the environment.



Company specific case studies
Both Coca-Cola and PepsiCo have shown some leadership in material use by
having a 10% recycled content in plastic bottles and promising to work with
competitors toward setting beverage container recovery goals;
Chapter 19 “ Aspects of environmental risk 487



GUS plc: Argos sold snooker cues made from illegally logged Ramin timber (a
species listed under the Convention on International Trade in Endangered
Species). It was allegedly taken from dwindling Indonesian rainforests, even
though the Indonesian government banned all cutting and export in 2001.
Illegal logging destroys over 2 million hectares of Indonesian rainforest each
year and it is also linked to corruption and human rights abuses (Red Pepper
Report, September 2003 quoted in the Ethical Consumer Research
Supplement);
According to the spring 2001 edition of the Corporate Watch newsletter,
NatWest Bank and other banks were among the companies financing Boise
Cascade, the American forestry giant responsible for deforesting an area the
size of Luxemburg each year in regions such as the Amazon, South East Asia
and Canada (Ethical Consumer Research Supplement EC89 July/August 2004
referring to the Corporate Watch newsletter: 2 (1 April 2001)). Friends of the
Earth claim that NatWest had provided finance to APP (the Indonesian paper
company) which has been accused of clearing vast areas of Indonesian rain-
forest. The allegations were also made against: Barclays Bank plc (who had
helped to arrange loans of over US$500 million to APP companies); Scottish
Widows Investment Partnership (now part of Lloyds TSB); and Framlington
Investment Management (FOE UK: 26 June 2001); and
Brambles have lost a custody battle in the US after a wood recycling firm
caught hoarding 30 000 of the company™s pallets refused to give them back.
This verdict could add £6.8 million a year to Brambles™ costs. It has been
estimated that in 2002 there were 2.5 million missing pallets in their US busi-
ness, leading to an unexpected charge to interim profits of £11 million.


Risk management
Developing a vision of eco-efficiency in which wealth is doubled and resource use
is halved, resulting in a fourfold increase in ˜resource productivity™, is seen as one
of the keys to sustainability. This concept, called ˜Factor 4™, refers to a hypothet-
ical fourfold increase in ˜resource productivity™, brought about by simultaneously
doubling wealth and halving resource consumption. The concept was introduced
in 1998, in a book of the same name written by L. Hunter Lovins and Amory
Lovins of the Rocky Mountain Institute, and Ernst von Weizs¤cker, founder of the
Wuppertal Institute for Climate, Environment and Energy.
There seems to be a lack of focus upon resource efficiency along the lines
of Factor 4, despite plenty of examples of positive programmes and projects
being introduced. BASF have even launched their own product eco-efficiency
labelling scheme. As a supplier of 8000 products to other businesses this could
have a profound effect for environmental engagement between businesses.
Other examples include the following:
The American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ASHRAE) has published a report focusing on the design, con-
struction and operation of sustainable buildings;
Part D “ Overview of the Environmental Aspects of Business Risk
488



Green buildings can improve the bottom line, says a report in the Building
Design and Construction (BD+C) entitled Green Buildings and the Bottom Line.
This contains an examination of progress in the building of green homes in the
US. The details of the financial implications of sustainable building are covered
in this comprehensive report, which shows that the predictions of high costs of
sustainable design did not come true;
A number of studies have confirmed that the premium for sustainable
designs is actually quite low, and that this investment can be paid back in a
few years through lower energy costs and other savings. Another report indi-
cated that, in late 2003, the Massachusetts Technology Collaborative (Kats,
Gregory 2003) surveyed 33 LEED buildings across the US and the findings
showed an average premium of just 1.84% for a sustainability designed
building (GLOBE-Net, 17 December 2006);

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