PRIVATIZATION AND ENVIRONMENTAL AUDIT

Environmental Auditing

In recent years the business community and Government have paid an increased interest in environmental auditing. In the business community it is seen as a management tool for gaining more control over environmental and safety issues. At governmental level it is perceived as a positive development that could represent a strong support for the application of the environmental legislation.

This interest is not purely theoretical. For various reasons, companies have begun to increasingly require to environmental consulting firms the development of environmental audits. One of the most important reasons for this action is that companies, as well as individual managers, are paying more attention to environmental liabilities. Due to the changes in the environmental legislation, companies become liable for the environmental impacts generated by their activities. Thus, they are compelled to adopt control mechanisms and instruments to address environmental and safety problems. The environmental monitoring is used to justify to all interested parties the extent to which environmental and safety issues are being tackled within the company.

The second reason for developing an environmental audit for a company that is subject to privatisation process is to present a clear picture of the company’s environmental situation. The potential investors want to know the significant environmental liabilities of the company they intend to purchase. A cost estimation of these environmental obligations can also be made within the environmental audit /due diligence report.

However, the environmental audit is considered as an instrument that could support the identification of the environmental liabilities, since it points out the relevant weak areas of the company’s operations. It can contribute to getting a more accurate insight of the environmental risks, which could affect the company’s position on the market. An environmental audit report can also be important to the company’s managers who risk becoming personally liable for the consequences of an environment or safety accident. The audit clarifies the manner in which responsibilities are assigned.

With respect to environmental liabilities, it is becoming increasingly important for the business interests of the companies and other interested parties to structurally manage the environmental and safety problems specific to each industry.

Definition

Independent experts into the environmental standard working routine and procedures of a company can define environmental auditing as systematic research. The study uses an integrated approach of both technical and organisational aspects of the company’s operations. The organisational aspect is paid special attention, since many environmental accidents, which occur in industry, are not triggered by technical malfunctions but by organisational problems.

The main objective of the study is to gain insight into the environmental protection standards of a company. In other words, the degree to which environmental and (external) safety problems are monitored. It also indicates which technical and organisational facilities might be required to improve the situation. An environmental audit may also have the goal of environmentally accounting for the company’s operations to third parties.

Primarily, an environmental audit is an important management tool. It helps identifying the weak points in business operations and the inherent risks. Environmental audits can also provide insight for interested parties on the extent to which an enterprise structurally manages its environmental and safety risks.

Environmental audit reports can provide a clear vision into complex material, which is rather difficult to access. Thus, environmental and safety aspects need not to be considered as elements that cannot be quantified in the decision-making processes. The growing interest in the development of environmental auditing and environmental due diligence reports within the Romanian privatisation process shows that this technique satisfies a clear need.

Environmental Audit - Crucial for Industrial Acquisition

At present, the acquisition process of companies and properties has increasingly developed in Romania. This process should not be carried out without full knowledge of the risks linked to the past operation of the purchased company.

Before acquiring a company it is vital to take into account its environmental and safety situation, as this will trigger the environmental liabilities on site.

Accurate risk assessment is therefore essential and can be achieved effectively by undertaking an Environmental Audit/Environmental Due Diligence.

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