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May 2004 with the proposed draft regulations soon to be published.
There has been quite a strong legislative response from both the UK gov-
ernment and the EU on the issue of waste management due primarily to the tox-
icity and harmful nature of much of the waste. Radioactive materials and
flammable or harmful substances even have their own legislation managing
their use and disposal. For example, the Control of Asbestos at Work
Regulations 2002 (SI 2002 No. 2675) introduced a new duty on (a) employers
and (b) the owners or occupiers of non-domestic premises who have a duty to
maintain and repair those premises.
Enforcement actions seem to be slightly lacking in force, and finding those
who are responsible can prove difficult. This situation is set to worsen without
stronger sanctions. At the moment many hazardous waste treatment sites are
said to be failing to meet management and operational standards, as the
Environment Agency and the Health and Safety Executive noted that the
industry does not give ˜high enough priority to health and safety and environ-
mental considerations™ (ENDS Report, issue number 351, April 2004 quoting
Hazardous Waste Storage and Treatment Facilities 2002/3: Report on a Joint
Enforcement Programme).
There will be increased liability for control of chemicals due to the
European Commission concluding that reform of the chemical regulation legis-
lation was necessary as the number of chemical substances was reported as
100 106 in 1981. It is estimated that over 30 000 of these are currently marketed
in volumes starting at 1 tonne per year. Approximately 140 of these substances
have been identified as priority substances and are subject to comprehensive
risk assessment carried out by member state authorities under Regulation
(EC793/93). The EU White Paper intends to bring new and existing chemical
substances under a unified regime called REACH (Registration, Evaluation and
Authorisation of Chemicals). The new regulatory approach will not only
impact the chemicals industry, but also anyone who imports anything con-
sidered as chemicals (such as printer ink cartridges). In the coming 10 years
this is expected to cost the industry more than ‚¬3000 million.
The regulation replaces 40 legislative texts that now govern chemicals in
the EU and is a new regulation for 30 000 chemicals which will oblige produ-
cers to register all chemical substances produced or imported above a total
quantity of 1 metric ton per year. European Parliament President Josep Borrell
said that REACH was,
one of the most complex texts in the history of the EU, sets up an essential piece of legis-
lation to protect public health and the environment from the risks of chemical sub-
stances, without threatening European competitiveness. It offers EU citizens true
protection against the multitude of toxic substances in everyday life in Europe.

The government also see REACH as a vital element in the EU™s attempt to meet
the target set at the World Summit on Sustainable Development in
Johannesburg in September 2002:
To achieve by 2020 that chemicals are used and produced in ways that lead to the mini-
misation of significant adverse effects on human health and the environment, using
Chapter 19 “ Aspects of environmental risk 505



transparent science-based risk assessment procedures and science-based risk manage-
ment procedures, taking into account the precautionary approach. (See www.defra.
gov.uk/corporate/consult/reach/consultation.pdf “ UK Consultation Paper on the New
EU Chemicals Strategy “ REACH)



