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Next Generation Environmental Management Techniques and the Emergence of Sustainability Management

Presented by Edward L. Quevedo, DirectorEnvironmental Management & Sustainability ProgramsWSP Environmental North America


Overview of Session

1. EMAS 1 and the Emergence of Environmental Performance

2. Experiences and Legal Issues in EMAS I

3. The Foundation for EMAS II – the Sustainabitlity Debate and the Pendency of Earth Summit II

4. EMAS 2 and Sustainable Production5. Anticipated consequences of EMAS II

and Potential Legal Issues


Fundamental Argument of the Session The Context in which our clients’ businesses

(whether those are private sector manufacturers, municipal agencies, universities, service organizations, or other entities) operate has fundamentally changed

This change is a consequence of clear trends identified as early as 1972 which are now coming to vest

This changed context makes the traditional environmental lawyer’s toolbox, including resort to cautious regulatory interpretation, defensive advocacy, and agency negotiation, drastically inadequate to meet our clients’ needs and our fiduciary duties to our clients and their stakeholders and shareholders


Part 1: EMAS 1 and Environmental Performance

Rio Earth Summit and Agenda 21 Continuing environmental degradation in the

face of increasingly strict environmental laws The persistent problems of regulatory

prescriptionStifles innovationDistracts from the businessMakes environment and ecology a side line issue

So . . . What to Do?


The Regulatory Design Problem

“Bad design is having to institute several hundred thousand rules and restrictions under the jurisdiction of government and expecting business to know them all, much less obey them.

Good design makes things easier and simpler. Good design seems natural, unaffected, and appeals to common sense. Good design for the commercial system accounts for and appeals to the innate behavioral modes of both governance and commerce. Let governance govern with a minimum of intrusion and a genuinely “conservative” approach; let business be business at its best: humane and creative and efficient.”

Paul Hawken, The Ecology of Commerce


Enter EMAS

New IdeasVoluntary Environmental PerformanceThe Initial ReviewThe Environmental StatementProduct design, facility planning,

supplier management, employee education, personal responsibility, continuous improvement

Are these legal issues?


Part 2: Experiences and Legal Issues in EMAS I


Legal Issues We Encountered during the EMAS I Period (April 1993 through March 2001):Legislation from DG Environment (XI) Integrated Product Policy document

released in early 1999Developing Sector timetables for

submission of sustainability plans and indicators, based on environmental indicators in EPE Guidance

Release of SD strategy document in October 2000


Integrated Product Policy Definition: “Public Policy which explicitly aims

to modify and improve the environmental performance of product systems”

EU considering comprehensive policy to address all life-cycle stages of product

DG Environment has developed a Green Paper Potential measures within IPP:

waste and materials prohibitions; green product design; public procurement policies; product-focused fiscal measures; labelling schemes; EMAS scheme for retailers; extended producer responsibility


Goals of IPP

Replace Product, Packaging, Process and Logistics regulations with “integrated” approach a la IPC

Add principle of User Responsibility to Producer Responsibility

Rationalize existing RegulationsRely on EMS and EMAS as a

regulatory device


Content and Principles of IPP

Statement published by the Consultative Forum on the Environment and Sustainable Development

Public authorities should strive to avoid distorting the market - work toward cooperative approach

Task is to provide a frame within which private sector can take advantage of the workings of the market


Information

The green market is still lagging as the decisions made and supply management do not integrate ideas of sustainable production

High information demand existsMarketing instruments and behaviours

must lay the foundation for Integrated Product Policy


Instruments Existing instruments will lay the foundation Assessment, prioritization, and reassembly into “a

coherent framework” Business sector use voluntary instruments

collaborative model for reduction in toxics in products, packaging, logistics, supply chain

using scale and cooperation to increase leverage

production model for hazardous materials management and use (moving the waste equation upstream)


EMAS is both a response to and aid in meeting these new kinds of regulatory goalsNew Ideas

Voluntary Environmental PerformanceThe Initial ReviewThe Environmental StatementProduct design, facility planning, supplier

management, employee education, personal responsibility, continuous improvement

Are these legal issues?


Part 3: The Foundation for EMAS II – the Sustainabitlity Debate and the Pendency of Earth Summit II


Evolution of Sustainable Development as a Political and Legal Concept 1972 – Stockholm Conference on the Environment 1987 - Bruntdland Commission Report (World

Commission on Environment and Development) 1992 – Earth Summit (UN Conference on

Environment and Development) 1999 – European Union Sustainability Policy

Document 2000 – Draft legislation in Holland and Bavaria,

Germany 2001 – ABA Meetings in St. Louis, MO 2002 – Johannesburg, RSA, Rio + 10 Conference

(or, Stockholm +30)


Background

1987 Brundtland Commission report “Our Common Future” - coined the term “sustainable development”

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs


Alternate Definition of Sustainability

The pursuit of long-term viability and progress of our business while taking responsibility for listing, calculating, and improving the environmental, social, and economic consequences of our enterprise.


