environmental Risk Managers, Inc.
Guide On profiting In Today’s Environmental Market
Development and Execution of an
environmental Management Strategy (eMS)
Liability creates change: Environmental liabilities have changed the way businesses operate. This document will show you, how to take advantage of the changes environmental liabilities have created.
Part One
We all want to be indispensable to our clients. During my professional career in the insurance business, I have learned that environmental education/risk management (also referred to as competitive environmental intelligence) impacts virtually every business in existence. Delivering competitive environmental intelligence to your client’s/prospects assists you in being indispensable. When you’re indispensable, you have moved beyond the commodity based attitude so many insurance consumers have in looking at little more than price in making their buying decisions.
We all know that liability creates change, if it didn’t, then most of us would be out of work. To date, the hundreds of billions of dollars businesses have spent for known environmental liabilities such as superfund, asbestos, lead, mold, underground storage tanks and the list goes on, has forced businesses to change the way they operate.
As mentioned earlier, environmental liabilities via direct or indirect exposures impact virtually every business in existence. Businesses with direct environmental exposures are quite obvious like chemical manufacturing, hazardous materials transportation, environmental remediation contractors and so on.
Businesses with in-direct environmental exposures are not quite so obvious, like a retail greeting card shop. Chances are, you didn’t think about a retail card shop having an indirect environmental exposure before reading this competitive intelligence. However, when the dry cleaner three doors down in the same strip mall, has a spill of their dry cleaning chemicals and the mall has to be evacuated for a week while the chemicals are cleaned up, the card shop has just experienced an in-direct environmental exposure.
Due to the pressure on businesses to keep up with regulatory change, the majority have operated from a reactive position which means they manage environmental events after they occur. Environmentally reactive businesses should know, the Department of Justice, for businesses and/or individuals facing environmental fines, penalties or jail, has a 98% conviction rate.
Question: So far, from reading this competitive environmental intelligence, what business can you think of that would not want to invest a little time to discuss the development and execution of their environmental Management Strategy (eMS)?
The most asked question I get at this point is, with so much competitive environmental intelligence how do I know what information a particular client needs? The answer is simple, through the development and execution of an eMS, the information needed will become overwhelming obvious. An eMS is a customized, evolving strategy that will have a horizontal and vertical impact upon its user.
Over the next few pages, I am going to summarize where the environmental industry has been, where it is going and where the opportunities are for you to profit. You can refer to the last page of this document and follow along with the environmental Management Strategy matrix.
eNVIRONMENTAL MANAGEMENT STRATEGY©
Tree huggers got the environmental revolution off the ground, Love Canal gave environmental issues national attention. After Love Canal, government in their divine wisdom decided they would create laws and regulations to make sure we better protect human health and the environment.
In developing our laws and regulations, Government has made them so confusing and so complicated there is no one stop shop for a business to go to get all the answers. I will come back to this point in a moment.
(refer to number 1 on the diagram)
One segment Government has identified as being harmful to the environment is business, (“Business” used in our discussion refers to any entity that sells a product, service or idea.) To date, due to a lack of competitive environmental intelligence, businesses have addressed their environmental issues from a reactive position.
Reactive businesses have responded in one of two ways in dealing with the environmental issues.
(refer to number 2 on the diagram)
- They have elected to send out their environmental exposures, i.e. they send out their plating, painting, cutting, construction services, etc., thinking they will pass their environmental liabilities off to the vendor. This approach has proven to be ineffective and in some cases catastrophic. Why? Because business has not found out, who they are doing business with.
Example:
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- A manufacturer was notified by a vendor that the vendor was going to be shut down in 60 days because according to the government they were using an ozone depleting system in their manufacturing process. This meant the vendor would not be able to meet their parts delivery agreement to the manufacturer. In the 60 days the manufacturer had to make a reactive decision, they elected to put $6.5 million dollars into retooling their vendor, versus the losses they would have faced, if they had to shut down their own production line because they could not get the parts from their vendor.
