There is a growing consensus that business should bear a greater responsibility towards the environment and pay closer attention to the “externalities” that its activities create. Nongovernmental organisations, customers, governments and investors have all begun to scrutinise the activities of business more carefully and demand a more responsible and sustainable approach. In response, the business community has implemented corporate social responsibility programmes with the aim of improving its social and environmental behaviour and portraying itself as a more responsible member of society.
External pressure to improve environmental performance has coincided with a trend towards increased complexity in business. A successful company now depends on an intricate web of global supply chains and partner networks, while an international reach – through alliances, acquisitions and greenfield investments – has become a prerequisite for growth.
Given these two parallel trends of greater business complexity and scrutiny into environmental performance, it was only a matter of time before companies would seek a more rigorous way of identifying and assessing their environmental liabilities, and of managing the risks associated with them in a more coherent manner. Companies now seek greater visibility not just of their own activities, but of those that take place in countries to where they have outsourced manufacturing, logistics or assembly. In addition, as organisations increasingly seek overseas acquisitions to further expansion plans, there has been a growing realisation of the need to scrutinise environmental performance of target companies more carefully as part of their due diligence processes.
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