Improving the chemical industry's performance - lessons from the USA and Netherlands

The European Commission is having second thoughts about proposing a mandatory chemical emissions register along the lines of the USA's Toxics Release Inventory (TRI) - and instead is hoping to negotiate voluntary reporting agreements with several industrial sectors. First in line for such a deal is the chemical industry. But recent experience in the USA and the Netherlands suggests that a blend of statutory and voluntary measures is likely to be more effective in putting the industry on the path of environmental improvement.

Early this year, the European Commission outlined plans for legislation to require companies to report their releases of specified chemicals for compilation into an EC Polluting Emissions Register. Based on the USA's TRI legislation, the idea quickly drew opposition from the European chemical industry's federation, CEFIC, which offered voluntary disclosure of some environmental data as an alternative (ENDS Report 217, pp 16-18 ).

The Commission has now back-tracked. Instead of pursuing the idea of a statutory PER, it is looking into the possibility of making voluntary agreements on emission reporting with industry on a sectoral basis (ENDS Report 222, pp 39-40 ). CEFIC has let it be known that it is canvassing its membership to get approval to negotiate such an agreement with the Commission. It hopes to have a mandate to proceed by September.

CEFIC's objections
In February, CEFIC said it had fundamental objections to the TRI because it gave the public, not to mention environmental groups, access to raw emissions data which could be manipulated to place companies in a bad light. The organisation wants companies to be allowed to take responsibility for revealing environmental data themselves, under the auspices of its Responsible Care programme, so that they have the opportunity to place the information in their selected context. It has urged its members to give such publications high priority.

Two of CEFIC's sister organisations, the CMA in the USA and the VNCI in the Netherlands, have already signed voluntary pacts with their Governments. The authorities in both countries have welcomed the deals because they mark a departure from their traditional confrontation with the industry - and believe that a joint approach fosters faster improvements than could be achieved by either industry or government alone.

Voluntary emissions pact
The simpler of the schemes is the CMA's 33/50 pact with the US Environmental Protection Agency (EPA), which stemmed from the TRI initiative. Under this agreement, the EPA asked firms from all manufacturing sectors to volunteer to reduce their emissions of 17 large-volume chemicals from the 300 or so substances on the TRI. The targets are to cut emissions from 1988 to 1992 by 33%, and by 50% from 1988 to 1995.

The most recent TRI data available are for 1991. They show that CMA member firms participating in the 33/50 programme achieved an overall 35% reduction in emissions and off-site transfers of the 17 chemicals by the end of 1991, a year ahead of schedule. The EPA says that the industry has displayed more enthusiasm for the scheme than most other sectors.

The CMA fought the same fight as CEFIC against the TRI before its introduction in 1986. But many of its member companies have since acknowledged that there are benefits to reporting the data despite the burden of having to compile it every year. Several companies have readily admitted that the quantity of chemicals reported as being lost to waste in the TRI's first year came as a revelation to them.

Many firms were prompted to announce new programmes to reduce these releases. One of the more familiar examples is Monsanto's pledge to reduce its world-wide air emissions of toxic chemicals by 90% by the end of 1992 from 1987 levels. By the end of 1991 it had achieved a 30% reduction world-wide, and 66% in the USA.

Reporting demonstrates improvement
Assistant Vice-president for Responsible Care at the CMA, Richard Doyle, told ENDS that the association now looks to the TRI to demonstrate the industry's improvement in performance. "We have been able to demonstrate that our member companies are improving at a higher rate than others who are reporting," he says. The CMA now puts out annual press releases stating the industry's latest collective TRI figures and its progress with programmes such as 33/50 and a similar exercise involving selected carcinogens.

The TRI's success as an indicator for the Responsible Care programme's code of management practice on pollution prevention has, alongside a similar use of the Occupational Safety and Health Administration's employee illness and injuries statistics to demonstrate the application of a code on health and safety, prompted the CMA's Board Committee on Responsible Care (BCRC) to recommend that performance indicators should be drawn up for each of its other four codes. These cover community awareness and emergency response, process safety, distribution and product stewardship. Pilot tests on the new indicators are to be run early next year.

