Letter: Corporate environmental risk

Wed, 09/03/2008 10:39 AM | Reader's Forum

It is likely that the Sidoarjo mud disaster case in East Java will last for years to come. As of Dec. 2007 it was estimated that the total volume of expelled mud flow had covered an area of 6.5 square kilometers, burying eleven towns and displacing at least 16,000 people. Transportation and power transmission infrastructures have been damaged. House Speaker Agung Laksono declared the government would finance the infrastructure repairs, while PT. Lapindo Brantas would finance the ongoing mitigation effort and also pay Rp 2.5 trillion (US$272 million) in compensation to the victims.

The Porong-Gempol toll road in East Java province has been damaged by the mud flow and is practically inoperable. The chairman of the national team handling the disaster, Basuki Hadimuljono, indicated that a 12-kilometer corridor would be acquired to the west of the affected area to rebuild the turnpike and also to construct a new rail line and gas pipeline to replace the disrupted links. These huge costs will be carried by the public sector.

Currently, more industrial activities in Indonesia involve high risks for human health and the environment; management efforts should be rapidly concentrating on reducing the probability of such occurrences and minimizing the consequences.

Corporate risk communication (CRC) management is a tool enabling industry to do the above. This entails informing the potentially affected stakeholders of the risks they are exposed to and the actions taken by industry to manage these risks.

CRC, in the case of environmental and health risks, implies not only a continuous exchange of data between an industry and its stakeholders, but also an active engagement of these stakeholders in key decisions concerning risk exposure, risk management and emergency preparedness.

The enormous potential legal and moral liabilities, huge economic costs and externalities, erosion of corporate reputation by the media and NGOs are main driving forces behind CRC management.

CRC is not in itself the solution to eliminate all industrial accidents, disasters or routine emissions that could affect the health and safety of the potentially affected stakeholders but it certainly contributes to reducing their occurrences and in minimizing their consequences.

MIGUEL FREDES
Jakarta

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