Environmental Due Diligence EDD is the assessment and management of environmental liabilities and risks. Environmental Due Diligence is a form of proactive environmental management. These include but are not limited to :. By executing EDD, an organisation will have awareness of historical environmental aspects and permit requirements that might produce large remedial bills in the future. This also allows for the appropriate management measures to be put in place.
Environmental Due Diligence audits are dependent on the size of the organisation, current and historical site activities and the industry sector in which the organisation operates. However, all audits tend to include the following list is not exhaustive :. Without having the ambition to offer solutions, the workshop demonstrated that there is no one-size-fits-all approach to operationalising due diligence when it comes to biodiversity for instance.
It also became clear that one single biodiversity metric is not feasible. Instead, engaging in nature-positive actions that are locally meaningful and encouraging alignment with existing conservation goals are key. When it comes to climate change, attempting to measure progress makes sense only via science-based targets. The workshop also confirmed that existing authoritative standards such as the OECD guidelines should form the basis of any future legal requirements.
To offer further clarification, however, the guidelines themselves need updating — since Chapter VI provides only some high-level guidance for an integrated model for environmental due diligence. The workshop also unveiled similarities and differences between the two processes. If both forms of due diligence entail the gathering of information up and down the supply chain, environmental due diligence requires the collection of extensive amounts of comparable data and robust scientific evidence.
Both processes rely on building capacity with suppliers and business partners, and both can benefit from the support of industry-driven initiatives too. Legislation is key to ensuring a true level playing field. Looking at the contributions of various stakeholders on this topic, it seems that there is no uniformity of views regarding the precise scope of this term. The European Parliament resolution on corporate accountability 10 March provides a list of environmental factors that should be accounted for as part of environmental due diligence.
Then there is the question of how to operationalise an environmental due diligence process. Chapter VI of the OECD guidelines suggests that this could be done through an environmental management system, which includes collection and evaluation of environmental, health and safety impacts of activities; establishment of measurable objectives and targets for improvement in line with relevant legislation and international treaties ; and regular monitoring and verification of progress.
It is important that the EU provides businesses — and especially small and medium-sized enterprises — practical guidance on how to operationalise environmental due diligence.
It also needs to offer additional support, including capacity building and tools that facilitate compliance, building on existing due diligence approaches provided by collaborative initiatives.
Valentina Bolognesi is Senior Social Policy Advisor at amfori , the leading global business association that promotes open and sustainable trade. The views are those of the authors and the associations they represent, and not necessarily those of ECDPM. Photo courtesy of kojo nana via Unsplash. Your email address will not be published.
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Thank you for this interesting and timely commentary. There appears to be broad concensus to have mandatory human rights and environmental due diligence legislation at EU level to create a level playing field.
CERCLA establishes the process that determines who is liable for any hazardous substances on a property. Merely owning a contaminated property is enough to make you liable in the eyes of the law; this is why environmental due diligence is so necessary. Related: Detailed Zoning Reports. All Appropriate Inquiry is the process of completing environmental due diligence. The EPA provides the AAI guidelines and recommends that the process is followed whenever a property is assessed for environmental contamination.
AAI also includes specific requirements about the education and experience for professionals who conduct this process. The Phase I Environmental Site Assessment is the standard used to evaluate environmental liability associated with the transaction of real estate.
Conducting an ESA before purchasing a property determines whether or not there is an environmental liability with the land. By having an ESA performed, the purchaser may qualify as an innocent landowner or contiguous owner according to CERCLA regulations; this helps the purchaser avoid being liable for any environmental contaminations on the property. These assessments search government databases and historical records to classify the property as high or low risk for environmental contamination.
When you need to find an environmental consultant to perform an analysis of a property, it is crucial to find an experienced and competent professional. Environmental due diligence must be completed in accordance with both state and federal regulations to have any legal basis.
It is a complicated and time-consuming process that requires a trained professional, but how do you find the right consultant? It is a good idea to talk to multiple consultants before choosing one to assess your property. You can ask them questions like :. Also, check any references that they can provide and be sure that the consultant gets approved through whatever lender you are using.
Make sure to practice environmental due diligence before closing on a property; it can save you from having liability for contaminations in the future. Research and find a reliable and professional consultant to perform this process for you; environmental due diligence works to protect you and your assets when purchasing a property.
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