Prasad ModakEnvironmental Management Centre

New Models for Environmental Governance

What are the challenges

we face today ?

We are already late ….

Environmental issues critical today as never before

Wasteful Use of Resources

• Phosphoric acid generates 500% waste gypsum• One tonne of rock to produce one ounce of gold• Five tonnes of wild fish to produce one tonne of farm

fish• Energy resources - oil extraction is 35% efficient,

electricity production also 35%, • Irrigation uses 80% of abstracted freshwater in the

world, but loses 65% of it before it reaches the farm.

Poor Flow of Resources into Products

• Only 7% of resources end up in the product

• 80% of products are used only once

• Many products consume more resources during the use phase than during manufacture

• Most product themselves become waste eventually

Population under the age of 15

(Un)sustainable Consumption and Production

8Green Purchasing Network India

Scenario C1

Scenario C2

1850 1900 1950

0

20

40

60

80

100

2000 2050 2100

1850 1900 19500

20

40

60

80

100

2000 2050 2100

Oil

Gas

Oil

Gas

Coal

Other

Solar

Traditional renewables

Other

Nuclear

Solar

Biomass

BiomassNuc.

Traditional renewables

Hydro

Hydro

Coal

Perc

ent

Perc

ent

IPCC: Energy Supply Projection: Scenario C1

Renewable Resources is the Future

Ecological Footprint

Source: Donella Meadows

U.S./12.2 Acres

Netherlands/8 Acres

India/1 Acre

Commercial

buildings create almost 20% of Greenhouse gases in the US.

Global Warming

• Precautionary and preventive actions need to supersede reactive or curative steps

In Most Countries

• Pollution events and protests govern response to environment

• Regulations are generally pollution focused, residue limited and rarely integrate resources and encompass products

Environmental management is not only about responding to problems

• It is a process that is proactive and anticipatory

• It must address resources – their protection, enhancement, allocation and best possible use

• It should influence products & services – keeping life cycle perspective – if the interest is to tame consumption and stimulate sustainable production

Basic Approach to Manage Pollution

Setting Policies - Proactive Principle

Establishing Legal and Institutional Framework - Precautionary Principle

Enforcing Policies and Legislation to ensure compliance – Polluters pay Principle

Reviewing effectiveness of measures - Strategic Principle

MoEF and the Pollution Control Boards (CPCB and SPCB) form the regulatory and administrative core .

1992 •Abatement of Pollution •The National Conservation strategy•Policy Statement on Environment and Development

1993 •EAP (Environmental Action Programme)

2006 •The National Environment Policy (NEP) 2006

The Journey in India

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

The Water (Prevention & Control of Pollution) Act, 1974

The Water (Prevention & Control of

Pollution)Cess Act, 1977 The Air (Prevention &

Control of Pollution) Act 1981

Forest Conservation Rules, 1981

The Water (Prevention & Control of Pollution)Cess Rules, Amendment 1978

The Water (Prevention & Control of

Pollution) Rules, 1975

The Air (Prevention & Control of Pollution) UT Rules, 1983

The Air (Prevention & Control of Pollution) Rules, 1982

Forest Conservation Act, 1980

The Prevention of Cruelty to Animals Act, 1960

The Indian Wildlife (Protection) Act, 1972

The Indian Forest Act, 1927

Other allied Acts:

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

The Environment (Protection) Act

The Rules for the Manufacture, Use, Import, Export and Storage of Hazardous Micro-organisms, Genetically Engineered Organisms or CellsHazardous Wastes (Management & Handling) RulesThe Manufacture, Storage and Import of Hazardous Chemical Rules

EIA Notification, various amendments

The National EnvironmentalTribunal Act

The Water (Prevention & Control of

Pollution) Cess Act, Amendment, 1992

The Public Liability Insurance Act,

Amendment 1992

The Environment (Protection) Act

Amendment

The Public Liability Insurance Act

The Environment (Protection) Rules

Declaration of Coastal Stretches as CRZ

Scheme of Labelling Environmentally Friendly Products (ECOMARK)

