BM2017

POLICY DEVELOPMENT

Environmental Policy
The environmental policy is more than a written statement of intent that sets out the organization’s
position on the environment. It has three (3) key functions that affect the environmental management
system (EMS) at a fundamental level (Sheldon & Yoxon, 2006):
• It identifies the main issues for the business;
• Establish the courses of action needed to manage environmental issues; and
• Details efforts to monitor and improve an organization’s environmental position.
To establish and manage an effective EMS, the environmental policy of a firm must reflect the realities of
the wider environment in which it operates. A business planning tool called PESTEL analysis (a framework
used to identify the external forces that may affect an organization positively and negatively) can help
provide this overview. PESTEL analysis is composed of the following factors (Bamford et al., 2018):
1. Political. This includes factors that determine the impact of government and government policy
on a particular organization or a specific industry. EMS must devise ways to track political changes
considering trade, fiscal, and taxation policies, among others.
EXAMPLE: McDonald's may capitalize on the opportunity for increased international trade
agreements because it enables easier business expansion to foreign countries. The company also
needs to consider public health policies and evolving sustainability concerns as an opportunity to
innovate its products or as a threat if the company fails to innovate.

2. Economic. This includes factors that determine the impact of the economy and its performance
on an organization and its profitability. These include interest rates, employment or
unemployment rates, raw material costs, and foreign exchange rates, among others.
EXAMPLE: McDonald's may capitalize on the opportunity for slow but stable growth of developed
countries and rapid growth of developing countries.

3. Social. This includes factors that determine the impact of the social environment and emerging
trends on the business profitability of an organization. EMS must consider stakeholder pressures
(such as cultural trends, attitude changes, and changes in lifestyles, among others), and
companies must find ways on how to deal with them.
EXAMPLE: McDonald's may capitalize on the opportunity for rising disposable incomes and busy
lifestyles in urban communities since it will increase the company’s sales growth. On the other
hand, McDonald's needs to consider increasing cultural diversity and healthy lifestyle trends as
both an opportunity and a threat. The company must also reflect on emerging consumers’
concerns for environmental protection when creating products and/or making process
improvements.

4. Technological. This includes factors that determine the impact of technological innovation and
development on a particular market or industry. These include changes in digital or mobile
technology, research and development (R&D), and automation. Moreover, these also include
technological influence on methods of distribution, manufacturing, and logistics. EMS must
identify how technological advancements may add or lessen the environmental impacts of firms.
EXAMPLE: McDonald's may capitalize on the opportunity for increasing business automation and
increasing customer preferences on ordering food using their mobile devices. The company must
also consider how environmental impacts can be minimized or eliminated using modern

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technologies. For instance, McDonald's may switch to machines/delivery vehicles with lower
carbon emissions.

5. Environmental. This includes factors that determine the influence of the surrounding
environment and the impact of ecological aspects on a market or industry. Firms must understand
its environmental aspects and impacts and establish programs relating to climate, recycling
procedures, carbon footprint, waste disposal, and sustainability.
EXAMPLE: McDonald's may capitalize on the opportunity for increasing emphasis on sustainable
business strategies while considering the threat of changes in climate conditions in some regions
where its business operates.

6. Legal. This includes factors that determine the importance of understanding legal laws and
procedures in a given territory where a business operates. These include employment legislation,
consumer law, health and safety, and international trade regulation and restrictions.
EXAMPLE: McDonald's needs to review the threat of increasing health regulations in workplaces
and schools and rising legal minimum wages imposed by some countries. The company must also
review the varying environmental legislations of countries where its business operates.