According to Mr Doyle, the ideal for each indicator "would be to use where possible a measure that is collected by the Government. Where there is no such measure, then our steering committee is in the process of developing them."

As well as re-emphasising the need for indicators, the BCRC has just agreed that third-party verification of companies' management systems for all six Responsible Care codes holds the key to the programme's credibility. The CMA is looking across to CEFIC and the UK's Chemical Industry Association for suitable models, as well as initiatives such as the EC's new eco-management and audit scheme and an environmental management standard currently being considered by the International Organisation for Standardisation (ISO).

The CMA has established a national public advisory panel which provides it with an outsider's view of the progress of Responsible Care, drawing on the experiences of 215 local panels around the country. Facilitator for the national panel, John Vincett, Vice-president of the Toronto-based consultancy Pat Delbridge Associates, told ENDS that he has "never seen Responsible Care as an alternative to legislation. It is something that in some ways can shape legislation quite effectively with debate on some difficult areas. It can lead to better communications" between government and industry "than blind legislation alone could achieve."

Improving relationships
The EPA also acknowledges that its relationship with the chemical industry has improved since the TRI was introduced. David Sarokin, who administers the 33/50 programme in the EPA's Office of Pollution Prevention and Toxics, said that "the TRI is a tremendously successful programme and one that works very well in concertation with private sector programmes like Responsible Care. Almost all of the companies are looking very seriously at TRI data and making commitments in public, which is really at the heart of the 33/50 programme."

Commenting on the achievements of the 33/50 programme, he said that "the jury is still out, but the preliminary results suggest that we may ultimately surpass the 50% target, even though when we first started the programme a lot of companies said the targets were too big." Further voluntary deals are said to be in the pipeline.

Mr Sarokin is convinced that without the influence of the TRI companies would not be disclosing data to the extent seen today. "There has always been reporting of data but the TRI data is fundamentally different than anything that preceded it and different to anything that is available in Europe. The thing about TRI is that we are collecting consistent data from every facility that is reporting, and we are putting that into a separate management framework that enables us to compare one facility against another and potentially, one country against another."

Standardised reporting
To illustrate the TRI's potency, Mr Sarokin comments that "right now, I can get into the TRI database and if I wanted to I could get all the quantities of pollutants being discharged into the Mississippi river. Without such a system I would have to go to every single company and get their reports to obtain the same information."

He further notes that without the TRI's distinct format every company could have decided to report data in slightly different ways, making comparisons impossible. And there is the danger of companies aggregating data using "alphabet soup terms such as 'volatile organic compounds'."

CEFIC's objections to a TRI-style system in Europe, says Mr Sarokin, are "mystifying". The organisation has admitted that some of the companies objecting to the PER in Europe have operations in the USA which have been obliged to report to the TRI. "These are companies who have lived with TRI and found it fairly painless and even useful," he observes.

Dutch covenant
In the Netherlands, the chemical industry has entered into a more sophisticated and ambitious voluntary programme. Earlier this year, the VNCI agreed to enter into a covenant with the Government to address the total environmental impact of its member companies in a strategy that runs through to 2010. The procedure is one used by the Government as part of its target group management strategy. A similar covenant was agreed with the basic metals industry last year (ENDS Report 205, pp 18-20 ).

The strategy takes a view of the contributions made to pollution by each sector, and how it should help to achieve the targets set out in the official national strategic environmental plan, the NMP+. Targets within the plan generally have a baseline of 1985 or later, and are to be met by around 2010 in keeping with the overall philosophy of the Dutch Government to achieve sustainable development within one generation.

The chemical industry's covenant includes targets for reducing releases of numerous chemicals by 2010 (see table ), as well as objectives for waste reduction and prevention of soil contamination. Another requires the industry to improve its energy efficiency by 20% by 2000 from a 1989 baseline. This will contribute to the national objectives of stabilising carbon dioxide emissions at 1989/90 levels by 1994/95, and reducing them by 3-5% by 2000. Emissions of sulphur dioxide and nitrogen oxides from processes and furnaces must also be cut by 90% apiece between 1985-2000.

Corporate environmental plans
The first step in implementing the covenant was a declaration of intent signed by the relevant central and local authorities and the VNCI to signify their agreement with the aims of the covenant and the baseline emissions data.

