Policy statement
Responsible Entrepreneurship
ICC Commission on Environment, 30 January 1998
ICC/ WBCSD Background
document
UN Commission on Sustainable Development
2O April -1 May 1998
"Responsive and entrepreneurial
businesses are required as the driving force for sustainable economic development
and for providing the managerial, technical and financial resources to contribute
to the resolution of environmental challenges…"
Executive
Summary
Since the UN Conference
on Environment and Development held in Rio de Janeiro in 1992, business and
industry have already broadly improved environmental performance, while simultaneously
creating jobs and improving living standards. Acting jointly, business organizations
have further established voluntary business initiatives like the ICC
Business Charter for Sustainable Development.
Eco-efficiency - a management
approach championed by the WBCSD - is a practical example of how business has
responded to the imperatives of responsible entrepreneurship. In addition, a
number of specific initiatives have been adopted: among them, the chemical industry’s
Responsible Care initiative.
Due to very different social,
economic and environmental conditions around the world, responsible entrepreneurship
cannot
be comprised in a "one-size-fits-all" definition. To be successful,
responsible entrepreneurship needs to combine regulatory instruments with voluntary
approaches and market-based initiatives, in a truly flexible and integrated
manner. The goal is to create value for society and the companies, by doing
more with less over a product or service life cycle.
Key tenets of voluntary
initiatives are coordination among companies, dialogue and openness and recognition
of stakeholders' concerns, and partnership with operators along the chain. Proper
reporting of the voluntary initiative’s achievements and wide communication
of these results are also essential for the initiative’s credibility and
its benchmarking, and business and industry will continue to explore verification
of adherence to voluntary initiatives.
Voluntary Systems, and other
agreements with policy makers, demonstrate that business strategies can indeed
address the complex problems of environmental, health and safety aspects of
products and processes. Voluntary approaches should, therefore, be used by policy
makers as they respond to business needs and market conditions complementing
regulation.
1 Introduction
As recognized
by Agenda 21, "Business and industry, including transnational corporations,
play a crucial role in the social and economic development of the country. ...
Increasing prosperity, a major goal of the development process, is contributed
primarily by the activities of business and industry. Business enterprises,
large and small, formal and informal, provide major trading, employment and
livelihood opportunities".
Sharing the
views of Chapter 30 of Agenda 21, ICC and WBCSD believe that "Responsible
entrepreneurship can play a major role in the improvement of the efficient use
of resources, the reduction of risk, the minimization of wastes and safeguarding
environmental qualities".
The principle
of Responsible Entrepreneurship, which is usually understood in
an economic sense, here speaks to the more flexible, market driven and innovative
response that the private sector has increasingly brought to bear on the
new, ever more demanding challenges associated with all three aspects
of sustainable development.
The ICC Business
Charter for Sustainable Development and voluntary initiatives like it provide
a common, global basis for improved environmental performance, cooperation between
companies, and for interactions with stakeholders. The emphasis is on a process
of continuous improvement rather than judgement on any absolute standard, given
the diversity of the business community. In so doing, voluntary approaches
minimize competitive distortions, transactions costs associated with regulatory
compliance, and inspire many companies to go beyond the regulatory minimum.
Eco-efficiency
- a management approach championed by the WBCSD - is a practical example of
how business has responded to the imperatives of responsible entrepreneurship
becoming at the same time more competitive, more innovative, and more environmentally
responsible.
The formal
definition is: "Eco-efficiency is reached by the delivery of competitively
priced goods and services that sati
sfy human needs and bring quality of life
while progressively reducing ecological impacts and resource intensity throughout
the life cycle, to a level in line with the earth’s estimated carrying
capacity".
The concept
makes seven main demands on companies:
reduce the
material intensity of goods and services
reduce the energy intensity of goods and services
reduce toxic dispersion
enhance material recyclability
maximize sustainable use of renewable resources
extend product durability
increase the service intensity of goods and services
Eco-efficiency
is designed to help companies support sustainable development, and encourages
businesses to adapt to new ways of working without immediately abandoning their
traditional practices. Furthermore, the philosophy links the business concept
of value creation to environmental concerns. The goal is to create value for
society and the company, by doing more with less over a product or service life
cycle.
