Companies failing to quantify value derived from natural environment: report

Despite increasing financial penalties and stringent clean-up requirements, many organisations are still unable to quantify the value they derive from environmental resources. Further, many firms remain relatively uninformed of the environmental risks they face, according to a report published by Marsh, the world’s leading insurance broker and wholly-owned subsidiary of Marsh & McLennan Companies.

Marsh’s white paper, Biodiversity – the Value of the Environment, states that although doing business according to environmental principles is now widely accepted as good practice, detailed consideration for the value of the environment and biodiversity is less well ingrained. The chronic loss of biodiversity remains a risk which is not well understood.

Dr Cliff Warman, Leader of Marsh’s Environmental Practice in Europe, the Middle East and Africa (EMEA), explained: “The economic significance of a chronic loss of biodiversity will be significant. Stringent legislation and financial penalties are now enforced globally against companies that fail to protect environment resources.

“The value of biodiversity and the requirements to protect the environment have become key risks to businesses. It is vital that companies assess the scale of their potential environmental exposures and are able to manage the associated costs and liabilities.”

Marsh recommends that companies develop a deeper understanding of the status of the environment around their sites of operation as part of their overall risk management strategies. In doing so, companies will be able to assess the potential financial and reputational impacts of causing environmental damage and have a clearer understanding of the requirements to protect the environment.

Dr Warman added: “Environmental impairment liability insurance is available to assist businesses in managing these risks and liabilities. However, businesses that do not fully understand the potential impact of their operations on the environment will be increasingly perceived as being companies with an unsustainable future.”