industry and environment · 2004-01-27 · Contents 2 UNEP Industry and Environment October - December 2003 3 Editorial - The spotlight is turning towards smaller enterprises 4 Small

UNEP

ISSN 0378-9993Industry and EnvironmentVolume 26 No. 4October - December 2003

A publication of the United Nations Environment ProgrammeDivision of Technology, Industry and Economics

Une publication du Programme des Nations Unies pour l'environnementDivision Technologie, Industrie et Economie

Una publicación del Programa de las Naciones Unidas para el Medio Ambiente División de Tecnología, Industria y Economía

industry andenvironment

Big challenge for small business:sustainability and SMEs

� Challenges andopportunities

� Tools andapproaches

� SMEs as models

� Role of supplychains

C o n t e n t s

2 � UNEP Industry and Environment October - December 2003

3 Editorial - The spotlight is turning towards smaller enterprises

4 Small and medium-sized enterprises and sustainability: facts and figures

7 Challenges for SMEs in a globalized world economy – by Michael Kuhndt, Justus von Geibler and Andreas Villar

10 CSR in the Netherlands: changing consumption and production patterns – by Jelle Blaauwbroek

13 L’approche collective, de nouvelles solutions pour les PME – by Jean-François Vallès

14 Evolution of a popular SMEs tool: Efficient Entrepreneur calendar becomes The SMART Entrepreneur

15 Networks and tools for SMEs

16 Increasing environmental performance in SMEs with environmental product declaration (EPD) indicators – by Lennart Piper, Mikael Stenius, Maria Carty, Ruth Hillary and Scott Wilson

18 Environmental risk considerations for commercial lenders working with SMEs – by Chris Bray

20 A business model for clean-energy SMEs: small companies’ role in eradicating energy waste and energy poverty – by Philip LaRocco

24 How chemical industry initiatives contribute to environmental, safety and health protection in SMEs: an example from BASF – by Carolin Kranz and Ingo Sagasser

26 Cleaner production challenges in Brazilian SMEs – by Ricardo L.P. de Barros, Maria de Fátima F. de Paiva and Cristina L.S. Sisinno

29 SMEs and the environment in Hungary – by Gyula Zilahy

32 Sustainable development : improving community relations – by Mindy Hadi

35 World News

38 Industry Updates

41 UNEP Focus

46 Books and Reports

49 Web Site Highlights

� News � Actualités � Actualidades

� Other topics � Autres sujets � Otros tópicos

� Sustainability and SMEs

ContentsIndustry and Environment is a quarterly reviewpublished by the United Nations EnvironmentProgramme Division of Technology, Industry andEconomics (UNEP DTIE), Tour Mirabeau, 39-43quai André-Citroën, 75739 Paris Cedex 15, France.Tel: +33 1 44 37 14 50; Fax: +33 1 44 37 14 74; E-mail: [email protected]; http://www.uneptie.org

Editorial Board

Michael ChadwickClaude FusslerNay HtunAshok KhoslaWilliam H. Mansfield IIIHaroldo Mattos de LemosWalter RetzschLéon de RosenSergio C. Trindade

Editorial Staff

Françoise RuffeRebecca BriteJohn SmithThalia Stanley

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E d i t o r i a l

UNEP Industry and Environment October - December 2003 � 3

Major international companies tend to occupy thespotlight with respect to economic news anddiscussions of corporate environmental and social

responsibility (CESR). Until recently it has been too easy tooverlook small and medium-sized enterprises, but this ischanging.

SMEs were cited as a target for awareness-raising efforts andinformation dissemination at the June 2003 meeting inMarrakech, Morocco, on the development of a ten-year“framework plan” for improving consumption and productionpatterns (as mandated at the Johannesburg Summit).

In many countries SMEs are the fastest-growing part of theeconomy: they account for major shares of exports and thebulk of new jobs. This is one reason these companies haverecently received greater attention. SMEs have longaccounted for the vast majority of businesses (by number) and at least half of all jobs. While most SMEs are in the servicesector the one-quarter or so engaged in manufacturingproduce an important share of industrial waste. SMEs areparticularly strong in sectors characterized by high intensity of resource use and by polluting emissions.

Another reason SMEs have recently received considerableattention is that far too often they do much less (individuallyor as a group) than large businesses to address their negativeenvironmental impacts, even if many big firms are far fromperfect in this regard. The reasons are numerous and are, forthe most part, quite understandable. A vast majority of SMEsare micro enterprises; many of them, especially in developingcountries, suffer from relative lack of training, know-how,technology and money. In a number of countries SMEs arenot covered by occupational health and safety laws.