There are many
contributions to improved environmental performance and quality which business
is uniquely placed to make, but it must fit into a framework of science-based,
non-discriminatory environmental regulations relevant to the country or region
concerned.
Moreover, business
and industry recognizes that much remains to be done, and in this paper, identifies
priority areas for further action, building on successes in each.
2 Regulatory
framework in support of responsible entrepreneurship
With conditions so very
different around the world, and with nations at different development stages,
it is hard to make a "one-size-fits-all" list of policies to
help business better support sustainable development. But it is clear that such
policies must be based on an integrated view of the economy, society, and the
environment.
Every government’s
responsibility is - working with business and citizen’s groups - to devise
the policy framework that will allow consistent and realistic goals to be developed
and met. Such a framework should be target-oriented and cost-effective
in implementation.
Governments should use market
mechanisms to encourage actions that work towards the goal of sustainable development.
For example favourable treatment of investments in clean technologies, within
a revenue-neutral tax shift, could speed their introduction. Such instruments
will encourage, rather than force, industry to improve and reward companies
which pursue good environmental management in keeping with sustainable development,
often inducing improvements that go beyond minimum standards.
A truly integrated approach
to sustainable development calls for a range of measures, including market-based
approaches, economic incentives and voluntary approaches. In particular, voluntary
approaches provide flexibility, allowing business to achieve the desired goals
in the most cost-effective manner possible.
Voluntary policies come
in many forms, ranging from binding agreements to voluntary initiatives and
benefits the entire economy of the nation, in line with Agenda 21. For example,
in negotiated agr
eements between government and industry, certain industrial
sectors agree to take specific actions without the need for legislation. The
negotiations allow industry to influence the targets and objectives and to set
a suitable time scale. Industry is left largely free to determine the means
by which targets and objectives will be met. The Dutch have pioneered these
agreements, and other countries, such as Portugal, Australia and the US, are
experimenting with them.
Initiatives taken voluntarily
by industry, independent of government, such as those on energy efficiency
by the European chemicals industry and those by Japanese industry, may not have
legal status but nonetheless can achieve specific goals. The new "hybrid"
voluntary environmental management system processes such as the EMAS Regulation
and the ISO 14001 standard look to entrepreneurial solutions to environmental
problems. Their value and benefit alongside, or in place of, the regulatory
requirements for inspection and reporting is already being usefully explored
in a number of countries.
3 Voluntary
initiatives / Codes
In addition to general principles
embodied in the ICC Charter, a number of specific initiatives have been
developed. For example, the chemical industry’s Responsible Care
initiative seeks to continuously improve the environmental, health and safety
(EHS) performance of the chemical industry’s operations and products in
a manner responsive to the concerns of all stakeholders. Responsible Care was
first adopted by the Canadian Chemical Producers Association (CCPA) in 1985
and has since been implemented by chemical associations and their members in
an additional 39 nations. Responsible Care represents an important corporate
cultural change which has led to improved performance and new levels
of openness with the public.
3.1 The
Voluntary Route
In initiating and participating in voluntary programs like Responsible Care,
industry’s expectation is that through improved performance the public’s
trust and industry’s credibility will be gained and enhanced and
that this will enable it to operate, innovate as a fully accepted member
of the community and to contribute further to human development.
Since its beginnings in
the mid 1980’s, the chemical industry has extended the reach of this voluntary
program to approximately 86 % of the world’s chemical production. In
each country, the initiative is managed by the nation’s primary chemical
trade association representing both domestic and multinational chemical producers.
Participating chemical companies, led by their chairmen and CEOs, commit themselves
to adhere to the Responsible Care Guiding Principles which state that a company
will manage its activities so that they represent an acceptably high level of
protection for the health and safety of employees, customers and the public
and for the environment.
