The voluntary approach: look before you leap

The coalition government is keen to sign ‘responsibility deals’ with industry in place of more regulations, but the record and reputations of previous ones are mixed. Roz Bulleid and Alex Marshall weigh the pros and cons

Bottles and tins. Courtesy of WRAPThe environment department (DEFRA) does not have a detailed new waste policy yet; it is still waiting for the outcome of a major review. But it is sure of one thing: voluntary agreements with industry, or – in its words – ‘responsibility deals’, are the way forward (ENDS Report 425, p 44).

“This government believes that businesses… should be encouraged to do the right thing, rather than be tied down or penalised with excessive rules and regulations,” DEFRA minister Lord Henley said last summer. “We see responsibility deals as an important part of the drive towards a zero-waste economy.”

The idea that environmental and other problems – such as poor nutrition and public health – can be tackled through voluntary collaboration with industry rather than regulation or fiscal measures is not new.

The Netherlands started putting in place “covenants” with polluting industries 20 years ago (ENDS Reports 224, pp 3-4 and 241, pp 29-30). In the mid-1990s, about 300 agreements were in place across the EU, mostly in the Netherlands and Germany.

By 2000, the UK government had agreed voluntary targets with the chemicals industry on energy efficiency, on HFC emissions with users of the gases, and on the recycled content of newspapers (ENDS Reports 226, p 34, 252, pp 31-32, 303, pp 25-28 and 306, p 9). There were also voluntary agreements restricting the use of some detergent ingredients and the discharge of chemicals from offshore oil and gas platforms, as well as codes of practice agreed with farmers to protect soil, water and air quality (ENDS Reports 234, pp 3-5, and 274, pp 38-39).

But attempts to establish agreements on packaging recycling and the environmental impact of aggregates extraction had failed and other measures were introduced instead.

Use of voluntary agreements stepped up a gear in the past decade under the Labour government with more than 20 signed (see table, p 28). These range from the prominent and much cited, such as the Courtauld Commitment on packaging and food waste or the Milk Roadmap, to more obscure agreements on junk mail and reuse of aggregates from street works.

In a way, the climate change agreements (CCAs) reached with energy-intensive sectors are voluntary agreements too, albeit ones with hefty financial incentives (ENDS Report 313, pp 4-5).

Several voluntary agreements also operate at EU level, for example, commitments being developed on the energy efficiency of some electrical goods and a recent agreement on standardised mobile phone chargers (ENDS Reports 414, p 23 and 418, p 43).

CCAs are generally popular among businesses and the first round of Courtauld was deemed a success. Besides reducing regulatory burdens on industry, agreements can broaden the range of companies tackling environmental issues beyond the usual suspects and provide a forum for sharing best practice.

Voluntary agreements made by UK government since 2000

Resorting to regulation

However, there have been outright failures. The EU was forced to legislate on the CO2 output of cars after carmakers missed a 2008 target agreed in 1998 (ENDS Report 407, pp 57-58). And the UK government decided it was better to replace an agreement with energy suppliers on tackling fuel poverty with mandatory measures.

Response to a voluntary agreement with biofuel-processors on sustainability reporting was also patchy and the outcome of an agreement on plastic bags did not live up to expectations (ENDS Report 428, pp 19-20). The Welsh government decided to introduce a bag tax because it deemed performance sub-standard (ENDS Report 430, p 20).

There are also hints that other agreements, signed to much fanfare, are not quite the panacea promised. An update on the Ashdown Agreement with plasterboard makers published this month shows little progress on a main target: to work with the supply chain to eliminate waste sent to landfill. The situation is expected to improve, but mainly thanks to regulation in the form of limits on landfilling plasterboard wastes and rising landfill tax.

Furthermore, targets on the percentage of direct mail and magazines recycled have been met early, but mostly through councils extending their recycling services rather than producer efforts.

Other agreements look inherently weak: the clothing roadmap for example has no overall targets at all. Signatories simply list their own sustainability pledges (ENDS Report 420, pp 19-20).

So it makes sense to assess voluntary agreements’ effectiveness before plunging into a fresh wave. Do they deliver as well as regulation or fiscal measures? Do they provide value for money?

According to the government’s Waste & Resources Action Programme (WRAP), which manages several agreements, a small commitment such as the one for street works costs about £250,000 per year to run and has one part-time staff member. But the Courtauld Commitment has a multi-million pound budget and up to ten staff working on it at some points during the year.