In both the developed and developing world many SMEs fallinto the grey area known as the “informal sector”. In thatsector in particular, SMEs are often run by women, whoconfront more obstacles than male entrepreneurs. Only noware special initiatives being developed concerning corporateenvironmental and social responsibility for small companies.Thus the business case for SME CESR is still imperfectlyunderstood.

SMEs are under less pressure from consumers and NGOsthan are big firms with respect to their operations’sustainability. They also receive less information regardingtheir sustainability and how to achieve it. For most SME managers, upgrading technology, management andmarketing to meet stiff price competition has the highestpriority. If they know about CESR at all, managers probablyperceive it as a burden rather than an opportunity.

Once SMEs are persuaded of the benefits (to themselves andto society at large) of providing products and services thatrequire smaller amounts of materials and energy, they have animportant job to do in changing the way consumers’ needsare met. Some SMEs are even better positioned than largecompanies in that regard. This is especially true of the mostinnovative businesses in areas such as chemical management,energy efficiency services and renewable energy supply.

Many tools and approaches have been shown to beenvironmentally and economically beneficial to businesses,including SMEs. The problem has been to persuade SMEs toadopt them. However, for many small companies movingtowards sustainability is becoming a necessity. SMEs mustincreasingly cope with sustainability demands from the largecompanies to whose supply chains they belong. Asenvironmental risks become a factor in obtaining access tocapital, it seems likely that smaller firms in particular will beaffected. Micro finance donors are increasingly aware of theenvironmental implications of loans for small industry.

Government, businesses, financial institutions and businessdevelopment services should be actively involved in providingSMEs with triple-bottom-line tools and approaches. Flexibilitywill therefore be required. It is fair to ask whether SMEs can be– or should be – expected to file full-scale sustainabilityreports, with comprehensive coverage of environmentalmatters, e.g. including impacts on biodiversity. When it comes to certification, SMEs may not be able to afford tocomply with systems as complex as ISO 14001. Special toolsfor SMEs could be needed. However, small businesses (byvirtue of their staff size, closeness of staff relations, and theirposition in their communities) may be well suited for activitiesand reporting related to sustainability’s social aspects.

Issues such as these are being addressed in a number of ways – from national initiatives to multilateral activities by UNbodies including UNIDO, which is responsible for SMEs underthe Global Compact, and UNEP with its capacity building toolsfor SMEs. “SME-friendly” environmental management systemsare being developed in some countries to help introduce SMEsto integrated management systems and certification schemes.

UNEP DTIE played an active role at the Marrakech meetingin June. It will continue to be active in the subsequent“Marrakech Process” – especially where work regarding SMEsis concerned. This issue of Industry and Environment is part ofthat work. The articles address barriers and opportunitiesfacing SMEs in their drive towards sustainability, as well asmany of the available tools and approaches. �

The spotlight is turning towards smaller enterprises

4 � UNEP Industry and Environment October – December 2003

Sustainability and SMEs

In most countries – large and small, developedand developing – the vast majority of business-es are small and medium-sized enterprises

(SMEs). These businesses provide at least half ofall jobs.

Big business is often perceived as the “back-bone” of national economies. In that case, SMEsare the flesh and sinews. We have become accus-tomed to being concerned about the social andenvironmental impacts of the largest companies.However, in many countries the cumulativeimpacts of SMEs are just as great if not greater.

DefinitionsUse of the term “SMEs” is often restricted to non-primary enterprises (i.e. it does not include farm-ing, fishery or the extractive industries). This isgenerally how the term is used in this issue ofIndustry and Environment. Nevertheless, small-scale fishery and mining operations, for example,are very important economically in many coun-tries, especially developing ones.

How small is “small”? Definitions vary accord-ing to countries and regions. The European Unioncategorizes SMEs as “micro” (one to nine employ-ees), “small” (up to 49) and “medium-sized” (upto 249). For the OECD, companies with up to 19employees are “very small,” those with up to 99 are“small” and those with 100 to 499 are “medium”.

In Canada, the United States and Mexico, defi-nitions of “small businesses” vary by sector and arebased on the number of employees (a maximumof 500 employees is the most common cut-offpoint) or annual gross income. Brazil defines a“micro enterprise” as one withup to 19 employees and a“small enterprise” as one withbetween 20 and 99, with agross annual income under 1.5million reals in each case.1 InIndia a “small enterprise” is onewhose total investment in plantand machinery is not greaterthan 7.5 million rupees.

Definitions that take thenumber of employees into ac-count could become less rele-vant in a “new economy” basedon information and communi-cations technology (ICT).

