By Ramzy Yakan and Jessica Babikian
Recently, we had the pleasure of attending the Spring 2024 CANECT Environmental Compliance and Due Diligence Training Event, a premier conference offering courses for environmental practitioners. Our experience at this event, along with conversations with industry professionals, provided us with significant insights into the state of environmental compliance across various industries. Here, we share our key takeaways and observations.
Understanding the Environmental Compliance Landscape
A major takeaway from the conference was the disparity in environmental compliance awareness across industries and companies. High-risk sectors like oil and gas typically have established processes to manage compliance, even if there’s room for improvement. These industries understand the importance of compliance due to the high probability and impact of the risks they face. However, not all industries and companies are at the same level of maturity when it comes to compliance. Many are still in the early stages of understanding their regulatory obligations and developing processes to mitigate the risks they face.
We had several conversations with environmental managers who told us they juggle compliance responsibilities alongside other roles and were attending CANECT to start piecing together what they should be doing. This served as a good reminder that expertise in the field is still niche and highlighted the value of experience and knowledge-sharing. Learning from seasoned professionals can help new practitioners avoid costly mistakes and accelerate their understanding of compliance.
The Value of Educational Events
Attending CANECT underscored the importance of educational events in raising awareness about environmental compliance. Many companies acknowledge the need to take compliance seriously but often struggle with where to start and lack the expertise to navigate the complex regulatory landscape. This is where events like CANECT play a crucial role by providing valuable insights and guidance from experts in the field.
We extend our gratitude to all the speakers who delivered compelling speeches at the conference. The presentations catered to both beginners and experts, offering foundational knowledge for newcomers while also providing advanced insights for seasoned professionals. This inclusive approach ensured that all attendees, regardless of their level of expertise, gained valuable information and practical advice.
Key Takeaways from the Presentations
Here are some specific takeaways from the conference, presented in no particular order:
Document Due Diligence
It is essential to document all due diligence efforts. If it’s not written down, it didn’t happen. Proper documentation can serve as evidence of compliance and proactive management. For instance, if a company conducts regular environmental audits or risk assessments, these should be meticulously recorded. This documentation not only serves as proof of due diligence in the event of a court hearing, but also helps in tracking improvements and identifying recurring issues.
Understand Regulatory Roles
Regulators enforce the law; they don’t create it. Their interpretation of the law can significantly impact its application. Companies must distinguish between mandatory legal requirements and recommended practices suggested by regulatory bodies. Understanding this distinction helps companies prioritize actions that are legally required versus those that are considered best practices. For example, a company might be legally required to report emissions data annually but might also receive guidance on how to improve emission controls that, while not legally binding, could enhance overall compliance and performance and could still help them in a case where they need to prove they were practicing due diligence and being proactive. Keep in mind, in some cases, what is considered due diligence for one regulator may not be enough for another.
Manage Mistakes Proactively
Companies should act in a manner to protect themselves from fines and liabilities. Mistakes happen but the crucial element is to have the evidence to demonstrate that you have taken all reasonable steps to prevent and address the issue in a court setting. Courts and regulators often look favorably on companies that take proactive steps to address problems, even if those steps do not completely prevent issues.
For example, if a company consults an environmental expert to assess potential impacts on wildlife but still encounters problems, the fact that they sought expert advice and followed the recommendations can show due diligence and potentially reduce penalties even if the court hires another expert that does not give the same recommendations. In legal proceedings, due diligence and acting in good faith is what you need to demonstrate.
Be Cautious with Sustainability Reports
Grandiose commitments in sustainability reports can set high expectations. Regulators will often subject companies to intense scrutiny on how well such commitments are upheld, so it’s important to ensure they are both realistic and achievable. When making public commitments, companies should align their goals with their actual capabilities and resources. Overpromising and underdelivering can lead to legal and reputational risks.
Enforce Effective Training and Implementation
Detailed procedures for compliance must be implemented correctly in order to be effective. In the past, simply having detailed procedures may have been satisfactory enough to a judge during legal proceedings, but this is not the case in the modern world. Detailed procedures are not worth much if they are not effectively mitigating risks and ensuring compliance. Controls and continual training for responsible employees is vital to ensure adherence to policies and procedures. Additionally, practical drills and simulations can ensure that employees are well-prepared to handle real-world scenarios.
Protect Yourself from Contractor Damages
When working with contractors, you should either have a clear contract that delegates responsibility and makes them liable, or you must take it upon yourself to supervise their work for due diligence purposes. Courts often tend to target the bigger name in cases where a contractor causes damages under the mandate of a bigger corporation. Don’t assume that the contractor will be responsible for damages just because they caused it. Without the above strategies, your company could be deemed negligent and held liable for any damages caused by contractors.
The Circular Economy
One of the emerging topics in the environmental world is the concept of a circular economy. Unlike the traditional linear economy, which follows a “take, make, dispose” model, a circular economy aims to minimize waste and optimize resource usage. This is achieved by designing products for longer life spans, reusing materials, and recycling. Circular economy embodies the principles of sustainability and represents a fundamental shift from viewing waste as a problem to seeing it as a valuable resource, much like in nature where all waste is recycled and reused. Moreover, it prioritizes renewable energy sources and safe, durable materials over disposable ones.
Implementing a circular economy approach can significantly benefit companies by reducing waste management costs, minimizing resource scarcity issues, and improving sustainability. For instance, companies can design products that are easier to disassemble and recycle, or they can implement take-back programs to reclaim used products and materials. This not only helps in compliance with environmental regulations but also enhances the company’s reputation as a sustainable and responsible entity.
Transitioning to a circular economy requires a thorough understanding of product life cycles and the environmental impact of materials used. Companies must innovate in product design, invest in recycling technologies, and foster partnerships to create closed-loop systems. By embracing these principles and practices, companies not only meet regulatory demands but also contribute to a more sustainable and responsible future.
Compliance in a Complex World
Environmental compliance has become increasingly complex due to the growing number of regulations and the need for companies to operate across multiple jurisdictions. This complexity is further compounded by evolving environmental standards and the expectations of various stakeholders, including regulators, customers, and investors.
Navigating this intricate landscape requires a strategic approach. Companies must stay on top of regulatory changes and ensure that their compliance programs are adaptable and robust. Utilizing technology can greatly enhance compliance efforts. For instance, EHS software solutions (such as Nimonik) can automate the tracking of regulatory requirements, manage documentation, and provide real-time reporting. This not only improves efficiency but also reduces the risk of non-compliance.
Furthermore, companies should foster a culture of compliance where employees at all levels understand the importance of adhering to regulations. This can be achieved through regular training, clear communication of policies, and incentives for compliance. By embedding compliance into the organizational culture, companies can ensure that it becomes an integral part of their operations rather than a mere obligation.
Collaboration with industry peers, participation in Environmental forums, and consulting with experts are also crucial in navigating the complexities of compliance. These interactions can provide valuable insights, share best practices, and offer support in addressing common challenges.
Conclusion
Our experience at CANECT reinforced the critical role of education and continuous improvement in environmental compliance. Many companies are still developing their understanding of regulatory obligations, and expertise in this area is invaluable. By documenting due diligence, understanding regulatory roles, managing mistakes, and continually training staff, companies can significantly enhance their Environmental compliance.
Additionally, embracing concepts like the circular economy and adopting a strategic approach to compliance in a complex world are essential for sustainable success.
We look forward to implementing the insights gained and contributing to the growth of environmental awareness with the companies across various industries that Nimonik works with. Thanks again to the organizers and the speakers at CANECT who made the conference such a valuable experience.
