How to develop an effective environment policy  

Concerns surrounding the environment have become central business issues in recent years. With increasing legislation, rising stakeholder expectations, and consumers advocating for sustainable business practices, managing and mitigating environmental risks has become more critical than ever, with companies now being expected to provide greater transparency and accountability for their environmental performance. 

While many organisations have already begun addressing their environmental responsibilities, the introduction of the EU Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) this year has heightened the urgency. For those facing a growing list of legal requirements without a clear starting point, developing an environmental policy has become a top priority.  

What is an environmental policy? 

An environmental policy is a formal statement outlining an organisation’s approach to its governance and management of environmental topics. A policy should reflect the businesses commitment to addressing environmental topics, providing a framework for setting objectives, targets and actions aimed at improving its environmental performance. By setting forth clear principles and goals, an environment policy not only guides internal practices and operations, but also demonstrates the organisation’s intent to meet regulatory requirements and industry standards. 

What are the benefits of an environmental policy? 

A well-constructed environmental policy not only helps to ensure compliance with relevant legislation, but also helps businesses to adopt environmentally friendly practices and strategies for a more sustainable business model. Specific benefits include: 

• Regulatory compliance: Having an environmental policy helps to ensure that a business is compliant with environmental legislation and requirements. For instance, the CSRD requires companies to disclose information about their environmental policies, meaning that having a policy is essential for businesses within this legislation’s scope. 

• Risk management: By proactively addressing environmental risks, businesses can help to mitigate the impact of potential environmental issues that may occur later down the line, such as damages to property or resources caused by climate change or disruptions to the supply chain. 

• Enhanced reputation: In today’s landscape, demonstrating a commitment to environmental sustainability has become an expectation of many stakeholders, consumers and investors alike. An environmental policy, if developed and actioned correctly, can help a business build trust in their brand and potentially attract environmentally conscious consumers. 

• Operational efficiency: Environmental policies can often lead to a more efficient use of resources, which may result in cost savings and reduced waste, thus improving the company’s bottom line.  

10 key components of an effective environmental policy

While a successful environmental policy should always be customised to fit the specific needs of each organisation, here are ten best practice components businesses can follow to ensure all crucial aspects are thoroughly addressed: 

1. Clear environmental governance and objectives: To start, an effective policy should clearly outline the organisation’s environmental goals and commitments, summarising the actions that will be taken to achieve these goals, which can be further detailed in the environmental strategy. It is also essential that the environmental policy is assigned to a designated owner, preferably at the Board level, which demonstrates top level/leadership accountability for the objectives outlined. 

2. Focus on key environmental topics: The policy should address the organisation’s most material environmental issues, as identified through a materiality assessment. While some more ‘universal’ topics prevail across most environment policies, such as climate change and energy usage, it is also important to recognise the topics that are mandatory to include based on various regulatory requirements. For example, for businesses in scope of the CSRD, the following topics need to be addressed in accordance with the European Sustainability Reporting Standards (ESRS): 

• Climate change and energy  
• Pollution (air, soil, water) 
• Water and marine resources 
• Biodiversity and ecosystems 
• Resource use and circular economy 

3. Commitment to improving environmental management systems: 
   A key component of the policy should be the organisation’s commitment to continually improve its environmental management systems (EMS); a set of controls and procedures used by a company to identify and monitor environmental impacts for the purpose of improving its environmental performance. Implementing and enhancing the use of EMS helps to align business practices with the environmental goals laid out in the policy, improve resource efficiency and reduce environment- related risks. 
    

4. Ongoing monitoring of environmental targets: 
   It can be simple for a company to state their environmental goals for the future, however, companies may be labelled as greenwashing if these goals are never met. Given recent regulatory changes and growing public scrutiny, greenwashing is not something that any business wants to be called up on. That is why it is essential for businesses to include commitments to monitor, measure, and report on their progress towards environmental targets. A policy should establish a mechanism for tracking the effectiveness of any environmental strategies and initiatives by including measurement metrics for its material environmental topics. A commitment to conducting regular internal reviews and external audits can also help to ensure the organisation remains on track to meet its commitments, allowing for timely adjustments and continuous improvement. 

5. Training and resource allocation: 
   To ensure the policy is effectively implemented, the organisation must commit to providing sufficient knowledge, training and resources for employees. . This includes developing training programmes and workshops that build awareness within the workforce, ensuring all employees understand the policy, their roles, and how their everyday actions contribute to meeting environmental goals. It can also cover a commitment to provide specific role-based, technical training to those with responsibility for achieving the principles of the policy.   

6.  Environmental expectations for third parties: 
   The environmental policy should clearly define expectations for third parties, such as suppliers, contractors, and business partners. These expectations should be consistent with the organisation’s own commitments to environmental sustainability, ensuring that its entire upstream and downstream supply chain operates in line with the company’s environmental values. This could involve conducting environmental due diligence of third parties and requiring third parties to comply with certain environmental standards within a supplier code of conduct or report on their environmental performance. 

7. Public reporting: 
   A commitment to transparency is vital, so an organisation’s policy should commit to publicly reporting its environmental activities. This should ideally include at least annual reporting on both the positive and negative impacts of the business’s operations, such as emissions data, resource usage, and progress towards environmental targets. Public reporting enhances accountability and allows stakeholders, such as investors, customers, and regulators, to assess the company’s environmental performance, further aligning with mandatory disclosure requirements under the CSRD and other sustainability frameworks. 

8. Compliance with laws, standards, and frameworks: 
   The policy must clearly state the organisation’s commitment to comply with relevant environmental laws, regulations, and international agreements. This could include national regulations, such as the French Vigilance Law, as well as global standards like the Carbon Disclosure Project (CDP), the Task Force on Climate-Related Financial Disclosures (TCFD), Science-based targets initiative (SBTi) or the Universal Declaration of Human Rights (UDHR). Explicit references to these laws and standards show the company’s proactive approach to regulatory compliance. 

9. Public accessibility: 
   To ensure transparency and accountability, it is recommended that the environmental policy is made publicly available. Publishing the policy on the organisation’s website and in relevant reports allows stakeholders and the general public to easily access the company’s environmental commitments, helping to reinforce the company’s dedication to environmental sustainability and build trust in the organisation as a whole. 

10. Regular review and updates: 
    Developing an environmental policy should not be viewed as a ‘tick box’ exercise. Instead, an effective policy will be regularly examined and updated in line with the ever-changing business landscape. To reflect this, the policy should include a commitment to conduct routine reviews and make the necessary updates to reflect changing legal, scientific, and industry conditions. Environmental regulations and best practices are continuously evolving, and businesses must keep up to date with these changes to maintain compliance and improve their environmental performance, ensuring that their policy remains relevant, effective, and aligned with new developments. 

By ensuring that all these ten components are carefully considered and incorporated, businesses can develop an environmental policy that not only meets best practice and regulatory standards, but also fosters trust from stakeholders and promotes environmental responsibility throughout the organisation. 

How GoodCorporation can help. 

GoodCorporation’s team of experts assists organisations in developing comprehensive environmental policies, leveraging our long-standing expertise in sustainability and ethical business practices. Through conducting a thorough assessment of the organisation’s current environmental impacts, identifying key areas of stakeholder engagement and benchmarking against industry standards, we help create tailored policies that not only meet regulatory requirements but also align with the organisation’s values and long-term sustainability goals. Visit our environmental management services for business webpage to find out more, or contact our team.