Environmental Compliance — Being ‘Green’ Reduces Red Ink

But is that enough? Is it appropriate for any business to conduct itself in socially irresponsible ways, simply because those behaviors are not illegal? And, how should financial impacts be added to the mix in making these decisions? We believe there are a number of issues to consider here. These include the following, at a minimum:

• What are the costs of complying with rules vs. the costs of non-compliance?

• Are there secondary benefits to compliance that can realistically reduce or even eliminate some compliance costs?

• Are there marketing opportunities in voluntarily implementing “sustainable methods?”

In terms of the costs of compliance, these are often difficult to identify. The reason is that often a “cost” of complying is directly offset, at least in part, by a benefit. An example of this is the “cost” of a waste-paper baler system to help a printer better manage recyclable waste, which is then sold to a re-processor. Is the baler, in this case, a cost or an investment? Clearly, it is an investment, with its own revenue stream. So, this is a good example of how the emphasis on “sustainable” policies actually is providing financial benefits to printers. If it were not for the growth and acceptance of recycled paper, this opportunity to recapture costs, which was previously treated as simply waste, would not exist.

One interesting aspect of this type of benefit, however, is that it may be overlooked, or at the very least underestimated, because of the way revenue from recycling is accounted. Many firms simply use these amounts to reduce paper costs, rather than accounting for them separately as recycling income. This can distort what is really happening and can confuse decision-makers. There is an old saying that it is hard to manage, or to fully understand, anything that you don’t measure and account for. So correctly accounting for the benefits, as well as the costs, of recycling and other “eco-friendly” activities is important.