To inform DEFRA’s waste review,  WRAP has commissioned a study into the effectiveness of voluntary agreements. It will be finished later this year. In the meantime, ENDS looked at three prominent voluntary agreements: the Courtauld Commitment, the construction industry’s Halving Waste to Landfill agreement and the Home Improvement Sector Commitment aimed at lowering packaging among DIY firms. The steps companies took to meet the agreements’ targets were assessed. ENDS made a similar assessment of the plastic bag agreement in September (ENDS Report 428, pp 19-20).

We also spoke to organisations participating in and managing other voluntary agreements. DEFRA declined to comment.

Anonymity for individual signatories is a condition of most voluntary agreements and many firms were unwilling or unable to answer requests for information. The response rate was lowest among the 32 non-retail signatories to the Courtauld Commitment.

Where companies were not willing to answer questions on their progress, information was gathered from their websites or sustainability reports if possible.

Mixed results

Each agreement has its strengths and weaknesses. Some firms have clearly benefited from them and the access to best practice, but others had not been spurred into action or found them useful.

The most obvious cases of this were in the construction waste agreement. One representative of a signatory who attended an event on Halving Waste to Landfill commented: “It achieved nothing. It was just another day with the happy clappers.”

There was even disappointment with some agreements among those who helped develop them. Jane Thornback, sustainability adviser at the Construction Products Association, said “the most progressive and useful agreements are those led by industry with good quality knowledgeable research support” from bodies such as BRE. The one for the joinery sector is a good example (ENDS Report 430, pp 28-29). 

“Unfortunately, sometimes when work is commissioned by government departments through general framework contracts with non-specialist consultants, the result can be ill-focused, poorly put together documents recommending things that are already standard practice within the industry.”

She says government would benefit from having more expertise on sustainability within its own departments and especially from utilising industry expertise. 

However, not everyone was happy with the CPA-led agreements either. Ramon Arratia, European sustainability director at carpet maker InterfaceFlor is disappointed by the flooring action plan designed to improve the sector’s resource efficiency. Its minimum standards “are very weak”, he says, and it would be more effective for the government to ban carpet from landfill.

Hannah Hislop, senior policy adviser at Green Alliance, says there is a clear spectrum of voluntary agreements. The best are progressive and encourage signatories to go beyond regulation. She puts Courtauld in this group, noting that it would be difficult to cut the carbon impacts of packaging through regulation. “There aren’t yet any standardised metrics to measure success, let alone baseline data.”

At the other end are agreements that set industry standards around the lowest common denominator. This is the case with some of those proposed under the EU Ecodesign Directive, Ms Hislop says. Companies producing sub-optimal goods are not interested in setting themselves tougher targets, she says. The raising of baseline standards would be better done through legislation or taxes.

Besides these general findings, several key issues arose:

Ambition: Many larger signatories had already set, and sometimes exceeded, targets in the areas covered. This suggests they would have made improvements anyway. The OECD criticised voluntary agreements for this reason in 2003 (ENDS Report 342, p 13).

Some targets also seem easy to meet. For example, the Federation House Commitment aims to improve the water efficiency of the food and drink industry by 20% by 2020, yet signatory Premier Foods managed to cut use at one site by 16% between June and December 2009, according to the commitment’s annual report.

The industry representatives ENDS spoke to did not see low ambition levels as a problem, because agreements can be strengthened after signing.

Andrew Kuyk, director of sustainability at the Food and Drink Federation, says progress on Federation House shows how much can be achieved once companies turn their attention to something. “I don’t think that means the target was wrong. If you didn’t have it, you wouldn’t have got that progress.”

The research also reveals notable absences among signatories to some agreements: Lidl and Aldi in the case of the Courtauld Commitment, for example. And there is a stark lack of small and medium enterprises, suggesting the agreements lack breadth.

But Richard Swannell, in charge of voluntary agreements for retailers at WRAP, says he is happy for firms not to sign up if they cannot provide the resources needed or make the changes sought.

“We don’t want people only paying lip service to these; we want them to make a commitment.” Furthermore, agreements target the largest firms so they can influence supply chains.

Difficulty of assessing performance: Another problem is that it is hard to assess whether targets are being met.

Some, such as those in the construction agreement, were made before baseline data were available or metrics were agreed to measure them. Signatories to this agreement gave information on their progress using several different metrics.