In the next phase, every chemical company is preparing an environmental plan showing on a year-by-year basis how it intends to contribute to the overall targets set for the industry. The plans must be submitted to local authorities for approval. The Government expects to start receiving the bulk of the plans from early next year. Once they are in, it will evaluate whether the industry as a whole is on course to meeting its targets, or whether further action is needed. It has reached that position already with the reports submitted since last year by the basic metals industry. Evaluation of these is expected to be completed by September, and it appears that local authorities have already refused a few plans because they are thought to be based on flawed data or because companies are not considered to be putting their best efforts into them.

The third stage of the covenant procedure is the implementation phase, when local authorities will issue licences to each company incorporating its improvement strategy and take note of the measures it has promised to undertake. According to the Government, "it will not be until 1996 that we will know whether the chemical industry is living up to its promises."

Although the covenant was entered into voluntarily by the VNCI and signed individually by several of its largest member companies, its legal status is uncertain. Early this year an official advisory committee ruled that the covenants will be taken into consideration in regulatory affairs, thus implying a pseudo-legislative status. However, until a company's failure to live up to any part of the agreement is challenged in court, the extent of its authority will not be clear. Any such proceedings are likely to be taken under civil law.

Checks on companies' data
Martin Timmer of the industry division in the Government's Directorate-General for the Environment says that the feedback received to date from industry on the covenant approach has been very positive. "It gives them ample space to fill in their own ideas." He also believes that a joint approach produces more effort on the part of companies than purely voluntary programmes - while a solely legislative approach would take longer to deliver results.

The baseline data used in the chemical industry's covenant were submitted in the first place by companies and then checked by local authorities against their own records. The revised data were then sent back to the companies for signature. Mr Timmer observes that the team compiling the data centrally has been working on the task since 1974 and is acknowledged to be as experienced as plant managers themselves at data assessment. "The quality of the data is best when it is collected by both companies and authorities. If you leave it to one of these it will be incomplete," he believes.

That said, the Dutch Government has not been in favour of the Commission's PER proposals. Its reservations, though, are less to do with the principle of the PER than with the concern that it would not extract enough information from companies.

The Government is currently drafting a Bill to oblige firms in all sectors to submit detailed annual reports both on their environmental impacts and on the management procedures and plans they have, or intend to introduce, to tackle them. On present plans the reports will be made public (ENDS Report 222, p 40 ).

The PER, says Mr Timmer, "is perhaps a good idea, but we might be a step ahead of that. It might spoil what we are trying to do. If we were to move too far away from the Community legislation, then our companies will tell us they cannot ignore Community guidelines."

On the same note, he questions the adequacy of some aspects of the TRI. These include the fairly high level of releases at which reporting to the TRI becomes mandatory, the lack of any requirement to report on the steps companies are taking to reduce their releases, and the limited checks carried out on the accuracy of the data submitted.

The VNCI's Chairman, Ruud Selman, said at the time the covenant was signed that "the chemical industry regards the agreement as a good thing". The reasons he cited were:

  • It maps out clearly the Government's aims up to 2010, and these are consistent across all industrial sectors.

  • It provides a platform for discussion with the Government and allows for commercial considerations to be included in the equation.

  • It leads to consistency in Government policy, thus providing a stable climate for investment.

  • Long-term agreements and environmental plans are helpful management tools for companies.

    Needless to say, Mr Selman also highlighted some concerns, notably the ambitious nature of the covenant and its legal status when it comes to the implementation phase and permits are negotiated. The VNCI anticipates that the cost of all the measures needed to fulfill its contribution to the national environmental plan will run to some o3.5 billion.

    The Dutch and American experiences certainly suggest that there are merits to the concept of voluntary pacts between industry and the authorities, not least their power to bring quicker improvements in environmental performance. But a clear lesson from both initiatives is the need for external credibility - provided in the Dutch case by official oversight of data generated by companies and their improvement plans, and in the USA by statutory and standardised reporting to the TRI. If the European Commission is serious about pursuing voluntary agreements in place of a statutory PER then it would be wise not to overlook this.

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