I'm not sure what you mean by 'sponge coral'. The only thing I can
think of is dead coral that has partially deteriorated or been worm
eaten. Back in the days when Taiwan was a world leader in
carving/cutting coral for the world market, I used to see quite a
bit of it being brought in by the dredging boats. A good friend who
owned a coral cutting/carving factory, explained what it was and how
it was worthless. Essentially, it was just coral with lots of holes
in it! Right...it looked a lot like a sponge. It still showed the
original color of the coral; red, orange, pink or whatever, but
otherwise, it was ugly.
If what you are talking about is the same stuff, it doesn't have any
effect on the environment because its already dead, except maybe
removing some materal that other coaral might use in reef building.
On the other hand, if they are dredging it, they proably are doing
human damage to the reefs.
Cheers from Don at The Charles Belle Studio in SOFL where simple
elegance IS fine jewelry! @coralnut2