Commission on Sustainable Development BackgroundPaper No. 5 Sixth Session 20 April - 1 May 1998 Chapeau for Business and Industry Background Papers Business and industry plays a critical role in the global drive for sustainable development. In the run up to and since the Rio Earth Summit, business's commitment to this goal has been apparent through many innovative initiatives launched by individual companies and business groups. Ground-breaking private-public sector partnerships have also contributed significantly to the effort. The launch of many positive voluntary programmes, such as the ICC Business Charter for Sustainable Development and as described in the WBCSD's report "Signals of Change: Business Progress Towards Sustainable Development," indicates the broad agreement of industry world-wide to integrate sustainable development considerations into nearly every aspect of their day to day activities. Business's constructive role in the United Nations Commission for Sustainable Development (UNCSD) clearly demonstrates on-going commitment to this long-term process. Successful technology co-operation, amongst the many varied contributions business is making to sustainable development, is one process which business can tailor to maximum effect in the pursuit of balanced economic growth and development . During the 1998 session of the CSD, industry wishes to underscore its on-going contribution to technology co-operation. Most importantly, business has a key role to play in addressing poverty alleviation while stimulating more sustainable consumption and production, all in the context of economic growth, environmental protection and social development. Industry's submissions to UNCSD 6 follows Agenda 21's approach in focusing on both the internal operations of a company (corporate environmental management tools) and its external relationships (responsible entrepreneurship). In addition, industry's role in technology co-operation and in freshwater issues are the third and fourth discussion themes in the Business and Industry Background Papers summarized below. Responsible Entrepeneurship (Background Paper No. 1) Responsible, entrepreneurial businesses are the driving force for sustainable economic development and provide the managerial, technical and financial resources to contribute to the resolution of environmental challenges. Many challenges remain and industry must continue to improve performance and keep stakeholders informed of its policies and practices. A particular challenge will be bringing SMEs into the mainstream of good environmental management. More broadly, business and industry will continue to champion voluntary environmental initiatives which encourage companies to go beyond regulatory compliance, in the spirit of responsible entrepreneurship. Corporate Environmental Management Tools (Background Paper No. 5) The development and use of corporate EMS (Environmental Management System) tools are the mechanism to integrate sustainable development considerations into everyday business. Furthermore, developing initiatives for public and private sector partnership show great promise for the increased voluntary use of EMS and related corporate tools. Such efforts will contribute to a harmonization of environmental regulation and enforcement and will drive further improvements in corporate policy and practice. Globally, the private sector is a primary source of employment creation, information, training, and capacity building. However, if the private sector is to make its full contribution to sustainable development, an essential prerequisite is a sound policy framework, both at the national and international level. This will promote and encourage growth and development and maximize industry's ability to employ the increasingly effective range of corporate environmental management tools to the greatest benefit. To support these trends, the ICC and WBCSD recommend increased attention to the development and integration of voluntary environmental management systems at all levels of business. Technology Co-operation (Background Paper No. 9) Successful technology co-operation, tailored to the specific national or corporate case, is critical to the implementation of sustainable development. . The concern that excessive government regulation of technology co-operation could stifle innovation and limit access to needed technology should be noted. Commercialization of R&D developments for new technologies to function as part of normal business life as quickly as possible is important in order to achieve the common goals. To this effect governments should enhance an effective business environment to catalyse the process of commercialization. The private sector has an increasing role to play in delivery of effective technology co-operation which, clearly, involves the transfer of skills and knowledge not just technological hardware. While it is apparent that the free market is the main driving force for the efficient introduction and assimilation of technology, successful, long-term technology co-operation requires that all parties must gain from the co-operation, while, at the same time, the protection of patents and intellectual property rights of the developer is essential. The ICC and WBCSD strongly recommend a concerted effort to ensure the creation of an efficient framework which promotes successful technology co-operation. Industry and Freshwater (Background Paper No. 13) The 21st Century will witness increasing competition for finite fresh water resources. Industry, which is not the main user of water, has financial, technical and management resources, and is well positioned to contribute to the resolution of broader societal problems in this critical area. It is apparent that all sectors need to co-operate if society is to