Environmental risks make auditors profit

COMPLIANCE with environmental law is becoming an inevitable condition for being present in European and international markets, and the importance of identifying potential risks continues to grow in response.

COMPLIANCE with environmental law is becoming an inevitable condition for being present in European and international markets, and the importance of identifying potential risks continues to grow in response.

Slovak legislation pertaining to the field has evolved rapidly. To part the cobweb of regulations and get a clearer look at environmental risks, The Slovak Spectator talked to Viera Fecková, director of the environmental audit and consulting firm Slovak Cleaner Production Centre.

The Slovak Spectator (TSS): In practice, where do environmental audits occur most often?

Viera Fecková (VF): The European Bank for Reconstruction and Development carried out the first environmental audits in Slovakia. It evaluated old environmental burdens, which means the environmental consequences and damages of past activities on a certain territory.

Today, auditing is more for investors who are buying a company and want to know what present or future environmental liabilities the company's operation presents.

Finally, there are audits of environmental management systems. Here we study the way a firm can manage its impacts on the environment, its long-term and short-term objectives, and provide training programmes aimed at environmental behaviour.

TSS: Is the environmental audit only about meeting the status quo or do you also suggest recommendations or possible improvements?

VF: It depends who orders the audit. Say I am a manager and I want to know the shortcomings of the system in my company. In this case it is expected that the auditor suggest improvements. Internal audit is, for sure, one of the best tools for improvement.

Then, there can be an investor who wants to buy a firm. In this case, we only find out potential environmental costs and penalties so he will know what this investment will actually cost in the future.

The audit of a supplier is more about compliance with environmental legislation; usually a business partner orders the audit and does not expect improvements. It simply picks a firm that already fulfils its criteria.

TSS: Is the environmental audit a tool to prepare firms for strict European environmental law?

VF: By now most obligatory European environmental legislation has already been adopted into Slovak law.

The truth is that it is often very confusing and chaotic. Slovak environmental law has been through several strategies, philosophies, and changes.

An audit of compliance with environmental law can help a firm find out whether it operates in line with the legislation or if there are threats of environmental penalties in the future. But most companies have already done such an audit, as Slovakia will become an EU member this May.

TSS: Does this mean that Slovak companies are prepared for strict regulations in the EU?

VF: They should know them, but whether they are completely prepared... that is another question. Slovakia probably has the largest number of companies with an environmental transition period of the V4 countries [that include the Czech Republic, Hungary, and Poland]. The transition periods mainly concern industrial companies or waste deposit sites in the area of pollution prevention and control.

Compliance with regulations will require the investment of hundreds of millions of crowns and even a big company cannot afford such sums of money from one day to the next.

TSS: The Ministry of the Environment said that Slovakia would need Sk437 billion (€10.74 billion) in investments to bring all the regulations completely into practice by 2035. Do you agree with this assumption?

VF: It is hard to imagine the amount. Some say the number is overestimated, some say it will be bigger.

We do not even know whether the ministry meant the overall costs or only the costs of the private or state sphere.

If the state spends the money reasonably, it is possible that the expenditures will be lower.

TSS: Do Slovak firms realise the need for compliance with environmental law?

VF: So far, about 100 firms have already acquired certificates vouching for their environmental management systems. Mainly they are chemical, paper, textile, and machinery companies.

Environmental certificates are already becoming as important as quality certificates. They will be an important condition for survival on the international market.

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