Designing an Effective Policy (Sheldon & Yoxon, 2006)

It is important to design a flexible, proactive, and clear environmental policy as part of the wider EMS
development strategy. The policy must mirror organizational realities and anticipate future environmental
situations. The following are the foundations in creating an effective EMS policy:
• The environmental policy must be business-focused within the scope of the organization’s EMS;
• Present a good understanding of EMS;
• Reflect the current environmental situation, often called the baseline or initial environmental
review;
• Provide a thorough understanding and knowledge of the organization’s environmental aspects
and impacts; and
• Show an understanding of legal and other requirements pertinent to the organization.
The following are the five (5) key areas that companies must address when designing an environmental
policy:
1. Attitude. To establish an effective policy, all members of an organization must possess a positive
environmental outlook. Commitment and responsibility are the glue that holds the policy
together. Firms need to involve relevant staff in drafting the policy (from line managers to rank
and file employees) and ensure that they understand why the policy is being crafted and its
implications for the business. The final version of the policy must be approved by senior
management to ensure that it satisfies the standard requirements of a firm.
2. Accuracy. The environmental policy must set out goals in an open, accurate, and realistic way.
The recipients of the policy (whether customers, contractors, suppliers, or staff) must be
convinced that what has been set out is realistic for the business and them.
3. Adequately resourced. Resources will be required to move the policy from paper intent to active
performance and amplify the efforts of those involved in implementing the EMS. Resources will
include both staff time and money. The mix and allocation will depend on identified business
priorities.
4. Awareness. The environmental policy must be properly communicated and cascaded to all
members of an organization. Effective communication, both within the business and outside the
business, is essential. The actions of staff to bring the policy to life will bring credibility and credit

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to an organization. Staff will need help and guidance to integrate the policy with their workplace
activities. Anyone working for or on behalf of an organization will need to know what is now
expected from them. On a wider front, other stakeholders such as the community (from the local
to the national or perhaps international) will need to know about the new environmental position
of a firm.
5. Action. Environmental management is a journey and not a destination; the policy should reflect
this by indicating how an organization will monitor progress, audit the EMS, and act proactively.
The policy should include a set of specific statements for an organization. The following are the
components in drafting an effective environmental policy:
• Overview. A summary of what an organization does in terms of its activities, products, and
services.
• Statement of intent. This outlines the role of a business and how it proposes to maximize the
opportunities presented by managing environmental aspects of its activities.
EXAMPLE: “The Organization Ltd. is committed to design, develop, produce, and deliver quality
goods and services. We recognize that day-to-day operations impact the environment in ways
that are both positive and negative. We wish to minimize the potentially harmful effects of such
actions wherever and whenever this is practicable and work to secure measurable business
benefits from our EMS.”
• Statements on specific issues. These include declarations that address particular circumstances
relating to stakeholder problems, legal subjects, and environmental concerns of a business.
• External parties. These are customers, suppliers, vendors, contractors, and other outside
stakeholders of an organization. Aside from internal stakeholders, EMS policy must be
communicated with external parties as well.
• Continual improvement. This involves management commitment to implement, review, and
update the EMS to achieve improvements in overall environmental performance. The
environmental policy should commit an organization to these activities.
The final balance of the policy will depend on those environmental issues identified as priorities for the
business. Exhibit 1 shows an example of an environmental policy.
ABC Corporation is committed to reducing its impact on the environment. We take our responsibilities
seriously and pursue a policy of environmental best practice with clear policy aims and objectives.
Policy Aims:
• To include environmental considerations in daily and project activities.
• To conduct an ongoing company resource flow analysis and ecological footprint.
• To implement an environmentally responsible purchasing policy.
• To reduce, recycle, and reuse waste on the company premises.
• To maximize energy efficiency and reduce greenhouse gas emissions.
• To minimize and control the use of water on the premises.
Objectives:
Energy
ABC Corporation aims to maximize energy efficiency and reduce emissions by:
• Minimizing and monitoring its total energy consumption; and
• Purchasing, where possible, renewable energy.
Purchasing and supply
ABC Corporation aims to maximize the use of environmentally sound products and services by:
• Maintaining and increasing the use of local suppliers for products, such as stationery; and