avert or minimize adverse effects associated with emerging fresh water shortages. The elements of a comprehensive water strategy are rather straight forward and apply to all parties. Growing evidence demonstrates that industry has already begun to manage industrial water use more effectively. One future task is to continue raising awareness within the business community and encourage others , notably within the agricultural sector, to take action now. The issue of economic pricing of water, both in agriculture and domestic use, remains primarily a government and public policy issue. Subsidies should be phased out since they encourage waste and prevent better management of finite fresh water resources. The 1992 Dublin Principle was clear and correct :"Water has an economic value in all its competing uses and should be recognized as an economic good." Commission on Sustainable Development Background Paper No. 5 Sixth Session 20 April - 1 May 1998 CORPORATE MANAGEMENT TOOLS FOR SUSTAINABLE DEVELOPMENT International Chamber of Commerce (ICC) World Business Council for Sustainable Development (WBCSD) " The integration of environmental and other sustainable development considerations into everyday business is a long-term challenge for the business community, and to this end the development and use of corporate EMS tools shows strong promise......" I. INTRODUCTION 1. Economic vitality, employment creation and environmental protection are strongly interrelated, and business continues to be an integral contributor to all three, not only in terms of its external relations with its customers, shareholders, governmental authorities and community, but also in its own facilities and places of business. Business also recognizes that in light of globalization and the opening of trade and investment that accompanies it, large multinational companies can, through changes in their business practices, impact sustainable development significantly. The ICC and WBCSD recognize that all companies, regardless of size, sector or location, can make significant contributions to sustainable development by improving their internal management of environment, health and safety. 2. For these reasons, the ICC and WBCSD have emphasized the introduction and development of environmental management practices and systems within enterprises as an essential contribution to sustainable development. Business firmly believes that the first step to improved environmental performance of business is to bring environmental considerations into the daily process of decision making and operations, as the principal objective of an environmental management system. Without this foundation of an environmental management system (EMS), there is little chance an enterprise can promulgate sustainable development to other stakeholders, joint venture partners, and society as a whole. 3. In concert with the concept of responsible entrepreneurship (discussed in the accompanying paper), which addresses the external relationships and practices of companies, corporate environmental management is focused on continual improvement of environmental practices and performance, with associated benefits in other areas. 4. This paper will discuss some of the most effective tools available, and suggest how they can be more broadly disseminated and utilized. Corporate environmental management tools deployed within companies, and through joint venture and supplier/contractor relationships help business make steady progress toward sustainable development. Companies are striving to raise skills and awareness at all levels and pursue partnerships and innovative approaches. Many companies and business organizations are responding through initiatives like the ICC Business Charter for Sustainable Development, sectoral initiatives and individual programs in companies of all sizes and sectors. Companies are becoming more open about their environmental policies, programmes and performance with their employees, looking for ways to work with them to improve environmental management systems (EMS). 5. But much remains to be done and new challenges have arisen since UNCED and the publication of such industry reports as "Changing Course" and "From Ideas to Action." Rapidly industrializing countries offer investment opportunities, yet may not have adequate environmental regulations, or the enforcement or infrastructure necessary to support them fully. On the positive side, innovative new approaches by governments, such as voluntary agreements, public-private sector partnerships, the E.U.'s EMAS (Regulation 1836/93/EEC allowing voluntary participation by companies in the industrial sector in an EU eco-management and audit scheme) and ISO 14000, as well as further voluntary efforts by the private sector promise to extend and integrate environmental considerations into all aspects of business and governance. 6. But the most important point to remember is that no single corporate environmental management tool is a panacea, nor can it guarantee success. It must be implemented within a governmental framework that supports its continued use. Both employees and managers must be aware of and engaged in it. II. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT SYSTEMS 7. Business is shifting from a disconnected and fractured view of environment and development issues to a holistic, integrated concept of business and sustainable development. This involves a transition from: (a) seeing only costs and difficulties in the concept of sustainable development to seeing saving and opportunities; (b) end-of-pipe approaches to pollution to the use of cleaner, more efficient technology throughout entire production systems, and further, to seeing sustainable development as integral to business development; (b) linear, "through-put" thinking and approaches to systems and recycling approaches; seeing environment and social issues as responsibilities only for technical departments or experts to seeing these as company-wide responsibilities; (c) a starting premise of confidentiality to one of openness and transparency; (d) narrow lobbying to more open discussion with stakeholders. 