EU Developments

Since publication of 1st Environmental Action Plan in 1973, the EU has been the most progressive supra-national environmental regulatory body in the world

EU Foundational Treaties:

• 1987 Single European Act: identified Environmental policy as an area in which member states should develop common policies

• 1992 Maastricht Treaty: incorporates sustainable development as an aim of the EU (but vague)


EU Response to Rio 1993: EU Fifth Environmental Action Plan

“Toward Sustainability”: strategy for 1992-2000 on environment and sustainability

2 major principles:1. Integration of an environmental dimension

into all major policy areas will be a key factor in sustainable development

2. Commitments to agreed measures will only be fulfilled by replacing command & control approach with shared responsibility among various actors (government, industry, public)


The Poverty of Environmental Law and the Limits of Compliance Counselling

What we know about Products and Design:Primary output of today’s production process is waste Across all industries, less than 10% by weight of all

raw materials become incorporated into usable productsThe remaining 90-95% of raw materials become waste

from productionMuch of the resulting 5-10% that becomes a product also

eventually become waste via disposal at end of life

Sources: Hawken & Lovins, Natural Capitalism, 1999, at p. 14; Industrial Metabolism, R.U. Ayers, in Technology & Environment (Ausubel &

Sladovich, eds. 1989); and A Roadmap for Natural Capitalism, Hawken, Lovins & Lovins, HBR 77 (May-June 1999) at pp. 145.158).


Poverty and Limits ContinuedKey learning: while our business top managers fret and obsess over labor and financial capital efficiency, we have created possibly the most inefficient system of production in human history


More Poverty, More Limits Meantime, according to the World Bank, the

poorest quartile of humankind has seen its share of global income fall from 2.5% to 1.25% in the past 25 years

Inverted, this means that the richest 20% of the earth’s human population increased their share of global income from 70 to 80%

In the U.S., the top 10% of the population enjoys 28.5% of the wealth, and the bottom 10% receive only 1.5% of the wealth

Sources: Innovating Our Way to the Next Industrial Revolution, Senge & Carstedt, MIT/Sloan Mgmt Rev.,

Wntr 2001, at p. 25;UNDP Human Development Report, Oxford Press 1996;

World Development Report 1999,World Bank, Washington D.C.


The poorest quartile of humankind has seen its share of global income fall from 2.5% to 1.25% in the past 25 years

In the U.S., the top 10% of the population enjoys 28.5% of the wealth, and the bottom 10% receive only 1.5% of the wealth


What are the key questions here?

Is this of any concern to my clients?

Is this relevant to how I counsel them?

If so, WGD?


We can choose to find the relevance

Or the relevance can be thrust upon us


The Relevance is Thrust Upon Us

European product regulationThe Seattle Effect, and the Genoa

CorollaryDue Diligence and undue riskThe poverty of compliance counselling

Land Use/Energy/Water SupplyTSCA and RCRAThe regulatory/corporate interface


Part 4: EMAS 2 and Sustainable Production


The EU Sustainability Policy and Regulatory Framework EU: Council request for Commission to draft long

term comprehensive strategy for EU sustainable development policy

Sweden: 1997 plan to achieve sustainable development within one generation; EMSs implemented at 99 public agencies (including all ministries)

Germany: to be released by government in Fall, 2000. National Council for Sustainability established to coordinate all policies.

Netherlands: Sustainability as key tenet of NEPP4, prioritizing social issues, climate change, and quality of life


European Council, cont’d

Cologne (June 1999):emphasize speedy ratification and

implementation of Kyoto Protocol Climate policy is the single most

important example of commitment to sustainable development

Urges early decision re: framework for energy taxation

Call upon Councils to report back in 2000 on integration progress in all policy areas


European Council, cont’d

Helsinki (Dec 1999):Called upon European Commission to

draw up long term strategy for sustainable development for the EU

Called upon European Commission to begin working on 6th Environmental Action Plan

Plan for 2001 ecological summit - to prepare for and contribute to Rio+10


Agenda 21 Ch. 30:Strengthening the Role of Industry

a. Make environmentally sound technologies available in transitioning economies without extra external charges

b. Encourage overseas affiliates to modify procedures in order to reflect local ecological conditions and to share these experiences with local authorities, national governments and international organizations.

c. Strengthen partnerships of government and industry to implement principles of sustainable development

d. Establish worldwide policies on sustainable development

e. Ensure responsible and ethical management of products and processes from the point of view of health, safety and environmental aspects.

f. Further, towards this end, business and industry [should collaborate] in order to increase self-regulation, guided by appropriate codes, charters and initiatives integrated into all elements of business planning and decision-making.


Context for Member State Action EMAS II

Focus on sustainable development as goal of EMSsEmphasizes ISO 14001 framework and legal compliance,

improvement of performance, employee involvement, and external communication

Uses P2 hierarchyStrong supplier management component

• “Organizations must be able to demonstrate that the SEAs associated with their procurement procedures have been identified and that significant impacts associated with these aspects are addressed within the management system. The organization should endeavor to ensure that the suppliers and those acting on the organization’s behalf comply with the organization’s environmental policy within the remit of the activities carried out for the contract.”

