How to avoid paying a £100 million fine…

No, the answer’s not having a very good lawyer or an alert public relations officer. The rules to the game have changed!

The Environment Agency has grown a sharper pair of teeth. It has recently used its new sentencing powers against a utilities company to make a statement:

  • Fines for environmental breaches are now going to be much, much higher…up to a 100% of a company’s pre-tax profits!
  • No excuses will be accepted. Companies should allocate means to prevent or fix any environmental issues their business may face, no matter their size or financial situation.
  • Self-monitoring and inspection checks are no longer the only means of reporting incidents. The general public has access to a 24/7 hotline.

We’re used to seeing dramatic depictions of corporate misdeeds in Hollywood movies. But usually the focus is more on a black and white moral message than on the mundane reality of business processes. The bad guy gets his comeuppance at the end, but what you don’t get to see is the two thousand page report put together by the regulator. The harsher sentencing guidelines highlight that the consequences for companies getting things wrong aren’t the same as in the movies, but they’re very real nevertheless.

Companies now have to switch to a different corporate culture and adopt a new attitude in order to sustain their profits in the face of more scrutiny and higher fines.  And this can’t happen overnight nor by the willpower of one or two individuals in the organisation.

What I’ve learnt at Saffron is that compliance training shouldn’t be seen as a ”tick-the-box” exercise in the sense of having a good defence in the case of a prosecution, but rather as a way to involve employees in making better decisions  in the first place. And avoiding these consequences altogether.

What’s the point of the changes to the guidelines?

Previously, under the Health and Safety at Work Act 1974, fines for breaches were limited to between £20,000 and £50,000.

But now one company has already had a £250,000 fine imposed by the Court of Appeal. And this is by no means the upper limit that we can expect in the future. In a recent statement on the ruling, the Court said:

This may well result in a fine equal to substantial percentage, up to 100% of the company’s pre-tax profit for the year in question…even if this results in fines in excess of £100 million”.

Effectively, the sentencing rules are aimed at cancelling out the business performance gains of not respecting the environment.

I’ve only listed here the financial damages that non-compliance with environmental regulations leads to. Another risk is the impact this lack of compliance will have on the company’s reputation. And this is way harder for companies to hide from the public!

That’s why companies should think differently, embed a different culture, and do this quickly. A change campaign based on performance, rather than “compliance”, is key.

A different kind of training needed

As usual with such high-impact changes, there was a whole year between when the Guidelines were first published and their first practical application. The Environmental Agency definitely wanted to send a message: companies have been given time to ensure their processes include more stringent measures to prevent environmental offences, and now there are no excuses.

It’s obviously necessary for more training and internal communications to explain the gravity of the implementation of the new sentencing guidelines.  But feedback we’ve received from the field show that in similar cases, such as anti-bribery and corruption, learners tend to reject a purely negative, “I-should-do-as-I-am-told” approach.

To counter the risk posed by these fines we need to focus not on the dangers of getting it wrong, but the how and why behind getting it right. Training should be designed which enables and inspires. I personally experienced this when completing the course we designed for a construction organisation on how to improve its global sustainability practices.

At the end of the course, learners are invited to make their pledge to be more sustainable in the workplace, and in their personal lives. This kind of “test” helps to prove that if the training strategy is well-designed enough, learners fully embrace the course and put it into practice in their daily lives.

eLearning can be a key part of changing culture to respond to new regulatory pressure. Here’s how:

1. eLearning should support better business processes

Decision-makers and employees all have a responsibility for the outcome of the process they’re involved in. So they should all know how it works, how to identify its malfunctions and how to fix them quickly (i.e. what means should be used to avoid environmental damages caused by one or many business processes). If you don’t take action and invest in implementing better processes, then the government will ensure the fine is equivalent to your level of negligence.

2. Bespoke elearning can be a powerful tool in helping companies prevent attitudes that would lead them to pay higher fines

Employees should be fully aware of their contribution to the company’s performance by ignoring the risks. By focussing on emotional motivations, elearning can instil a sense of pride and skill in being mindful of topics such as environment, health and safety and create a culture of compliance, instead of a simple fear of punishment that encourages people to hide breaches (and make it even worse!).

3. eLearning should shape behaviours and encourage learners to challenge things that don’t seem right

By introducing best practices within the organisation, instead of constantly referring to the legislation, we equip learners to express themselves on the issue and act upon it. In my example of the sustainability course, pledges learners had to make weren’t compulsory. But because they were given the choice on actions to apply in their lives and jobs, they took the ones that resonated for them and applied them. This resulted in some 28,000 commitments made within one year of the course being rolled out.

It goes without saying that, like anti-bribery training, your training strategy in response to the new sentencing guidelines should be implemented from the top of the organisation to its bottom – even for those who seem to be unaffected. We all contribute to culture even when we don’t act directly.

So how can you raise awareness and change behaviours within your organisation in a totally innovative, creative and effective way? Get in touch with us to find out!

 

 

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About the author

Marlene Cursoux - Sales and marketing assistant

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