The chemical industry has
made a concerted effort to respond to the challenges outlined in Agenda 21’s
Chapter 19. These efforts include risk reduction efforts, many of which were
underway prior to Agenda 21. In many cases these voluntary risk reduction efforts
have been conducted with the participation of customers, suppliers and other
stakeholders within the chemical distribution chain.
The chemical industry’s
success with Respons
ible Care has led to its recognition at the 1992 UNCED meeting
in Rio, by the Intergovernmental Forum on Chemical Safety at numerous forums,
by the United Nations Environment Programme, by UNGASS in June 1997 and by President
Clinton’s Council on Sustainable Development. Japan’s Ministry of
International Trade and Industry’s Council for Chemical Safety recognized
Responsible Care as an example of an effective, voluntary initiative which in
combination with regulations can promote chemical safety.
Another interesting example
of voluntary initiative are the guidelines for global environmental issues taken
by Keidanren (Japan Federation of Economic Organizations) of 1991. Responding
to the Charter, the member companies established voluntary plans and reinforced
action.
Commemorating five years
after Rio, Keidanren published Keidanren Appeal on Environment in July 1996,
a declaration of voluntary action taken by Japanese industries to conserve the
global environment, which covered four focus areas: global warming, structuring
of recycle-based society, restructuring of environmental management systems
and auditing, and attention to environmental considerations in overseas projects.
The Appeal has been reinforced
by the voluntary action programs covering 36 business sectors with 138 associations,
which shows the business’ commitment towards and after the year 2000 in
the four focus areas identified in the Appeal.
3.2 Voluntary, Collective
Action to Reduce Risk
An important aspect of voluntary initiatives by industry has been
the transformation of EHS management from an individual company activity to
the responsibility of a group of like-minded companies representing significant
segments of a nation’s industrial production. These companies seek broad-based
performance improvement, reduction of risk and the establishment of best management
practices, while lessening concerns about competitiveness, and taking advantage
of opportunities to network and cooperate.
Factors supporting this
trend include:
- agreement among participating
companies that successful EHS management can be shared to promote collective
performance improvement
- peer pressure among companies
driven by an understanding that the failure of one company to deliver on its
commitment threatens the entire group’s license to operate
- input from interested
parties or stakeholders both within and outside the industry which continually
emphasizes their expectations and raises industry performance
- belief that given the
opportunity to innovate and introduce flexibility into their response to regulation,
companies can meet and exceed regulatory and stakeholder expectations
4 Partnerships
All sectors of society,
including government, business, public interest groups and consumers have a
role to play in contributing to sustainable development and business recognizes
that these sectors need to work in partnership, bringing their values
and experience to bear on the challenge. Sustainable development will best
be achieved if each stakeholder fully plays its part, focusing on what each
can do best. Through partnerships, local, nationa
l and global, society
can build on the strengths of each group.
4.1 International Business
Partnership in Voluntary Initiatives
The growth and integrity of Responsible Care is guided by the Board of the
International Council of Chemical Associations (ICCA) and its Responsible Care
Leadership Group. The latter has identified certain fundamental features of
Responsible Care which must be present in each national association’s initiative
and which are designed to ensure global consistency of the initiative for the
chemical industry and for its stakeholders. The ICCA is actively promoting the
spread of the Responsible Care ethic both within and outside the chemical industry.
An important function of
the international Responsible Care network has been its ability and success
in bringing EHS innovations from one company or country to the attention and
benefit of all. So, for example, a novel technique for presenting safety performance
data in Norway, verification trials being conducted in the US, an Australian
approach to management commitment and a successful working practice in Japan
are all readily accessible to the 40 federations and their companies.
Some concrete examples of
the practical results of this leadership are listed below:
- working with the OECD’s
Risk Reduction Program, a group of chemical companies concerned about the
health and environmental effects of brominated flame retardants have conducted
extensive research and education activities, including a series of conferences
on brominated flame retardant issues in Europe, Japan and the US.