The Water (Prevention &

Control of Pollution) Act,

Amendment 1988

Forest Conservation Act, Amendment 1988

Forest Conservation Rules, Amendment 1992

The Air (Prevention & Control of Pollution)

Act, Amendment 1987

1996 1997 1998 1999 2000 2001 2002 2003 2004

The Chemical Accidents (Emergency Planning, Preparedness & Response) Rules

Biomedical Waste (Handling & Management) RulesThe Environment (Protection) Second Amendment*

Noise Pollution (Regulation &

Control) Rules

Hazardous Wastes

(Management & Handling) Rules,

Amendment

Manufacture, Storage & Import of

Hazardous Chemical Rules,

Amendment

Municipal Solid Wastes

(Management & Handling) Rules

Ozone Depleting Substances

(Regulation & Control) Rules

Recycled Plastics

Manufacture and Usage Rules

Environment (Siting for Industrial

Projects) Rules

Environment (Protection)

Second Amendment

Recycled Plastics Manufacture and Usage Rules, Amendment

Biomedical Waste (Handling & Management) Rules, Amendment

Water (Prevention & Control of Pollution)Cess Act, Amendment

Hazardous Wastes (Management & Handling) Rules, Amendment

Forest Conservation Rules

The Environment (Protection) Amendment Rules

Prohibition on the handling of

azodyes

Noise Pollution (Regulation & Control) Rules, Amendment

Environment (Protection) Second, Third & Fourth Amendment

Batteries (Management

& Handling) Rules

Environment (Protection),

Second Amendment

The Biological Diversity Act

The Environment (Protection) Second Amendment

National Environment Appellate Authority Act

*: All Amendments refer to Rules

And so on …..

Gradual Evolution of Environmental Regulations

Limits on BOD

Control on Sludges from Wastewater Treatment Plants

No Azo dyesNo chlorine bleaching

Not more than x m3/ton of water for pulp washing

Product not to contain ….

Product rejects to be managed responsibly across Life Cycle

Where do we stand?

Key ChallengesAssessing existing polluters (industries) and ensure compliance

(Audits, Assessments, Renewal of Consents)

Managing new development (EIA Notification, Granting Consents, Project limited EIAs, Cumulative Effects, Carrying Capacities, Mainstreaming)

Addressing area wide issues related to environmental management (Cumulative Effects, Carrying Capacities, Action Plans, Institutional issues, Lack of experience, Flawed approaches like CEPI)

Resolving legacy issues (Hazardous waste dump sites)

Legacy issues • Illegal dump sites and health impacts, damage to

eco-systems and resources, economic implications

• Public outcry – Public Interest Litigation – Supreme Court’s intervention

• Remediation and Rehabilitation (Legal system not yet ready)

• National Plan coming up

Status of Dump Sites Identified ( Illegal)

Uttaranchal

Jharkhand

Chattisgarh

Total No. of HW dump sites identified : 64

21

02

01

10

03

0106

08

05

04

03

India’s Performance on Environmental Compliance

• Around 60% for major polluting industries

• Small and Medium Industries – an issue

• Urban Local Bodies not having adequate environmental infrastructure

• Islands of “excellence” demonstrating “beyond compliance”

India’s Environmental Performance IndexEPI Score 60.3EPI Rank 120

Pressures for Change• Competition, Quality, Costs• Resource constraint (water/energy)• New regulations – Waste – Residues -

Process – Resources – Products – Rejects – Waste –Residues

• Leveling up and Harmomization• Public expectations -Social justice• Transparency and Accountability• Risks of reputation

http://www.greensupplyline.com/showArticle.jhtml?printableArticle=true&articleId=192300815

Cost of Non Compliance

compliance

Supporting CorporateObjectives

Business development and beyond

Economic Performance

En

vir

on

men

tal P

erf

orm

an

ce

Recent Trends – Going Beyond Compliance

Regulators The Law

Polluters

Regulators have limited enforcement capacity

Traditional regulatory model

Polluters

Elements• Reputation• Market requirements (e.g. Ecolabels)• Credit risks

Consumers

Investors

Markets

Markets as Regulators

NGOs

Plants

Community

Informal Regulation

Elements• Right to Know• Public Hearing• Public Interest Litigation• Partnerships

“Ratings” and Disclosure

Bad News

0

10000

20000

30000

40000

50000

60000

Date

Stoc

k Pr

ice

in M

exic

an P

esos

Mexico: Government fines Kimberly-Clarkfor a water pollution violation.