Risk management
An organisation should ensure that all waste generated in the course of its
activities is stored, handled and transported safely. All waste should be
securely stored to prevent leakage and pollution, and to ensure that it neither
causes litter nor is susceptible to fire or vandalism.
You should identify the types of waste you generate and the hazards asso-
ciated with each type and then the individual waste streams should be properly
labelled. When you transfer waste to a third party, you must provide the per-
son/organisation with a written description of the waste. Your organisation
should keep a copy of this written description, together with a written note
recording the transfer, for a period of two years after the transfer. Ensuring that
third party waste brokers also have the appropriate registrations with licensing
bodies is important, as it is now an offence in an increasing number of coun-
tries to arrange for disposal of waste with unlicensed third parties.
One example of a positive risk management programme is Philips forging
ahead with their eco-design programme. The Dutch electronics giant are
steadily increasing the number of their ˜green flagship™ products which are
designed to have significantly better environmental performance than their
predecessors or those of competitors. For example, the company plan to phase
out the use of the brominated flame retardant TBBA in printed wiring boards by
2006 and looks set to cut packaging by 10% over four years. Other examples of
their eco-design philosophy include the following:
Their flat-screen liquid crystal display televisions have an ˜active control™
feature, which detects how much light is in the room, and controls light out-
put accordingly. Some models have at least 40% lower energy consumption
per year than their major competitors;
By substituting plastic components with metal parts, one of their DVD play-
ers, for example, is ˜20% more recyclable™ than its closest commercial com-
petitor; and
The company has phased out its use of lead, mercury, hexavalent chromium,
cadmium and two classes of brominated flame retardants “ polybrominated
biphenyls (PBBs) and polybrominated diphenyl ethers (PBDEs), in line with
the requirements of the EU Directive on the restriction of hazardous sub-
stances in electronics.
Other examples of what can be achieved are that:
BT plc have managed to reduce their level of waste to landfill down by 10 201
tonnes while increasing the percentage of total waste which is recycled up to
26% (BT Social and Environmental Report 2004); and
Both Coca-Cola and PepsiCo have promised to work with competitors toward
setting beverage container recovery goals.
Part D “ Overview of the Environmental Aspects of Business Risk
506



Resource usage risk “ water use
Risks resulting from water resources and
contamination of water
Research and analysis into water use risk shows that:
Water use risk is 0.2% of market value of the top 500 EU and US companies;
and
This risk exposure has been reduced from 0.3% of market value by good risk
management techniques (the risk reduction/management factor).
At present, around 40% of the world™s population is experiencing regular short-
ages of drinking water. A recent study predicted that over the next quarter cen-
tury, two out of three people would be faced with regular depletion of drinking
water supplies. By 2025, about 60% of the world™s people will be living in
water stressed countries. Industrial development is one of the major factors
driving increasing water demand. While agricultural water use currently tops
the list, this will change as developing economies increasingly choose industry
over agriculture in pursuit of economic growth (˜No water, no business™,
WBCSD, 19 October 2006).
At the same time as restricted supply and increasing demands there will be
further demand pressure as global warming is expected to raise the global aver-
age temperature by 1.4“5.8 degrees by 2100, thus further increasing demand
upon a scarce resource.
The nature of changes now occurring simultaneously in the global environ-
ment, their magnitudes and rates are unprecedented in human history. The
Canadian Environment Minister David Anderson said that global warming
posed a greater long-term threat to humanity than terrorism because it
could force hundreds of millions from their homes and trigger an economic
catastrophe.
Natural disasters caused by extreme weather, including heatwaves and tor-
nadoes, claimed more victims in 2003 than the previous year and the trend is
set to continue. Disruptive environmental changes include surging urban popu-
lations, wild weather patterns, depleting fish stocks, diseases and water
scarcity. Environmental changes are also seen as a trigger for conflict
(˜Environment looms as major security threat™, World Environmental News, 1
March 2004).
The WBCSD report entitled Business in the World of Water
(www.wbcsd.org) highlights that water crisis can hit all businesses not just
those in the water supply business. Additional findings include:

Water issue and sourcing complexity will drive up business operating costs;
Businesses cannot survive in societies that thirst; and
Businesses can be part of the solution and depend on their ability to engage.

The graph below shows the environmental risk (net) from water usage by
sector.
Chapter 19 “ Aspects of environmental risk 507



Water Use
0.8%

0.7% MINING

OIL & GAS
0.6%
FOOD PRODUCERS &
Net (Residual) Risk




PROCESSORS
0.5%
STEEL & OTHER METALS
0.4%
ELECTRICITY
0.3% PHARMACEUTICALS &
BIOTECH
0.2% SECTORS

FTSE 350 AVERAGE
0.1%

0.0%
0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%
Gross (Inherent) Risk

