• Mechanics: Presentation and commentator from the IP team

• Breakout Session 3: Sustainability Topics• Chair: Ivan Nimac• Presenter Arthur Appleton, Syed A.

Mahmood, Grahame Dixie• Discussants: Wim Douw

Event 2. Breakout Sessions

Sustainability TopicsDay 3 [breakout

session]

ViennaOctober 14, 2015

INVESTMENT POLICY AND PROMOTION WEEK

OUTLINE

C. Effective Regulatory Delivery for Enhancing Sustainability

B. The Challenges of Good Regulatory Practice

1. The regulatory cycle

2. The enablers of good regulatory practices

3. Establishing good regulatory practices: the need for nuance

1. Regulatory delivery when government capacity is low

2. Regulatory delivery when government incentives are poor

3. Specific regulatory reform suggestions: example from Bangladesh

A. Good Regulatory Practices and the Sustainability Agenda

A little known statistic

Some sustainability issues make global headlines, some don’t

A picture seen all over the world

Average water use in Bangladeshi textile factories

m3 of water per ton of

fabric

m3 of water per ton of

fabric

Average water use in best practice textile factories

200 50vs

Driving the sustainability agenda: standards and regulations

Standards

Standards which have been made mandatory by government through

regulations

Regulations

Standards set by private sector

Regulations which are not related to specific standards

Objective• reduce discharge of pollutants by factories

Design questions• should we target production, or treatment, of pollutants?

• do we use regulations or other policy instruments?

• what will be the costs: to government to enforce, and to business to comply?

Enactment of regulations• inform front-line officials about new regulation; provide

guidance on implementation

• inform stakeholders about new regulations

Enforcement • modernize inspection function; build enforcement capacity

• use modern technology to collect pollution discharge data

• establish B2G feedback loops on implementation quality

• establish feedback loop within government to identify enforcement challenges

Assess regulatory outcomes• develop approach to assess regulatory outcomes

The regulatory cycle: with a sustainability related example

Define regulatory objectives

Design regulations

Enact regulations

Enforce regulations

Assess regulatory outcomes

The enablers of good regulatory practices: capacity & incentives

Incentive:

• of governments to consult stakeholders during design

• of businesses to participate in consultation• of government to undergo economic

analysis of regulations

Capacity:

• of government regulators to enforce regulations

• of higher bodies in government to oversee lower level regulators

• of businesses to comply with regulations• of civil society to monitor compliance

Incentive:

• of government officials to enforce regulation• of businesses to comply with regulations• of civil society to advocate for compliance

Capacity:

• of government to design good regulations• of government to collect data needed for

good regulatory design • of private sector and citizen to assess

implications of regulations

Design of regulations

Cap

acit

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tive

s

Ena

ble

rs o

f g

oo

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reg

ula

tory

pra

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es

Enforcement of regulations

Stages of the regulatory cycle

Establishing good regulatory practices: need to be nuanced

Incentive

Capacity

Government

Businesses

Scenario 1

Businesses

Businesses

Government

Scenario 2

Scenario 3

Aligning regulatory delivery with capacity and incentives: Scenario 1: Low government capacity

Private sector ability to comply

Go for smart regulations that make enforcement easier

Increase capacity in government

agencies to play educational role

vis-à-vis businesses

Modernize government

systems to facilitate enforcement

(such as risk-based inspections)

Low High

Encourage collective action by industry for greater voluntary compliance

Consider outsourcing some regulatory functions to the private sector

Develop partnerships with private sector and civil society to enhance government capacity

Regulatory streamlining Addressing behavioral issuesCapacity/systems building

Aligning regulatory delivery with capacity and incentives: Scenario 2: Moderate government capacity but low incentive

Private sector ability to comply

Low High

Reform regulations

to make compliance easier

for businesses

Help build capacity in private sector to

comply better

Focus on incentive issues. Address collusion

between business and government officials.

Develop strong advocacy mechanisms to influence business behavior

(such as media and civil society advocacy)

Regulatory streamlining Capacity/systems building Addressing behavioral issues

Develop strong oversight mechanisms in government to address enforcement inertia

Country example: enhancing sustainability in Bangladesh textile sector

Reforms proposed by a public-private working group working on textile sector sustainability in Bangladesh

Observed anomalies regarding duty rates for environment merit items in the customs duty structures should be rationalized.

This database may be set up by the government and draw information from third parties, including from civil society, industry peers (such as voluntary benchmarking schemes), and multinational brands.

Move from concentration ratios to load-based standards, which take into account the total amount of substance passing through the system during a given amount of time.

The Ministry of Environment should review the scope for implementing load-based standards in close consultation with key stakeholders and brands.

Regulatory enforcement (inspections)Fiscal incentives

Standard setting

Assess, every quarter, the effectiveness of the inspection program against intended objectives by comparing the results of the inspections with the targets. Collect feedback from businesses and citizens

Make legal provisions requiring installation of ETPs within the WDF textile factory premises

mandatory.

Develop detailed ETP inspection program so that all ETPs are inspected at regular intervals.

Open data

This database may be set up by the government and draw information from third parties, including from

civil society, industry peers (such as voluntary benchmarking schemes), and multinational brands.

Partnership with private sector and civil

society

THANK YOU

INVESTMENT POLICY AND PROMOTION WEEK