Even where consistent results have been issued, it is hard to have confidence in some claims. This is particularly true of agreements aiming to influence the public. The debate over how much of the recent drop in household food waste Courtauld signatories can claim credit for may seem trivial, but misleading claims could skew policymaking in this area (ENDS Report 428, p 48).

Some industry bodies are also concerned about the lack of clarity on performance of voluntary agreements. In its response to the waste review, the CBI intends to ask DEFRA to report more often and transparently on all its agreements.

Anonymity: Even if DEFRA did report openly on its agreements’ progress, no one would see the performance of individual signatories. This seems a key weakness. Companies can hide their lack of progress behind aggregate results.

But this is a cynic’s complaint, according to the CPA’s Jane Thornback. “Business wants to push things forward,” she says. Anonymity helps to persuade companies to sign up.

Andrew Kyuk of the FDF agrees. Many large firms “are running out of easy wins” so can also benefit from the collective approach because the public and media will not interpret small gains as poor performance. “People also have the space to explore things and see what they can and can’t do,” he says.

WRAP’s Dr Swannell denies anonymity encourages free-riders. “If people are taking the mickey... we will go in and we’ll be quite robust. I hope I’m not giving the impression we’re pussy cats.”

However, Hannah Hislop of Green Alliance says if a voluntary agreement is agreed in place of regulation, companies should be held to account. “To not do that is unfair to regulated sectors.”

Threat: The most surprising message to come out of the research is that most people feel the threat of regulation is needed for agreements to succeed. “If you have a voluntary agreement with no regulatory threat in the background, it tends to promote free-rider syndrome,” says Mr Kuyk.

Rhian Kelly of the CBI also believes threats have their place, pointing to the failure of the EU carmakers’ agreement, which did not have one. In this sense, agreements have a lot in common with the self-monitoring of pollution data, she adds. Under that regime, businesses face enforcement action if they do not manage their emissions effectively and deal with problems that arise.

But to some this raises a problem: is the threat of regulation credible when the current government has a deregulatory agenda?

So what does all this say for the benefits of voluntary agreements? The answer depends on the agreement in question. They have value only if they are designed well.

The ideal agreement should be developed for a specific sector and tackle a clear problem. It should have defined and measurable goals. It should lead to sharing of best practice and provide the financial support needed to stimulate innovation (something the government may not realise when it is trying to cut costs).

Regular results should also be published in a standardised format so signatories can be held to account. The agreement should also be backed by the threat of regulation if possible.

There are several environmental problems for which voluntary agreements seem promising. The FDF’s Mr Kuyk suggests limiting the water footprint of food products as an example. At the moment, metrics for this are underdeveloped and many of the worst environmental impacts lie outside the UK government’s control.

However, some fear the government may also apply the agreements where regulation or market mechanisms would be cheaper or more effective.

“You set your policy based on the problem you’re dealing with, rather than picking your tool and then applying it irrespective of the problem,” said one consultant, speaking anonymously. “No government comes out and says, ‘We’re going to do lots of tradable permit schemes’. There’s a lack of thought here.”

Plastic bagsClaire Monkhouse, senior policy analyst at the Sustainable Development Commission, says the body will put forward this message in a forthcoming report on behaviour change. “There’s a word of warning not to think [voluntary agreements] are the solution to everything. Intervention needs to be fit for purpose and not just a means for smaller government or cheaper policy.”

Agreements have many benefits compared with regulation, she continues, but “we need to know they are evidence based and can be independently verified… Government needs to be confident they are delivering outcomes. That’s why you need a threat [of regulation]. There does not seem to be that threat there right now.”

Dr Swannell insists WRAP only uses voluntary agreements where analysis shows they are worthwhile. He points out that the body has used other tools to drive change, from developing quality protocols that move materials outside waste controls to awarding grants to stimulate development of recycling markets.

But he also says “choosing to go down the regulatory or voluntary agreement route is a policy issue and a question for DEFRA”.

It would therefore seem sensible for DEFRA or the energy and climate department (DECC) to assess what has been achieved to date before they go ahead with any more such agreements.

However, the study of voluntary agreements commissioned for DEFRA’s waste review is limited in its scope. And its terms of reference ought to include whether regulation or market-based mechanisms could be as effective as voluntary agreements.

Additional research by Sam Edwards