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• Using environmentally responsible and recognized printing companies for company publications.
Waste
ABC Corporation aims to maintain and improve its management of waste produced on the premises by:
• Minimizing (reducing and/or recycling), wherever possible, its solid and liquid waste streams;
• Using recycled products wherever feasible;
• Adopting a purchasing policy sensitive to environmental concerns; and
• Ensuring satisfactory disposal of waste that cannot be reused or recycled.
Transport
ABC Corporation aims to maximize the use of efficient and environmentally sound transport options by:
• Minimizing the use of cars and airplanes for transport;
• Maintaining and improving the use of public transport for business activities; and
• Maximizing the use of environmentally sound transport options for both project-related work and
commuting.
Water
ABC Corporation aims to manage its water resources efficiently by:
• Minimizing and monitoring the total water consumption; and
• Ensuring that water systems on the premises are not wasteful.
Table 1. Example of an environmental policy
Source: Environmental management systems: A step-by-step guide to implementation and maintenance (3rd ed.), 2006, p. 95

In formulating an environmental policy, it is important to create a balance between long- and short-term
issues. The payback for some policy activities may be relatively easy to measure; others may be less so.
For example, an investment in new machines might take several years to pay back, while energy
conservation measures or waste minimization programs can bring an almost immediate return. Sustaining
a viable market share or satisfying local or national stakeholders’ expectations/demands can be measured
in financial terms. The strategies embodied in the environmental policy need to reflect changing factors
in the business environment (based on the PESTEL Analysis). Companies must be flexible enough to
respond to these changes to secure maximum business benefits. Benchmarking or matching existing
policies of other companies may also help draft an organizational policy.
Context of the EMS (Sheldon & Yoxon, 2006)
The environmental policy is a cornerstone of the EMS. The initial draft can be created for internal
consumption or reference. It is worth noting that the initial draft must be marked as ‘Draft only’ and
‘Confidential’ – if not, the document may leak outside the organization. The management must assemble
a team of trusted colleagues working with them to develop the EMS. They will be closely involved in
setting the objectives and targets of the firm, which underpins the policy commitments. Colleagues’
expertise is also important for critical comments on the first draft. It is worthwhile adding a couple of
neutral readers to the list of critics (i.e., a trusted individual from another organization who will be able
to take a disinterested, external view of the draft). External observations can be a vital component in
developing a policy that will make sense to a wider audience.
Using the inputs from the experts, revise the policy to produce a presentation draft for discussion with
senior management. It makes good sense to discuss this draft policy alongside the emerging objectives
and targets for the EMS. Remember, the policy provides the framework for setting objectives and targets,
so the final sign-off will come when members of the organization are satisfied that the policy is congruent
to the objectives and targets. Finally, produce the first version of the organization’s environmental policy
and make sure it is a controlled document and signed off by senior management.

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The following steps detail the courses of actions that firms must take after developing the environmental
policy:
1. Communicate. The organization must send a copy of the policy to all employees, including those
who helped in the consultation process leading to the drafting of the environmental policy. In
doing so, the policy statement must bear a suitable endorsement from senior management.
Cascading of the policy could be done by paper or electronic means.
2. Publish. The organization must attach copies of the policy to workplace notice-boards and in staff
handbooks. The policy must also be published in company reports and other relevant
communications.
3. Establish. The organization must ensure staff awareness of the policy by including it in all relevant
training activities. The company must also be proactive and allow customers and suppliers to have
a copy of the policy to set the environmental expectations required from them.
4. Measure. The organization must assess the impact of the policy in the workplace to ensure that
the message is being received, understood, and acted on.
5. Update. The organization must commit to continual improvement by setting a review of the policy
at determined intervals.
6. Address. The organization must let the staff know how the company is performing against the
established policy objectives.

References:
Bamford, C., Hoffman, A., Hunger, D., & Wheelen, T. (2018). Strategic management and business policy:
Globalization, innovation, and sustainability (15th ed.). United Kingdom: Pearson Education
Limited.
Sheldon, C. & Yoxon, M. (2006). Environmental management systems: A step-by-step guide
to implementation and maintenance (3rd ed.). Earthscan.

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