5/18

/92

5/20

/92

5/22

/92

5/26

/925/28

/92

6/01

/92

6/05

/92

6/09

/92

6/11

/92

6/15

/92

6/17

/92

Good News

10.0015.0020.0025.0030.0035.0040.0045.0050.0055.0060.00

Date

Stoc

k Pr

ice

in P

hilip

pine

Pes

os

Philippines: Regulatory authority highlights San Miguel Corporation’s environmental commitmentand the installation of pollution control equipment.

1/25

/91

1/31

/91

2/06

/91

2/18

/91

2/22

/91

2/26

/91

3/06

/91

3/12

/91

3/18

/91

3/22

/91

2/12

/91

Case in Indonesia

CommunitySocial PressureSocial Pressure

& Local & Local EnforcementEnforcement

MarketsReputationReputation& Profits& Profits

Public Information &Public Information &RatingsRatings

{ } { }

BAPEDAL

Selection of polluters

Mail survey questionnai

re

Develop pollution database

Data analysis by BAPEDAL

Data verification

by BAPEDAL

Performance Rating Process

Rating finalization by the Advisory Board

Rating

submitted to the Minister

of Environment

Rating

submitted to the Minister

of Environment

Rating reported to

the President

Rating reported to

the President

Rating released to the press

Rating released to the press

Using Public Information:Using Public Information:PROPER PROPER

Indonesia’s Public Disclosure ProgramIndonesia’s Public Disclosure Program

In Compliance with emission (concentration) standard?

100% treatment of Hazardous waste?

Pollution Accidents?

In compliance with pollution (load) discharge permit?

Inappropriate environmental behavior?

Utilization of solid waste >80%?

Subject to Administrative Penalty?

Subject to Public complaints?

ISO14000?

In compliance with environmental management requirement?

Clean production?

Green BlackRedYellowBlue

Frequent Violation?

Administrative Penalty > 50,000

Serious Pollution Accidents

Y

Y

Y

Y

Y

Y

Y

N

Y

Y

Y

Y

Y

Y

N

N

N

N

N

N

N

N

N

N

N

N

Y

N

Case in China

Follow-up by Media, Company Plans in Response to Rating Zhenjiang Daily, 08/25/00, 09/12/00, 09/22/00

Environmental Rating

Company Plans in Response to Rating

Name of the Enterprise

Photo of the CEO

Program Background

Emergence of Proactive Corporate Governance

Market leader in UK, but under pressureEnvironmental code for clothing (1993)

Exploring EMS for major suppliers:not ISOGlobal Sourcing Principles/ETI (1999)

Detailed supplier assessments on product and production

Launched organic range (2000)

 

MARKS & SPENCER

Target of Clean Clothes Campaign ISO14001 + Code of Conduct

SOCAM audited c.1,500 units in 1999Child labour priority: TISSO

Narrower than other codes (eg collective bargaining), but requires Oeko-Tex

 

C & A

Environmental Textile Standard (1992)‘Future Collection’ range -- but only 1%

‘Ecological Suppliers’ scheme for hazardsSupplier training and auditing

Ethical code of conductPilot SA8000 audits for suppliers

 

OTTO

We have to LiveWith the Brand

• Developed in Oct 2004 by companies

engaged in manufacturing of electronic

products

• Participating industries included– Celestica, Dell, Flextronics, HP– IBM, Jabil, Sanmina SCI– Solectron

Electronic Industry Code of Conduct (EICC)

• The EICC outlines standards to ensure that working

conditions in the electronic industry supply chain are safe,

that workers are treated with respect and dignity, and that

manufacturing processes are environmentally responsible

• It includes

– Original Equipment Manufacturers (OEM’s)

– Electronic Manufacturing Services (EMS)

– Original Design Manufacturers (ODM) including contract

Labour

Scope of EICC

Section A: Labour

Section B: Health and Safety

Section C: Environment

Section D: Elements of an acceptable

system for conformity to code

Section E: Standards for Business ethics

The EICC Sections

• As a fundamental principle to this code, the

business and all of its activities must operate

in full compliance with the laws, rules and

regulations of respective countries.

