Regulatory Innovation: EMSs as Environmental Regulatory Tools

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Regulatory Innovation EMSs as Environmental
Regulatory Tools

• Jason Morrison
• Pacific Institute for Studies in Development,
  Environment, and Security (www.pacinst.org)
• May 22, 2000

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Environmental Management System
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EMSs can further principles of sustainable
development

• reconcile social and environmental objectives
  with economic goals
• incorporate environmental considerations into
  day-to-day business decisions
• help regulatory agencies achieve policy
  objectives
• facilitate new partnerships and improved
  relationships among stakeholders

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ISO 14001 can serve as a valuable internal
management tool, but its ability to meet public
policy objectives and address societal
expectations for corporate accountability is
limited

• ISO 14001 alone cannot satisfy public policy
  objectives
• certification should not be mistaken for denoting
  environmental excellence
• ISO 14001 certification function in the US lacks
  the rigor needed for use in public policy

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History of Federal Environmental Regulatory Reform

• Promoting paradigm shift
• EPAs voluntary programs
• Cleaner, cheaper, smarter
• Project XL, Common Sense Initiative, etc.
• How EMSs fit in . . . addressing what CC cant

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REGULATION ENFORCEMENT
Number of Facilities
INCENTIVES FLEXIBILITY
B
A
PUNISH
PUSH
REWARD
PULL
Environmental Performance
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PERFORMANCE-BASED MODEL
Degree ofGovernment Flexibility
COMPLIANCE ZONE
TRADITIONAL MODEL
Environmental Performance
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EMSs and non-regulated aspects
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Key Parts of an EMS-based Environmental
Regulatory Program

• Superior environmental performance and quid pro
  quo
• EMS plus additional components
• Positive reinforcement
• Performance reporting, transparency
• Multi-media and facility-wide

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Advantages DrawbacksRegulated Entity
Perspective

• Cost savings
• Product quality improvements
• Improved public image
• Regulatory flexibility

• High transaction costs
• Regulatory uncertainty

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Advantages DrawbacksRegulator Perspective

• Reduced regulatory oversight burden
• Better environmental performance data
• Improved environmental quality (e.g.,
  non-regulated aspects)

• Large resource investment (especially in the
  beginning)
• Potential for greenwashing

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Advantages DrawbacksNGO Perspective

• Better corporate environmental performance data
• Potential to move beyond compliance
• Improved relationships among companies,
  regulators, and NGOs

• Potential for regulatory rollback
• Voluntary self-enforcement ineffective
• Lack of transparency

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Examples of Program Development
Oregon Green Permit Program New England StarTrack
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Accomplishments

• Improved environmental management
• Enhanced stakeholder relations
• Some facility cost savings
• Some management reporting of non-regulated
  aspects

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Challenges

• Interest level of pilot facilities
• Interest level and perceptions of NGOs
• Program resources
• Jurisdictional issues
• Defining superior environmental performance
• Environmental performance reporting

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Future Design and Implementation Issues

• Program design alternatives procedural vs.
  substantive compliance
• Determining appropriate NGO role
• Scale-up issues (e.g., determining who will
  participate, reducing transaction costs,
  reporting requirements, role of third parties)
• Evaluation the causality dilemma

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Other Applications of EMSs in Public Policy

• Environmentally Preferable Procurement (EPP)
  Programs
• Supplementary Environmental Projects (SEPs)
• Consent decrees