8. The first five aspects of this trend are particularly relevant to corporate environmental management systems. A. Corporate Environmental Management Systems and Eco-efficiency 9. The ISO defines an Environmental Management System (EMS) as: "...that part of the overall management system which includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy." 10. An EMS should include strategic planning activities, the organization's structure and implementation of the environmental policy as an integrated part of the manufacturing process. 11. One particularly significant contribution is the concept of eco-efficiency, a management approach developed by the WBCSD. Eco-efficiency is about: (a) producing more with fewer resources and less pollution; (b) encouraging business to become more competitive, more innovative, and more environmentally responsible. 12. Eco-efficiency makes seven demands on companies: (a) Reduce the material intensity of goods and services; (b) Reduce the energy intensity of goods and services; (c) Reduce toxic dispersion; (d) Enhance material recyclability; (e) Maximize sustainable use of renewable resources; (f) Extend product durability; (g) Increase the service intensity of goods and services. B. Life Cycle Approaches 13. A key way in which business supports sustainable development is by providing products of superior quality and value that meet consumer needs while minimizing their environmental impacts. Superior quality and value of the products includes the efficient use of the resources necessary to make the product, and its production and use should contribute to the protection and improvement of environmental quality. The developing science of life cycle approaches, which list and weigh trade-offs between positive and negative environmental aspects of a specific product of process, can help improve products' quality and environmental impacts. 14. One important reason for developing an EMS is to improve the bottom line -- that is, reducing costs and/or increasing revenues, especially over the long term. Life-cycle thinking is essential in both regards: to help provide the least environmentally impactive product, while maximizing profits. In addition, it ensures that to the extent possible "hidden costs" of environmental damage can be accounted for and reflected. 15. For environmental and economic reasons, business constantly strives not only to decrease operating costs and but also to reduce the volume and costs of its inputs and waste. This trend is embodied in life-cycle approaches and design for the environment, both of which have become increasingly important aspects of product development. The issue is not one of how much is being consumed in any absolute, material sense, but to strive as companies to continually improve resource efficiency while reducing environmental impacts. 16. Life-cycle analysis (assessing the environmental impact of a product or service through its entire life -- including any recycling and final disposal) and Design for the Environment (alternately Design for Sustainable Development) are further important responses by business and industry to the challenges of sustainable development. 17. Perhaps the most familiar aspect of waste reduction initiatives that arise from LCA are companies' efforts to institute and encouraging internal recycling and reuse programs, in manufacturing facilities and in partnership with distributors and retailers. Some companies have been able to convert wastes into products, "closing the manufacturing loop." Box 1 Shell Chemicals Canada Ltd. has for several years utilized an expert external panel to review their current and planned product lines and product end uses to evaluate their long term sustainability. The Panel's advice and "red flag" have been incorporated into Shell's business decisions on which products and applications to maintain or pursue and which to ultimately eliminate, as well as what to contruct in projects. Box 2 Life cycle approaches can be extended and shared through partnership with joint venture parties and suppliers and contractors. One example of such partnership is the case of a major photocopy multinational. A steamlined LCA of a small/mid-volume copier system was developed to determine which aspect of its products and services contribute most significantly to the overall environmental impact of meeting the clients' needs. The results of the study are currently being used to support research and technology resource investement decisions, and serve as a baseline to identify opportunities to improve environmental performance. The LCA has provided the information necessary to quantify areas where the greatest improvements can be made and provide value in research, technology, and design decision-making. However, due to the high cost of conducting comprehensive LCAs, steramlined screening methodologies and high quality environmental inventory data for materials, process, and parts need to be more readily accessible if LCAs are to be used widely. C. Environmental Auditing 18. Pioneered by organizations like the ICC, environmental audits are an essential component of an EMS. Environmental audits are becoming understood in an increasingly broad sense, to be applied to pollution control programs, health, employee safety, product safety, transportation safety and security. Although environmental audits are primarily compliance-oriented, as companies themselves strive to go beyond compliance, so too have audits. In any case, for an EMS to function properly, it must be assessed for effectiveness. 