- chemical companies working
in concert with shippers and users of hydrogen fluoride in the United States
and Mexico have sponsored a number of programs to improve the safe handling
of this material. This is part of a larger effort to co-ordinate chemical
distribution safety programmes in North America, which is co-sponsored by
the US, Canadian and Mexican chemical associations.
- In Europe, 16 of 21 member
federations of the European Chemical Industry Council (CEFIC) have processes
for responding to chemical transportation emergencies under the umbrella International
Chemical Environment (ICE) program, and information on best practices have
been transferred to countries in eastern Europe. A similar programme has been
operated in the U.S. and the Mexican and Brazilian federations are operating
emergency response centres.
4.2 The Product Supply
Chain as a Vehicle for Partnership
Chemical manufacturing associations are aware that the Responsible Care
message and its benefits must be shared, and policed, throughout the
chemical supply and customer chain to foster product stewardship and improve
chemical risk management. An increasing number of corporate buyers are demanding
comprehensive environmental and social information on the products or materials
they purchase - a practice that has become known as supply-chain auditing.
Consequently there has been
a campaign to encourage those associations involved in the supply chain to become
literally "Partners" in the Responsible Care program. The international
distributor and coatings associations have entered into partnership agreements
with a number of organizations and in many of the countries where Responsible
Care has been established. The strength of the resulting coverage of a product
life c
ycle has become very substantial and is a powerful example of a voluntary
partnership.
The strategy adopted by
a major Italian car manufacturer in reducing the number of suppliers and demanding
improved quality is an example of how higher-quality products can be combined
with better partnership with suppliers. A document called "Guidelines for
Cooperation," signed in February 1994, states that "the partners accept
the increasing environmental compatibility of their products and manufacturing
processes as a priority, while respecting the economic and competitive balance."
A survey of 360 suppliers
was conducted in 1994 to monitor their management of environmental resources
(energy, water, air, and so on). The information allowed improvements that led
to savings and the anticipation of expected legislation.
A "waste database"
has been created with the local Chamber of Commerce. This puts companies producing
waste in contact with those who can re-use or recycle it. A real "goods
exchange" is operating with the company’s expertise under the "Control
of Machine Waste" program, which is extended to 20 first-level suppliers,
and is also on the Internet.
At a local plant, which
produces car instrument dashboards and bumpers, a "packaging waste control"
programme is under way with 70 suppliers, monitoring incoming and outgoing materials.
The above partnership with suppliers has proved valuable in creating significant
improvements in the company’s quality and environmental performance.
4.3 Dialogue
with Stakeholders
One of the key tenets of Voluntary industry initiatives such as Responsible
Care is openness and responsiveness to public and stakeholder concerns. Public
interest groups and individual consumers exert pressure through their behaviour
and attitudes. Therefore, industry appreciates the need to seek out these concerns
and to include them in its development of policy.
Following the example pioneered
by the Canadian CCPA, several national chemical associations have established
National Advisory Panels to provide public input into the development and implementation
of Responsible Care. These panels ensure that the performance expectations of
interested groups are a part of the industry's planning processes. Formal national
Responsible Care panels are now also sponsored in the US, Australia, Japan and
Germany.
In addition to these national
advisory processes, individual chemical companies have realized the need for
local community dialogue about their production and distribution facilities.
A growing number of formal and informal mechanisms are being established by
chemical companies around the world to foster dialogue with local communities.
One successful example is the Community Advisory Panel, the local version of
the National Advisory Panel, which provides input to chemical facility management
and reinforces the local facility’s accountability to the community in
which it operates. In cases where panels do not yet exist, facility managers
seek outside parties’ input through other forums such as meetings with
local leaders, open houses or progress reports to the media.
