Responding to corporate environmental liability: the role of environmental auditing in the Natural Gas Corporation as it develops an environmental management system

Abstract

Environmental legislation introduced in many countries over the past two decades has progressively tightened environmental standards, toughened penalties, decreased mens rea requirements and opened up standing. These moves have substantially increased the potential risks and costs to companies and focused managers attention on environmental issues and mechanisms for minimising potential exposures. In New Zealand the Resource Management Act (RMA) is the central focus for companies concerned with environmental exposures. Companies reacting to the RMA initially sought to minimise their exposure by adopting one, or a few, discrete environmental management initiatives, including environmental policy and environmental auditing. Recent resource management case law has emphasised the importance of integrated approaches to environmental management. This has provided the impetus for companies to develop environmental management systems. Developing an effective environmental management system involves changing company structures and culture. Environmental auditing can have an important role to play in these changes. As a product its findings and recommendations can drive change in the companies structures and procedures. The process of environmental auditing, including interviewing and site visits, can change attitudes and culture. Natural Gas Corporation adopted environmental auditing as its major initial response to the RMA. As its understanding of environmental legislation has become more sophisticated it is developing an environmental management system. By investigating the procedures and policies underlying its environmental performance and adopting an open consultative process the environmental audit programme at NGC has played a crucial role in driving change. Drawing on the environmental audits of the Corporation, and the results of two surveys of staff environmental attitudes, in 1992 and 1994, the role that auditing has had in developing an EMS is investigated. The changes in the environmental management structures and procedures of the company and the changes in attitudes, understandings and knowledge of staff and management are presented.