19. The voluntary application of environmental audits remains an indispensable part of EMS, and business continues to explore how environmental audits can embrace the full range of sustainable development issues in an individual enterprise. 20. Another emerging type of audit is the supply chain audit, which involves a company's requirement of comprehensive environmental and social information on the products and materials it purchases. Supply chain auditing is particularly important because of the "pressure" it places on small and medium sized companies to make improvements, and opportunities to network with larger companies. D. ISO 14000 Environmental Management System Standards 21. Business has been at the forefront to establish fully credible Environmental Management Systems. ISO 14000 is the result of an initiative to bring a host of national EMS standards under a common umbrella. The process's initiation was facilitated in 1990 by Stephan Schmidheiny of the Business Council for Sustainable Development, which has since been merged into the WBCSD. 22. Business supports the development and implementation of a single, internationally agreed voluntary standard for environmental management systems (EMS) which will facilitate both improved environmental management and international trade. The EMS standard developed through the International Organization for Standardization (ISO 14001) has had the wide geographical participation and broad stakeholder involvement necessary to achieve these dual objectives. 23. The ISO 14001 EMS standard has been developed as a mechanism to improve the internal management of environmental issues in an organization, large or small, public or private, and thereby create opportunities to improve its environmental performance. The standard has been developed with the understanding that different companies will need the flexibility to implement the standard using the methods best suited to their particular organizational characteristics. 24. For the potential benefits of ISO 14001 to be realized, however, the manner in which the standard is implemented and the scope of its use in a regulatory framework must support its initial objectives. Specifically, the method under which a company chooses to implement the standard and any potential government use of the standard must embody the concept of a single, voluntary EMS standard. Additionally, the choice to certify to a particular EMS or not must remain an internal management decision, particularly as mandating its use would require uniform implementation among all organizations to be legally enforceable. 25. ISO 14000 and its accompanying ISO 9000 (quality) are also particularly important tools for aiding exporters from developing countries as they provide internationally recognized seals when approaching potential new customers. E. Environmental Management and Criteria Worldwide 26. Many multinational enterprises operate according to a company-wide policy or set of principles world-wide, and therefore have a strong beneficial impact on environmental management in the countries in which they operate. Experience has shown that the international practices of large multinationals by and large spread good environmental management practices to joint venture partners, suppliers, and contractors in all areas where such practices are applied. 27. Nevertheless, there is much to be done by enterprises and industry associations to promulgate and improve environmental assessment methodologies, management methods and international standards. The special situation and role of small and medium size enterprises, especially in developing countries, must receive particular attention from both the public and the private sectors. Voluntary initiatives such as those discussed in the Paper on Responsible Entrepreneurship, and systems like the ISO 14001 can provide a common language useable by all companies. II. VOLUNTARY ENVIRONMENTAL CODES OF CONDUCT AS ENVIRONMENTAL MANAGEMENT TOOLS A. The ICC Business Charter for Sustainable Development 28. The ICC Business Charter embodies the promulgation, support and implementation of good environmental management practice through continuous improvement. The Charter and other voluntary initiatives like it continue to be timely and effective, not just to large multinational companies, but to SMEs around in the world. To facilitate its international use, the Business Charter is available in 24 languages, and has been endorsed by over 2,000 companies and business groups. 29. Experience in implementing the Charter has been shared at ICC workshops in Switzerland, Sweden, Finland, the United Kingdom, and the United States; other workshops are being planned. A number of tools have been developed by organizations such as the Global Environmental Management Initiative in the U.S., and Entreprises pour l'Environnement in France, to facilitate the implementation of the Charter. 30. To foster public-private sector partnership, the UNEP/ICC Joint Advisory Panel on the Business Charter for Sustainable Development has focused on the Charter's implementation in the developing countries and in countries in transition. The Panel's high-level representatives of business, government and environmental groups have assigned particular importance to improving environmental management in small and medium sized companies. 