The sector-ranking graph highlights some heavy water users.
The food producers and processors in this sector include drink makers;
Natural resource extraction industries can use large amounts of water in their
processes. Oil and gas and affiliated activities can use large amounts of water but
the risk is similar to the mining sector in that these activities often occur in water
stressed areas, or where extraction can adversely affect the local environment;
Mining operations can use vast amounts of water for cutting softer gravels away
from faces and in separation processes, the sector™s aggregated usage figures can
also mask hit usage in countries where water is a very limited commodity; and
The water sector has always been directly linked to the use of water as one of
its primary roles is to deal with others™ water emissions, much of which is pol-
luted. However, there are extensive fines from the Environment Agency
against water companies and they can often run into conflict of interest with
competing risks on each side. An example of this is ScottishPower who own
PacifiCorp in the US, where an Indian tribe are complaining that the com-
pany™s dams are destroying their sacred river and fish populations. They have
even taken their struggle to ScottishPower™s annual general meeting (AGM)
(The Guardian, ˜US tribes dance to shame ScottishPower™, 24 July 2004).

Case studies
Approximately 20% of the world™s population lack access to safe water and
about 50% lack access to adequate forms of sanitation. This causes severe stress
in societies with nearly a billion people in 50 countries experiencing severe
water shortages every day (in Preparations of Guidelines in the Water
Resources Sector, EU DG VIII, October 1997). The UK view is best represented
Part D “ Overview of the Environmental Aspects of Business Risk
508



by the Ministry of Defence, which believes water security will become the 21st
century™s major source of interstate conflict. This is as a result of 40% of the
world™s population living along shared water resources (Everybody Lives
Downstream, World Day for Water, UNEP, March 1999).
It is also estimated that there are 250 million cases of water-related disease
each year. This results in a preventable minimum death toll of 10 million
people per year. This is a risk issue which is going to increase in severity and is
not only relevant to the developing world. In fact, there are almost a million
cases of water-borne disease in the US each year. With growing populations
there will be increasing pressure on water availability and costs.
In the UK these issues translate into responsible use of a resource which is
in increasing demand. Even though the UK is blessed with large reserves of
fresh water, its location is often away from populations and there have been
incidents of shortages and contamination. The quality of groundwater and river
networks in the UK is being damaged by inappropriate use of resources, while
the price of water is increasing.

Risk management
Examples of positive risk management programmes and projects include the
following.
The Global Environmental Management Initiative™s Water Sustainability tool
includes five modules to help industry to achieve sustainable management of
water:
Module 1 explains how to analyse water use, impact and source
assessment;
Module 2 is about business risk assessment and ensures that water risks are
prioritised;
Module 3 addresses business opportunity assessment;
Module 4 is about strategic direction and goal setting to identify the busi-
ness case for action; and
Module 5 covers the strategy development and implementation. It helps
defining key organisational roles and water strategy and action plan
development.
The tool is available on the Global Environmental Management Initiative
(GEMI) water strategy website: http://www.gemi.org/water/
Folkestone and Dover Water are pre-empting their future levels of risk from
water use. Their risk management plan has highlighted the likely impact of
climate change and demand growth as putting heavy pressure on their sup-
ply network. Their response was the mandatory introduction of water meters
for 200 000 customers. This is the cheapest option and avoids the need for the
construction of a new reservoir;
Nestl©, the food and drink giant, emphasised the importance of eco-
efficiency and sustainability, particularly the responsible use of water. Nestl©
created the Sustainable Agricultural Initiative, which aims to combine the
influence of food producers to protect and improve the natural environment.
Chapter 19 “ Aspects of environmental risk 509



Between 1997 and 2001 Nestl© increased production by 32% at the same
time reducing water use in one South African plant by almost half; and
Ford™s largest plant in the US have a plan to collect and recycle all rainwater
on their premises, this includes making their entire vast car parking areas
pervious, thus allowing rainwater to penetrate into the ground and minimise
localised flooding.

Resource usage risk “ waste water pollution
Research and analysis into waste water generation risk indicates that:
Waste water generation risk is 0.2% of market value of the top 500 EU and US
companies; and
This risk exposure has been reduced from 0.4% of market value by good risk

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