EMAS II Annex VI Sec. 6.3


Part 5: Anticipated consequences of EMAS II and Potential Legal Issues


The Legal Implications of Seattle, Genoa, and Durban, and the Rumblings in Johannesburg Organizations will be held to a higher standard of

responsible production and product design and manufacure

Increasingly, organizations will be required to account for their social responsibility actions and social and economic impacts

It is inevitable that this will lead to ETHICAL scoring of our clients Financial Scorecards Environmental Scorecards Sustainability Scorecards A Sustainability Management System An Integrity Management System?


The Earth Charter (UNEP/UNDP 1999)

Build democratic societies that are just, sustainable, participative, and peaceful;

Secure the natural bounty and beauty for present and future generations

Protect and restore the integrity of ecosystems, especially the natural processes that sustain life

Use prevention as the best environmental protection device and when knowledge is limited, apply the precautionary principle

Adopt patterns of production, consumption, and reproduction that protect the ecosystem’s regenerative capacities, human rights, and community well-being


Response – Combine Sound Legal Risk Management Counselling, ISO 14001, EMAS II, Agenda 21, mix well. . .

The Sustainability Management System


Unique SMS System Elements

Sustainability execution and performance Supplier management, customer

partnership, and business alliances Stakeholder engagement Functional control and integration

(OpCon) Scope Includes:

Environmental ProtectionEconomic ResilienceSocial Responsibility


SMS and Supplier Management, Customer Partnership, and Business Alliances

“The organization shall establish and maintain procedures to communicate the existence and requirements of its sustainability management system to all relevant suppliers, contractors, and customers. The organization shall consider methods and practices which will enhance its ability to use its economic relationships to responsibly increase prosperity in the public and private sectors.”

“Methods and practices will also be considered which will enable the organization to structure its business alliances with a view toward optimizing opportunities to enhance and encourage sustainability throughout its value chain.”


SMS and Communication (excerpt) “The organization shall adopt and implement

documented processes for external communication on its significant environmental, economic, and social aspects.

“This communication shall form the basis for a continuing dialogue with interested parties (i.e. local communities, customers, shareholders, distributors, trade-unions, non-governmental organizations, industry associations, suppliers, regulators, and others), with the goals of (1) enhancing understanding of the organization’s operations, activities, and sustainability management system, and (2) increasing participation in the organization’s sustainability management system.”


An SMS Begins with Sustainability Aspirations


Designworks/USASustainability Policy Statement:

“We practice responsibility in all areas of human endeavor, by

pursuing services that positively affect the lifestyles of our clients

and their customers.”


We meet this goal by:Meeting or exceeding all [EH&S] legal requirementsDelivering services that incorporate our devotion to responsible resource use, environmental protection, economic resilience, and social responsibilityBuilding relationships with all of our stakeholders, including our suppliers and contractors, to share our SMS goals, encouraging them to incorporate similar practices and goals into their own organizations, and working with us to improve the quality and effectiveness of our SMS


The Relationship Between Product Design and Compliance

Lessons from the High Technology and Life Science Sectors


The Relationship Between Environmental Performance & ComplianceLessons from the Educational Sector


Is this Relevant to My Clients and to How I Counsel Them?

We have considered having the relevance thrust upon us

Can we find the relevance for ourselves?

delivering solutions“The gross national product includes air pollution and advertising for cigarettes, and ambulances to clear our highways of carnage. It counts special locks for our doors and, jails for the people who break them.

It grows with the production of napalm and missiles and nuclear warheads…

And if the gross national product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It does not account the beauty of our poetry or the strength of our love for each other, the intelligence of our public debate or the integrity of our public officials.

It measures neither our wit nor our courage, neither our wisdom nor our learning.

The gross national product measures everything, in short, except that which makes life worthwhile, and it can tell us everything about us-- except whether we are a good people. . . .”

Robert F. Kennedy, May 1968, Chicago

delivering solutionsFurther ReadingFurther Reading

The Dance of Change, Peter Senge, 1999 Innovating Our Way to the Next Industrial

Revolution, Senge & Carstedt, MIT Sloan Management Review, Winter 2001

The Green CEO, Fortune, 24 May 1999 Industrial Metabolism, R.U. Ayers, in Technology &

Environment (Ausubel & Sladovich, eds. 1989) The Ecology of Commerce (Little Brown 1993), Paul

Hawken Biomimicry (University of California 1995), Janine

Benes Where On Earth Are We Going? (Texere 2001)

Maurice Strong Agenda 21, United Nations Conference on

Environment and Development (New York 1992)


Edward L. QuevedoWSP Environmental North America343 Sansome St., Suite 450San Francisco, CA 94105(415) 402.2207

[email protected]

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