Market forecast

Reversing Direction

Four ways globalism affects environmental compliance.

Differences among global marketplaces are shrinking. The result is a global economy in which expectations of acceptable environmental and safety practices for manufacturers are becoming more universal.

While the world likely has more years of disparate approaches before it establishes an international standard for business practices, the future will arrive shortly. How will business most be affected by compliance issues in the global economy?

Changing Regulations

In emerging economies, a new government or new political leader may abandon previous environmental or safety regulations for new, sometimes arbitrary standards. This means that to be one step ahead of potential changes, environmental compliance officers need to be aware of local elections and political movements in the areas in which they operate. 

In the U.S. or European countries, administrators are accustomed to periods of regulatory rollout. They build in transition times for changing regulations that emerging economies may not allow and may even perceive benefit from catching businesses unawares.

Embracing Stakeholders

In previous decades, the philosophy behind doing business in emerging markets was to set up and start making money as quickly as possible. With the ever-increasing availability of information, local populations expect greater engagement in manufacturing development and use of natural resources in their area.

Lack of appropriate engagement of stakeholders early in the planning process can lead to a distrust of the business and result in obstacles, such as class-action lawsuits or rejection of operating permits and access to resources by government agencies. Where previously the local population and government would have welcomed a new factory simply because of job creation, those same areas now are blocking development because of concerns about sustainability or responsibility for long-term environmental liabilities.

Ensuring Safety

Anyone who's worked in manufacturing for more than a few years has heard stories about what people do at their jobs in other countries that would be considered appalling in Western economies. For example, an employee at a smelter who wore one shoe. The shoe went on the foot over which the worker ladled material from the crucible to the mold, and the liquid metal sometimes dripped. He could only afford the one shoe, so he bought just the one shoe and worked in the smelter with one bare foot.

Although it may be considered the cultural norm to work in a smelter bare-footed or single-shoed where this worker is located, it isn't acceptable in the U.S. or European countries. Global companies cannot tolerate these disparities.

International organizations are becoming more involved in workers' rights and ensuring that basic standards of safety are universal, rather than dependent on local norms or employees' desperation for work. Also, workers in global companies want to know that employees are treated ethically at all levels, independent of location.

Regulating Supply Chains 

Many global companies already are implementing this concept for safety. For example, injuries for subcontractors have to be included in the organization's total safety statistics. Responsibility for suppliers, both safety and environmental, has become critical for a global economy.

Ignorance of where a company's supplier sources raw materials or how employees are treated at supporting facilities no longer is acceptable. It also is becoming harder to believe.

The perennial media attention that personal electronics companies receive about working conditions in assembly factories, which are not owned or operated by the design firm, is publicity no company wants. Also, the responsibility for injury and death in these facilities are statistics no firm wants on its resume.

Globally, consumers are concerned about how the products they purchase are sourced. As more ethical and sustainable options are presented, the longevity of a business may depend on ensuring that every life stage of its product meets the highest standards for compliance with environmental and safety regulations.

Andy Bajorat

Andy Bajorat is chief operating officer and principal at BBJ Group, an environmental consulting firm in Chicago. Contact him at abajorat@bbjgroup.com.

 

CIRE March/April 2018 Issue Cover

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