• The code encourages it participants “To Go

Beyond Compliance”

Pushing Beyond Compliance

The Upside

• Increased Sales and Market Share• Strengthened Brand Positioning• Enhanced corporate image and clout• Increased ability to attract, motivate and

retain employees• Decreased operating costs• Increased appeal to investors and financial

analysts

Increased sales and Market share

Eco-lables have helped many industries to widen and secure their markets (Century Textiles in India, Misr Mahalla in Egypt)

The rural movement of HLL is an outstanding example of how capacity building of the community helped HLL to acquire a larger market share of its products in the country.

Strengthened Brand Position

• It is estimated that more than 70% of the Orchid Ecotel customers are repeat customers because of commitment to environment

• Companies with a public commitment to ethics perform better on three out of four financial measures than those without. These companies also have 18.0% higher profits on average (Institute of Business Ethics 2003).

Environmental Audit? Or Optimization for Profits?

Case of Misr Mahalla, Egypt

Misr for Spinning and Weaving Co., Mahalla El-Kobra is a public company, the largest in the Middle East. It has an average annual production of 48,000 tons, of which approximately 50% is exported.

The factory occupies and area of 600 acres (including residential area) and has a workforce of over 30,000. It processes cotton, wool, synthetics and blends to produce a wide range of products including ready-made garments, yarns, finished fabrics, bandages and blankets.

1. Management commitment

2. Selection of eco-label product line(s)/articles

3. Establish a factory eco-labelling implementation

team

4. Obtain eco-label certifying procedures and application form

5. Prepare process flow diagram(s)

6. Conduct audit of chemicals and dyestuffs

SCOPING

PREPARATORYACTIVITIES

Steps for Obtaining Eco-label

7. Phase out of objectionable substances

CAUSEDIAGNOSIS

8. Chemicals and dyestuff substitutionOPTION

GENERATION

9. Process optimization

10. Verification and operating procedures

11. Establish a quality

assurance system and prepare a

Quality Manual

12. Submit application form, declaration of conformity and samples

13. Award of eco-label certification

14. Annual renewal

IMPLEMENTATIONPLAN

CLOSINGACTIVITIES

Key milestone – Identification and phase out of objectionable substances

• As a result of the chemical audit (step 6), there may be a need to phase out objectionable substances (steps 7, 8)

• Substitution may require-

– Minor modifications: Substitution of chemicals / dyes on the banned list; may / may not require changes in the processing recipe

– Major modifications: Substitution of chemicals / dyes on the banned list; requires changes in the production lines or the processing recipe

Key milestone - Process Optimization

• In some cases, changes implemented result in use of more expensive chemicals and dyes

– However, overall costs may be reduced (lesser amounts of better quality dyes needed to maintain product quality)

• In other cases, costs may be considerably reduced(!) by optimizing existing production techniques, both in modified and downstream processes

How does one achieve Process Optimization?

• Process optimization is achieved by-

– Inspecting all recipes and procedures– Identifying where excess raw materials are

being used– Identifying where process steps can be reduced

Phase out of harmful chemicals and process modifications at Misr Mahalla (Egypt)

• An example of effects of chemical substitution, accompanied by process optimization benefits; i.e. modifications to the bleaching process

Process Cost (US$); basis=1ton

Cost differential

(US$)

Conventional half-bleach

159.7 -76.4

Modified half-bleach

83.3

Conventional full-bleach

139.4 -11.6

Modified full-bleach

127.8

Phase out of harmful chemicals and process modifications at Misr Mahalla (Egypt)

