PESTEL (VI) : Environmental Protection

Impact of business activity on the physical environment is a major concern.

Companies are under pressure to incorporate measures to protect environment into their plans.

This present both challenge and opportunity, since some measures will impose costs, but others will allow significant savings.

There is also a new range of markets for goods and services designed to protect or have minimum impact on environment.

Possible issues to consider are:
1. Consumer demand for products that appear to be environmentally friendly.
2. Demand for less pollution from industry
3. Greater regulation by government and EU
4. Demand that businesses be charged with external cost of their activities.
5. Scarcity of non-renewable resources
6. Opportunity to develop products and technologies that are environmentally friendly.
7. Taxes (landfill tax)


Ways in which business and environmental benefits can be achieved:
1. Integrating the environment into capital expenditure decisions.

2. Understanding and managing environmental costs.

3. Introducing waste minimisation schemes

4. Understanding and managing life cycle costs. For many products, the greatest environmental impact occurs upstream ( mining raw materials) or downstream ( energy to operate equipment). Organisations therefore need to identify, control and make provision for environmental life cycle costs and work with suppliers and customers to identify environmental cost reduction opportunities.

5. Measuring environmental performance, both for statutory disclosure reasons and due to demands form customers.

6. Involving management accountant in a strategic approach to environment-related management accounting and performance evaluation.


Sustainability
It means that resources consumed are replaced in some ways (example tree)
Some resources are inherently non-renewable. (example oil)

Sustainability now embraces not only environmental and economic questions, but also social and ethical dimensions.

Business people must increasingly recognise that the challenge now is to help deliver simultaneously:
1. Economic prosperity
2. Environmental quality
3. Social equity.


(source: BPP Learning Media)



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