1. Regulatory Innovation: EMSs as Environmental Regulatory Tools Jason Morrison Pacific Institute for Studies in Development, Environment, and Security (www.pacinst.org) May 22, 2000

2. Environmental Management System Act Do Plan Check Act

3. 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

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

5. 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

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

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

8. EMSs and non-regulated aspects

9. 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

10. 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

11. 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”

12. 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

13. Examples of Program Development Oregon Green Permit Program New England StarTrack

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

15. 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

16. 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

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