• Here, chemical substitutions AND process modifications resulted in an annual savings of LE 30,456 (about US$ 9,000), after incorporating values for-– Chemicals purchase– Optimization of water– Optimization of steam– Optimization of electricity consumption

Modifications to the bleaching process = LE 89,820

The bulk of savings resulted from:

Resulted in a yearly increase = LE 59, 364

Conversely, purchasing “eco-

friendly” chemicals…

Lowering of Costs – Increasing of Profits

Case studies and More Case studies

• 100 Success Stories – Waste Minimization Database of India

• 440 Case studies – International Cleaner Production Information Clearinghouse

• TERI Awards, Green Governance Awards of BNHS/ICICI , Vasundhara Award

WASTE MINIMISATION CIRCLE (WMC)Waste Minimization Circles

RESULTS (Economic Benefits from the Project)

(i) Number of WM options identified : 500+

(ii) Number of WM options implemented : 220+

(iii) Investment made by member units : > Rs. 10 Crores

(iv) Annual savings to member units : > Rs. 9.0 Crores

(v) Gross Payback period : <14 Months

Source : National Productivity Council

WASTE MINIMISATION CIRCLE (WMC)

Waste Minimization CirclesRESULTS

(Environmental Benefits from the Project)

Reduction in water consumption : 10-35%Reduction in electricity consumption : 15-20%Reduction in fossil fuel consumption : 10-20%Reduction in raw material use : 10-20%Reduction in waste water generation : 10-30%Reduction in Air Emissions (GHG) : 5-10%Reduction in solid waste generation : 5-20%Yield improvement : 2-5%

Source : National Productivity Council

Are WMC’s now working?

From Process to Products – Moving Upstream

Six Focal Areas:

Mass

Energy

Hazardous Substances

Recyclability

Packaging Mass

Extended/Long Life

The Product Focus – Life Cycle Thinking

Compliance Exclusions & Preferences

Leanness

Consistency

Monitoring & Disclosure

Key Elements of Going Green

Techno-Economic feasibility

Environmental Sensitivity and Responsibility

Social (Consumer) Acceptability

Global Environmental Regulations on Products

EUChina

U.S.Korea

RoHS Directive (July 2006) EuP Directive (2007) Reach Rule (2007) WEEE Directive (August 2005) ELV Directive (July 2003) Packaging Waste Restrictions (December 1994) Netherland Cadmium Restrictions (June 1999)

California RoHS (Electronic Waste Recycling Act; Jan. 2007)

Packaging Heavy Metal Restrictions (8 states)

Main Mercury Regulations (July 2002)

Battery Directive (May 1996)

Argentina

<under study> RoHS Directive Product Take Back Program

Australia<under study> RoHS Directive

J-Moss (Revised Law for Promotion of Effective Utilization of Resources)(Japan RoHS: 2006.7)

Japan

China RoHS (Administration on the Control of Pollution Caused by Electronic Information Products; March 2007)

Korean RoHS(July 2007?)

Reduce risks

Leveraging on Greening

Enhance Competitiveness

Reduce environmental impact including GHG

emissions

Drive innovation

Partner producers and consumers

Leanness Consumption of resources and generation of

wastes/emissions

Consistency and Commitment for

Continual Improvement

Responsible disclosure

ComplianceExclusions/Preferences Minimizes Risks,

Improves Competitiveness, Lends a Brand

Essentially leads towards Smart SustainAbility

Green Flagship Products – Philips Examples

Philips ALTO Energy Advantage 25 watt T8•Mercury content 40 % less•Uses 11 % less energy• Life improved by 30 %

Philips MASTER Compact Halogen Lamp integrated (CHL-i) with EcoBoost Technology

•40-60 % Reduction in energy consumption

Philips TV projection UHP lamp •Consumes 50 % less energy•Uses 52 % less packaging•Life improved by 25 %

Green Flagship Products - Examples

Philips BDL4221V Flat TV• consumes 45% less energy• uses17% less packaging .