I another case,
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- The Environmental Protection Agency (EPA), as a Potentially Responsible Party (PRP), brought a manufacturer into a Superfund case. The manufacturer told the Government they had no money and 100% of everything they produced was for one client. The Government went around the manufacturer and hit up the client for $2.3 million dollars.
Who are you doing business with? This is the first area of opportunity for insurance agents in the eMS. As your clients, professional risk manager, part of your environmental business strategy should be to go out and inspect your client’s vendors. As a commercial P&C insurance agent, my number one source of writing new business was inspecting vendors of my client’s.
In making an appointment to inspect a vendor, a typical phone call went something like this, “My name is Chris Bunbury, I am an environmental Strategist and my client ABC that generates XYZ amount of sales for you a year, would like me to come out and inspect your operations.” The response back every time was “Mr. Bunbury, what date and time would be convenient for you.”
Now I am in a new door and I can accomplish two goals. First, is this a business my client should be doing business with? Secondly, is this a business I would like to do business with? If I answered yes to both of these questions, then I would take the time I had with the vendor to discuss my risk management strategy. I would also explain the service I was performing for my client in development and execution of the eMS. A majority of the time, the vendor would ask if I could assist them in their eMS. I would explain that development and execution of an eMS is a service I offer to all my clients.
The vendor saw the value the eMS brings to a business and they wanted to have it too. I was their new insurance agent and the old one was out and we never got into the commodity based game. I brought something more valuable than just price to the table and this made my strategy indispensable.
(refer to number 3 on the diagram)
- As their second option, reactive businesses have elected to go to a relatively new industry we call Environmental Service Providers (ESP), i.e. environmental engineers, clean up contractors, waste transporters, etc.. However, in this approach it has been business going to ESP because they have a leaking underground storage tank. The answer from the ESP has been give me a bunch of money and I will make your problem go away. Since the business was reactive, their only options have been to pay the price or go out of business.
- The negative health, ecological and financial impacts from both of these reactive approaches, won’t be known for generations.
We know a business is profitable if the value it creates exceeds the cost of performing their value activities. Today’s society of growing environmental accountability, i.e. FIN 47, Sarbanes Oxley, ISO 14000, the SEC’s SAB 92 ruling, Brownfield redevelopment, terrorism and more are some of the laws and standards that have been developed to address environmentally reactive businesses. The goal is to assist/force business to become environmentally proactive.
Some may refer to this as sustainable business. Under a sustainable business strategy, environmental issues are an everyday value activity. The next evolution for businesses to create value is taking control of their environmental issues by moving beyond government compliance, by utilizing an eMS.
(refer to number 4 of the diagram)
Sustainable businesses use what they have learned to add value to their business. An eMS is an evolving strategy that assures you minimize risk, maximize value and optimize performance.
So, you now know your client’s future success depends upon developing an eMS to proactively address their environmental issues. You also know that delivering competitive environmental intelligence can assist in making you indispensable. How do you do it?
As stated earlier, Government has made our environmental laws and regulations so confusing and so complicated there is no one stop shop for a business to be able to get their answers. An eMS has proven successful because it is based upon a TEAM SPORT strategy. TEAM SPORT stands for (Together Everyone Accomplishes More because Strategic Partners Optimize Resources and Time). A TEAM SPORT strategy assures a business gathers the competitive intelligence necessary to execute an eMS.
Who are your TEAM members? We will discuss TEAM SPORT strategy and how as the TEAM leader, you truly are indispensable to your client’s in the next environmental Strategist email.
Assisting your clients with development and execution of their environmental Management Strategy (eMS) will make you indispensable, not just a P&C insurance agent/agency.
Proven sales builder from environmental Strategist: A field tested and proven way to generate new business sales, with high hit ratios, is to begin a risk management/inspection program of your current client’s vendors. No more cold calling to find out if a company is going to be taking competitive quotes on their P&C program. Think about the vendors your clients deal with and this alone can generate huge growth in your sales. If you need a sample risk management vendor questionnaire call or send an email request.
Chris Bunbury, eS
PO Box 1127
Leland, Mi. 49654
Phone: 231-256-2122
Fax: 231-256-2123
Email: jcbunbury@aol.com