SMALL BUSINESS AND THE CHANGING ENVIRONMENTAL ETHOS
Keywords:survival of small businesses, complex environmental laws, legal and cost implications, future development and growth, engines of economic growth, protection of the environment
There is increasing awareness globally of the importance of conserving the environment. The environmental ethos is changing and industries are under increasing pressure to reduce the negative impact of their operations on the environment. Such negative impact includes, for example, the consequences of non-compliance with safety standards; harm to the general well-being of both employee and community; pollution from production processes; and the risks associated with the disposal of waste material.
Traditionally, South African environmental law has had little influence on long-term strategic industrial decision-making and the response of many industries to environmental law has been re-active rather than proactive. In the past, businesses, large and small, have not been too perturbed by environmental laws, mainly because penalties for environmental damage were not enough to deter potential offenders and environmental legislation was weakly enforced.
Businesses therefore often opted to ignore environmental issues and would merely pay fines if and when these were imposed. This was seen to make sound business sense as it was less costly to pay the fine than to take the prescribed preventative measure. Furthermore, concern about the impact of industries on the environment was generally directed at large corporations and environmental laws were, therefore, mainly enforced against such large companies. As a result, small businesses especially could afford to ignore environmental management completely. These small, medium and micro-enterprises (SMMEs) are defined as separate and distinct business entities, together with their branches or subsidiaries, if any, and include co-operative enterprises. In terms of the statutory definition they are managed by one or more owner, and predominantly carried on in any specified sector or sub-sector of the economy in accordance with the Standard Industrial Classification, for example, the mining and construction sectors. Enterprises are classified as micro-, very small, small, or medium enterprises in accordance with the following criteria: total full-time equivalent of paid employees, total annual turnover and total gross asset value.
Similarly the industrial hives in which micro- and small enterprises operated, established by the Small Business Development Corporation, were legally exempt from complying with certain legal provisions relating to the environment, for example, regulations concerning hazardous chemical substances.
However, for various reasons, the environmental ethos in South Africa has changed and a strong and improved body of environmental law has developed. All business enterprises, large and small, now have to comply with an increasing number of complex environmental laws. Failure to do so could have significant legal and cost implications. It therefore no longer makes business sense to ignore environmental laws.
No doubt, legal imperatives are a major force in creating a culture of sustainable development. Although there are those who recognise that sustainable development is necessary only in order to comply with the legal requirements, sustainable development is also necessary because it makes good business sense. Large enterprises, and possibly small enterprises, although here more research is needed, should recognise that sustainable development enhances business value and that compliance should, therefore, be seen as an investment in a sustainable future. These investments would then be long-term assets that would in due course enhance the value of the business.
The question that arises is whether this new dispensation will ultimately threaten the survival of small businesses in particular and, if so, what measures should be taken to ensure their future development and growth. As will be discussed below, the survival of SMME’s as engines of economic growth is crucial to job creation in South Africa. At the same time the protection of the environment is crucial to sustainable development of the country and its peoples.
Resolving this dilemma can only be in the interest of society as a whole.
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