Philips PET830 Portable DVD Player•Consumes 10% less energy •Weights 26% less

Philips HTS6600 Home Theatre• Consumes 74% less energy

Combined Effort of Green Purchasing Activities in Japan

Green Purchasing Law Target: Public Sector Started in 2000 17 categories 214 items

(Jan ‘08)

Eco Mark Type I eco-labeling (ISO14024) Started in 1989 Top runner standard 4,400 certified products within 48

categories (Jan ‘09)

Green Purchasing Network Leading role in promoting

GP in Japan Started in 1996 2,920 members (2,381

companies, 268 governments, 300 NGOs)

These to activities These to activities had started before had started before Green Purchasing Green Purchasing Law was enactedLaw was enacted

They rapidly spread They rapidly spread green products to green products to private sector and private sector and stimulated the stimulated the expansion of green expansion of green marketsmarkets

Financing and Insurance Community

Equator Principles, July 2006• Developed from the efforts of a small number of

banks working in project finance sector convened in London, together with the World Bank Group's International Finance Corporation (IFC) in October 2002

• To jointly seek ways to develop a common and coherent set of environmental and social policies and guidelines that could be applied globally and across all industry sectors.

• This led to the drafting of the first set of Equator Principles by these banks which were then launched in Washington, DC on June 4 2003.

The Equator Principles• Principle 1 – Review and categorization• Principle 2 – Social and environmental assessment• Principle 3 – Applicable social and environmental

standards• Principle 4 – Action Plan and Management System• Principle 5 – Consultation and disclosure• Principle 6 – Grievance mechanism• Principle 7 – Independent review• Principle 8 – Covenants• Principle 9 – Independent monitoring and reporting• Principle 10 – Equator Principles Financial Institutions

(EPFI) ReportingCurrently there is no leading Indian FI that has signed the Equator Principles

The Equator Principles were ultimately adopted by over forty financial institutions during a three year

implementation period. A subsequent updating process took place in 2006 leading to a newly revised set of Equator Principles that were released in July 2006

International funds of worth 8 trillion are now under PRI by 70+ signatory institutions

Most important factor in forming opinion of a company

Survey: Altered Imagesthe 2001 state of corporate responsibility in India poll

Tata Group…"CSR is not another separate activity. It is an outcome of business models that go beyond just financial viability. Cost of helping communities to develop becomes the cost of the business-like material or labor. Billions of poor people have the potential to become part of the market if helped. Before making the `poor' into a market, business models must build sensitivities and capabilities to reach the poor and underprivileged".

Anant Nadkarni, GM CSR Tata Group,

New Models for Environmental Governance

Lessons learnt …

• Compliance must be integrated with improving Competitiveness. Thus focus should be on both resource management and pollution abatement

• Use of market instruments critical – only enforcement not enough

• Life cycle thinking a must - linking both production and consumption

Lessons learnt …• Need to use “innovative toolboxes”

• Projects must envelop with plans. Programmes and policies

• Area wide approaches work better. We need more work.

• Governments need to be both Regulator as well as Facilitator

The Ingress… – blurring the national governance and boundaries

Multilateral Environmental Agreements (India’s Biodiversity Act, Ozone Depleting Substance Rules, Alignment of Hazardous Waste related rules with Basel Convention)

Safeguards from Multilateral/Bilateral Development Agencies and Private Financing Institutions (e.g. Equator Principles)

The Ingress… – blurring the national governance and boundaries

Corporate Codes of Conduct (application of global principles)

Collective Guidelines and Agreements for Practice and Engagements (e.g. Electronic Industry Codes of Conduct)

Market Gatekeeping (e.g. Ecolables and Product related Regulations in the EU)

How do we change and organize?• Regulatory Models Must Expand…. Enforcement of law

alone is often not enough. We need to take advantage of markets and communities

• Problem Solving Process Must be Strategic…We need to envelop projects through policies, plans and programmes;

• Don’t just focus on brown issues, look at blue and green too. Look at the big canvas of managing resources

Environment today is where the Internet was four years ago – on the

edge of a infinite paradigm shift.

System need to be in

a helical that to lead

and ride on….

Need to Work Together

Thank you

pmodak@vsnl.com