Discussions between stakeholders
on the best way to reach sustainability are often hampered by a lack of credible
information. A pioneering study to address this problem with regard to the pulp
and paper
industry is the WBCSD initiative to commission, with multi stakeholder
funding, a study by the International Institute for Environment and Development
entitled "Towards a Sustainable Paper Cycle"
The findings were published
after over two years of research. They created a focal point for further debate
and consultation, triggering a series of presentations and seminars to analyze
the study’s recommendations and evolve local programs of action.
Also useful within such
debates are examples such as that of a paper company active in Brazil which
has created social development in a sustainable way in areas where hardly anything
existed but poverty and misery. It now employs more than 5000 people directly
and indirectly, supporting a local population of over 20 000, and has invested
$125 million in creating a social services infrastructure, such as schools,
medical facilities and housing. It also provides financial and human resources
for projects that lead to self-sustaining improvements in the living conditions
of neighbouring communities.
The company planted eucalyptus
trees in areas which had mostly previously been degraded and manages them, in
a way to preserve the Biodiversity and protect the soil and water resources.
To assure a balanced environment, the eucalyptus plantations are interspersed
with 56 000 hectares of native reserves, where about one million native trees
per year are planted in order to enhance biodiversity. These preservations correspond
to 27 % of the company's total landholding. The eucalyptus wood is processed
into pulp in a modern mill, which complies with world class environmental standards.
5 Goal setting and reporting
on progress
There has been a substantial
growth in company environmental performance reports called for in the
ICC Charter's 16th Principle on compliance and reporting. Modelled on financial
reports and accounts, these reports typically describe corporate responses
to environmental issues, such as management and company attitudes
to emerging areas of debate, along with data on wastes and emissions performance.
Various broad-based standards,
such as the Public Environmental Reporting Initiative (PERI), the Coalition
for Environmentally Responsible Economies (CERES) and those from the United
Nations Environment Programme (UNEP), have emerged to make the data more comparable
across sectors and the reports more consistent in their content. The production
of such reports often helps companies to get to grips with parts of their business
that have not come under such specific management scrutiny before. Many stakeholders,
particularly the investment community, are increasingly looking to these reports
for evidence of the effective management of environmental risk.
5.1 Sustainable
Development Report
An example of the role such reports can play is that of a major electricity
utility, which has recently completed the transition from an annual environmental
performance report to a Sustainable Development Report (for 1995) that addressed
the company’s goals and performance relative to all three components of
sustainability: environmental, financial and social integrity.
The rationale underlying
the reporting is to provide employees and external stakeholders a frank, even-handed
assessment of the company’s achievements and shortcomings with respect
to its initial progress towards sustainability.
In the future, business
will need both to achieve and demonstrate continuous improvement. Business must
recognize that there is growing stakeholder awareness that business decisions
are skewed when environmental performance, costs, and liabilities are not integrated
into the strategic decision-making of companies. Increasingly, business will
be required to demonstrate management of environmental and social issues along
with traditional financial performance to secure the social license to operate.
Future environmental reporting
will need to integrate both financial and non financial performance measures
and serve the information needs of external stakeholders, internal management,
and front-line personnel; eventually, such information will be integrated
into annual reports.
5.2 Reporting
on Responsible Care Achievements
Since the early 1990s, when chemical companies were among the first to publish
environmental reports, many of the national chemical associations implementing
Responsible Care began to collect EHS data from their members to measure the
impact on performance. While the amount of performance data varies between countries,
positive trends are beginning to emerge wherever Responsible Care is being implemented.
Reporting at national association level also provides a basis for benchmarking,
an aspect not usually covered in corporate reports.