31. Industry associations have also developed a number of their own codes of conduct, sharing many common principles, and consistent with and supportive of the Charter. One of the most widely diffused is the `Responsible Care' programme by the International Council of the Chemical Industry, in place in 40 countries. Similar initiatives include the "Statement by Banks on the Environment and Sustainable Development," initiated by UNEP; Environmental Guidelines by the World Travel and Tourism Council; guidelines on emergency preparedness by the International Petroleum Industry Environment Conservation Association (IPIECA); and the Environmental Principles of the International Iron and Steel Institute (IISI). 32. All of these voluntary initiatives aid companies in managing their environmental impacts, and provide a common framework for discussing commitment and goals with employees and management. Box 3 The Confederation of Indian Industries - EMD Initiatives on ISO 14000 CII/EMD has: (a) Conducted over 100 2-day in company appreciation and commitment training programmes on ISO 14001. All these programmes were conducted using the UNEP-ICC FIDIC training Kit; (b) Organized more than a dozen inter-company training programmes and workshops; (c) Conducted 6 training programmes exclusively for officials of State Pollution Control Boards, etc,; (d) Conducted 6 one-week Environment Auditors Certified Courses; (e) Of the 24 units certified to ISO 14001 in India so far, 15 of tehm were assisted by CII-EMS right from the first step to eventual certification. Box 4 The Mining Association of Canada (MAC), an ICC Business Charter supporter, requires all member companies to endorse its environmental policy. By adhering to this environmental policy, and through participation in ARET ( Accelerated Reduction/ Elimination of Toxic Substances), by 1996, member companies had reduced emissions of potentially harmful material by 66% from the 1988 base tear. III. PARTNERSHIPS IN THE WORKPLACE: WORKPLACE CONDITIONS 33. Improving occupational health and safety makes good business sense. Business and industry is working to spread examples of good practices; governments should, for their part, provide incentives to contribute to better working conditions. A. Partnerships in the Workplace 34. The Day of the Workplace in the 1996 Session of the UNCSD highlighted numerous existing corporate programs and partnerships with employees. It identified some priorities for continued business efforts: (a) Employee education: To educate, train and motivate employees to conduct their activities in an environmentally responsible manner; (b) Openness to Employee concerns: To foster openness and dialogue with employees, anticipating and responding to their concerns about the potential hazards and impacts of operations, products, wastes or services, including those of transboundary or global significance. (c) Reporting: To periodically provide appropriate information on environmental performance to employees. B. Training 35. Training continues to be a high priority, as companies are putting considerable effort into training programs for their employees. For example, joint UNEP/ICC workshops based on the Business Charter have trained industrial and trade associations in environmental management systems. In turn, participants will be encouraged to pass on the training at local seminars. As part of this program, the ICC and UNEP has developed an environmental management training kit based on the ISO 14000 standards. (Indian example). Box 5 Students are the business managers of the future. To raise awareness of Sustainable Development among them in particular, the WMCSD together with the Foundation for Business and Sustainable Development have developed an internet-based test, "The Sustainable Business Challenge." Readers of this paper, whether students or not, may like to take the test themselves (http://www.wbcsd.ch/foundation) IV. CONCLUSION 36. The integration of environmental and other sustainable development considerations into everyday business is a long-term challenge for the business community, and to this end the development and use of corporate EMS tools shows strong promise. It will take constant attention and commitment to respond fully in practice to the call of the Charter and similar industry codes of practice. Partnership between the public and private sectors show great promise for the increased use of EMS and related tools in a voluntary way. Such efforts will contribute to a harmonization not just of environmental regulation and enforcement, but also of corporate policy and practice, as companies innovate and voluntarily implement and disseminate EMS wherever they do business. 37. As countries rely on the market system, investment and trade for the functioning of their economies, they look to the private sector as a primary source of employment creation, information, training, capacity building and education. However, if the private sector is to make its full contribution to improving their daily operations in keeping with sustainable development, an essential prerequisite is a sound policy framework, both at the national and international levels, which will promote and encourage growth and development. 38. To support this trend, the ICC and WBCSD recommend increased attention in the following areas of environmental management systems: (a) Further implementation of the ICC Business Charter, and in particular the development of tools for this purpose, as well as of other voluntary programs and approaches; (b) Support for training programs (based on documents like the UNEP/ICC/FIDIC Environmental Management Systems Training Kit) and other initiatives to improve environmental management systems in small and medium sized enterprises; (c) Analysis of innovative public/private policy and technology partnerships to advance EMS, with a view to their wider use; (d) Regional and national environmental management training sessions, and work with UNEP, other IGOs and NGOs to prepare the necessary training materials.
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Date last posted: 8 December 1999 15:15:30