Regulatory Innovation: EMSs as Environmental Regulatory Tools Jason Morrison Pacific Institute for Studies in Development, Environment, and Security ( May 22, 2000

Environmental Management System Act Do Plan Check Act

EMSs can further principles of sustainable development u reconcile social and environmental objectives with economic goals u incorporate environmental considerations into day-to-day business decisions u help regulatory agencies achieve policy objectives u facilitate new partnerships and improved relationships among stakeholders

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

History of Federal Environmental Regulatory Reform u Promoting paradigm shift u EPA’s voluntary programs u Cleaner, cheaper, smarter u Project XL, Common Sense Initiative, etc. u How EMSs fit in... addressing what C&C can’t

INCENTIVES & FLEXIBILITY PUNISHPUSH PULL REWARD A B Environmental Performance Number of Facilities REGULATION & ENFORCEMENT

COMPLIANCEZONE Environmental Performance Degree of Government Flexibility PERFORMANCE-BASED MODEL TRADITIONAL MODEL

EMSs and non-regulated aspects

Key Parts of an EMS-based Environmental Regulatory Program u “Superior environmental performance” and quid pro quo u EMS plus additional components u Positive reinforcement u Performance reporting, transparency u Multi-media and facility-wide

Advantages & Drawbacks: Regulated Entity Perspective u Cost savings u Product quality improvements u Improved public image u Regulatory flexibility u High transaction costs u Regulatory uncertainty

Advantages & Drawbacks: Regulator Perspective u Reduced regulatory oversight burden u Better environmental performance & data u Improved environmental quality (e.g., non-regulated aspects) u Large resource investment (especially in the beginning) u Potential for “greenwashing”

Advantages & Drawbacks: NGO Perspective u Better corporate environmental performance & data u Potential to move beyond compliance u Improved relationships among companies, regulators, and NGOs u Potential for regulatory “rollback” u Voluntary self- enforcement ineffective u Lack of transparency

Examples of Program Development Oregon Green Permit Program New England StarTrack

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

Challenges u Interest level of pilot facilities u Interest level and perceptions of NGOs u Program resources u Jurisdictional issues u Defining “superior” environmental performance u Environmental performance reporting

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

Other Applications of EMSs in Public Policy u Environmentally Preferable Procurement (EPP) Programs u Supplementary Environmental Projects (SEPs) u Consent decrees