Why is reviewing the operational environmental risk of a site essential?

DateJul 20, 2020
AuthorAnna Gallart
Categories

What is an operational environmental risk?

An operational environmental risk is a potential threat of adverse effects on living organisms and the environment by effluents, emissions, wastes and resource depletion arising out of an organisation’s activities1,2 resulting from inadequate or failed environmental procedures, systems or policies associated with the current land use of a site. There are several environmental risks associated with the current use of a property, such as land contamination, air pollution, water pollution, and exposure to hazardous substances5 , and these can be evaluated through an environmental desktop study and where necessary a Phase 1 Environmental Audit. A failure to recognise the risks related to the operational use of a site can lead to financial penalties as well as damage a company’s reputation6. For that reason, it is essential to understand any potentially contaminative activities that may have been occurring on site and this will help the buyer to make an informed decision7 .

Why is reviewing the operational environmental risk of a site essential?

The importance of reviewing the operational risk of a site prior to acquiring any commercial property allows any environmental risks associated with the current use to be identified at an early stage which can help a purchaser save money and time3. A site currently operating in a potentially contaminative manner should ensure that no harm or damage is being done to the environment because of their activities. This is reflected in the Environmental Damage Regulations (Prevention and Remediation) (England) Regulations 2015 (EDR) which focus on the business or operator’s responsibility to prevent any environmental damage and if it is required to remedy any damage caused. In addition, large industrial sites with an environmental permit will be required to adhere to the Environmental Permitting Regulations (England and Wales) 2010 which requires a control on certain activities which could harm the environment or human health. Any sites holding current permits or authorisations for their operational procedures have certain parameters that they are required to adhere to and these parameters can be costly to uphold and even more costly if they are not. Although EDR is not used frequently, it is used to prosecute poor environmental management, however often bigger financial risks are associated with larger facilities operating with current environmental permits because an industrial site which holds a permit would be more likely to be audited and non-compliances can be prosecuted3,4.

Buying a current industrial site (don’t forget the neighbours!)

Environmental risks are more commonly associated with industrial processes and special care should be taken when acquiring one of the following sites: industrial sites, a property with a fuel storage tank, mining sites, a petrol filling station, a garage, waste sites, operating landfills and intensive farms. Sites such as these will often require permits for operation, particularly if activities fall under the following categories outlined in The Environmental Permitting Regulations (EPR)3,7,8,9:

  • waste management operations
  • operating landfill sites
  • mining waste
  • discharges to surface water and groundwater
  • abstracting and storing water
  • activities involving dangerous substances, pesticides and biocides
  • transporting dangerous and polluting goods
  • activities involving genetically modified organisms
  • activities requiring a pollution prevention and control permit
  • transboundary shipment of waste.

If a property is currently operating within the above mentioned categories or with any potentially contaminative activities and is in proximity to a sensitive receptor, the risk is heightened and more care is needed to ensure no environmental damage is taking place. Breaching any of the requirements or operating without an environmental permit when it is required can lead to a civil sanction and can be prosecuted by the Environment Agency or Local Authority.

In summary, reviewing the operational environmental risk of a site is essential, being fully aware of activities currently being undertaken on site and their implications will ensure that responsibilities are met under Environmental Damage and Permitting legislation thereby avoiding any costs to the business and the environment.

Operational environmental risk is directly linked with current activities of a site and is something that you must consider before buying a commercial property. Groundsure’s Review report provides detailed information on any operational environmental risks, including liabilities that may affect the site purchase. Click here for further details about Groundsure Review.

References:

  1. Environmental Risk. Crawford, Global Technical Services. 2019. Available at: https://crawfordgts.com/services/environmental-risk/environmental-risk-defined.aspx [Accessed 11/11/2019]
  2. Identifying and managing business risks. Investopedia. August 2019.  https://www.investopedia.com/articles/financial-theory/09/risk-management-business.asp [Accessed 27/11/20119].
  3. The Environmental Permitting Regulations. Available at: http://www.apis.ac.uk/overview/regulations/overview_epr.htm. Accessed [24/02/2020].
  4. Identifying and managing business risks. Investopedia. August 2019.  https://www.investopedia.com/articles/financial-theory/09/risk-management-business.asp [Accessed 27/11/20119].
  5. BD. Business Dictionary. Available at: http://www.businessdictionary.com/definition/environmental-risk.html [Accessed 11/11/2019].
  6. Environmental Risks and Liabilities, Lexis PSL. Available at : https://www.lexisnexis.com/uk/lexispsl/property/document/393788/5NH2-G001-F18C-429F-00000-00/Environmental_risks_and_liabilities_overview [23/11/2019]
  7. Risk Identification, Ian Searle 2018. Available at : https://www.cii.co.uk/learning-index/articles/risk-identifiction/16989 [Accessed 27/11/2019]
  8. A guide to environmental searches when buying a property. ORJ, Law Firm. 2019 Available at : https://www.orj.co.uk/a-guide-to-environmental-searches-when-buying-a-property/  [ Accessed 29/11/2019]. 
  9. Implementation of the Environmental Liability Directive in the UK. Nabarro, Clarity Matters. http://www.nicole.org/uploadedfiles/3.3%20Implementation%20of%20the%20Environmental%20Liability%20Directive%20in%20the%20UK.pdf [ Accessed 27/11/2019].