Specific examples of the
global chemical industry’s achievements through Responsible Care taken
from national association reports include:
the German chemical industry
achieved a reduction in CO2-emissions of 25 % between 1990 and 1993, and has
undertaken to reduce CO2-emissions by 40 % by the year 2005.
as a result of voluntary
reduction efforts sponsored by the Japan Chemical Industry Association (JCIA),
the level of vinyl chloride monomer (VCM) emissions at VCM/PVC production facilities
decreased by almost 50 percent between 1990 and 1993.
in the United Kingdom, member
companies of the Cement Industry Association have reduced discharges of " Red
List " substances by 89 percent since 1990. Members of the Dutch chemical
industry (VNCI) continue to make progress in emission reductions where a goal
of reducing emissions by 50 % was achieved in 1994, more than five years ahead
of schedule.
member companies of the
CCPA have voluntarily reduced emissions of all substances except CO2 by 50 %
since 1992 and have projected a further 50 % reduction by 2000.
Finland’s Kemianteollisuus
Ry collects and publishes more than 20 performance indicators. Since 1988 lost
time accidents have decreased by 50 percent while the number of member company
personnel participating in safety training courses has doubled.
members of the Plastics
and Chemicals Industries Association (PACIA) in Australia have reduced the number
of transportation incidents involving chemicals by more than 35 % since 1990.
Employees’ lost time injuries are down 30 % since 1990 and workdays lost
per employee by 50 %.
Federchimica, the Italian
chemical industry federation showed an average improvement of 50 % in overall
EHS performance between 1989 and 1995. A survey, carried out
on 42 000 employees
at 57 companies, demonstrated a high awareness of environmental issues.
Although far from comprehensive,
these results and activities reflect a general trend within associations which
have adopted Responsible Care. Currently, more than half of the associations
implementing Responsible Care are collecting EHS performance data, and results
are made widely available, particularly to local communities. CEFIC is issuing
a Guidance on EHS reporting to facilitate a CEFIC report covering all European
federations. Many associations are just beginning to identify performance indicators
for future use. The ICCA fully expects EHS performance results in these countries
to mirror the progress being made in those countries where the data is already
being reported.
The ICCA will pursue the
goal of ensuring the Responsible Care verification within its member associations,
to confirm their commitment to, and progress in, implementing Responsible Care.
Moreover, ICCA is extending Responsible Care to an ever-increasing number of
chemical companies around the world, and spreading its partnership ethic to
customers, suppliers and allied industries. Such partnerships will allow a fuller
exercise of responsibility through a product's entire life cycle.
6 Future
Challenges and Conclusions
There is a lively global
debate today about how various sectors of society are, and should be, changing.
Business, through freer trade, is spreading the technologies, skills and processes
required for development and, given the right global frameworks, for more sustainable
development. Economic growth provides the conditions under which the protection
of the environment can best be achieved. Responsive and entrepreneurial businesses
are required as the driving force for sustainable economic development and for
providing the managerial, technical and financial resources to contribute to
the resolution of environmental challenges.
Business acknowledges that
many challenges remain. Industry must continue to improve performance and increase
its collection and dissemination of data demonstrating this progress as a way
of keeping stakeholders informed of its policies and practices. Business and
industry will continue to explore verification of adherence to voluntary initiatives.
As other forms of auditing and verification such as ISO-14001 and EMAS are
adopted, business and industry will strive to integrate their verification processes
with these useful voluntary standards and programs.
A particular challenge in
pursuit of responsible entrepreneurship will be bringing SMEs into the mainstream
of good environment management, and using investment, trade and the market to
carry good practices, technologies and expertise to developing countries and
countries with economies in transition. Partnerships with government and other
stakeholders will be crucial to support this effort in the next phase of Agenda
21 implementation.
The ICC Business Charter,
which conveys the spirit of responsible entrepreneurship, is a good example
of an industry-led voluntary initiative which encourages companies to go beyond
regulatory system limits. Voluntary systems, and other agreements with policy
makers, demonstrate that business strategies can indeed address the complex
problems of environmental aspects of products and processes. Voluntary approaches
should, therefore, be used by policy makers as they respond to business needs
and market conditions c
omplementing regulation.
Business
Progress to Sustainable Development
Corporate
Environmental Management Tools
Technology
Cooperation
Industry and
Freshwater
ICC
Environment Commission
WBCSD
UNCSD
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