In Europe and much of therest of the world, most SMEsare micro in size. In central andeastern Europe and the formerSoviet Union, many private

companies with small-scale operations were cre-ated during the privatization and break-up of largestate firms.2 Only five years after transition began,there were 2.1 million companies in Poland: 92%employed five or fewer people, 6% employed sixto 50, and only 2% employed over 50.

Most SMEs are in the tertiary, or service, sec-tor. A 2001 survey by the Observatory of Euro-pean SMEs (which monitors the 15 EU MemberStates, Iceland, Liechtenstein, Norway andSwitzerland) showed that 25% of SMEs wereinvolved in manufacturing and construction. Theremainder were in wholesale and retail commerce,transport and communications, and business andpersonal services. Many countries have identified

an SME sub-category, “small and medium-sizedindustries” (SMIs), which generally means man-ufacturing/construction firms.

The triple impact of SMEsEconomicSome 90% of all the businesses in the world areSMEs (Figure 1). These businesses are responsiblefor 50-60% of total employment. In OECD coun-tries 95% of businesses are SMEs and 60-70% ofjobs are in these businesses. In 1998, 66% of Euro-pean jobs and 46% of those in the US were esti-mated to be in SMEs (Table 1). SMEs employedaround 60% of Poland’s workforce in 1995.

OECD figures show that SMEs create by far thegreatest number of jobs in the rich world. The ILOconsiders that this is probably also true in the devel-oping world, but figures are difficult to obtain.

SMEs account for over half of India’s GDP.Around 51% of shipped manufactured goods inJapan are produced by SMEs.

EnvironmentalAs the economic significance of SMEs continuesto grow, so do their environmental impacts. InIndia it is estimated that SMEs produce over 65%of industrial waste. In Canada and the UnitedStates toxic emissions from facilities emitting 10 to100 short tonnes of pollution per year increased by32% between 1998 and 2000, even though over-all industrial pollution decreased by 4%.3 Thesesmaller facilities are a cross-section of industry,ranging from metalworking to food processing. Asone observer put it, they are “the companies that

are in the industrial parks” (ofwhich the two countries haveover 15,000).

The Foundation for Interna-tional Training, a CanadianNGO, reports that a recent sur-vey of 116,300 SMEs inChina’s Jiangsu Province found67.7% were causing seriouspollution and 28.5% moderatepollution. Only 4% appearedto be pollution free.4

SMEs are generally prevalentin industries with relatively highresource and emission intensity(e.g. metal finishing, leathertanning, dry cleaning, printing,dyeing, brewing, food process-ing, fish farming, textile makingand chemicals). In Japan, as inmuch of the rest of Asia, many

Small and medium-sized enterprises and sustainability: facts and figures

Figure 1Share of SMEs in number of

enterprises worldwide

SMEs90%

10%

Implementing applicationof environmental

management systems 10%

Recreational activities'support for employees 6%

Investing ineducation/training

of employees 22%

High salary standards 16%

Health and safetyprecautions for workers 26%

Reporting on economic,social and environmentalperformance 11%

Support programmes foremployees' families 9%

Figure 2Importance of environmental-social activities to SMEs

Africa – 8 SMEsAsia– 8 SMEsEastern Europe – 11 SMEsLatin America – 2 SMEsMiddle East – 9 SMEsNorth America – 7 SMEsWestern Europe – 15 SMEs

Source: UNIDO

Source: UNIDO 2000

UNEP Industry and Environment October – December 2003 � 5


SME employees are engaged in traditional occu-pations.

Smaller businesses are generally concentrated inless capital-intensive sectors or those whereeconomies of scale are not of the greatest impor-tance. Economies of scale could become lessimportant, however, in economies that are increas-ingly ICT-based. (Small ICT start-ups can be asimplicated in e-waste generation as heavyweightsin this field.)

SMEs’ potential environmental impact mightbe expected to be commensurate with that of larg-er companies in the same sector. However, SMEsusually do not have the same levels of technologyor employee training as large companies, especial-ly in developing countries.

It should be noted that many companies inwhat might loosely be referred to as the “sustain-ability sector” (e.g. eco-services, eco-tourism,triple-bottom-line consulting) are SMEs.

SocialReasons for the growth of the SME sector world-wide include: � regional shifts in employment location, oftenassociated with “downsizing” related to globaliza-tion or with the dismantling of large state-runentities (e.g. in the transition economies andChina), which may give mid-career employees lit-tle choice but to create businesses of their own;� growth in franchising;� subcontracting and outsourcing by large com-panies.

In some countries, environmental health andsafety (OHS) inspections of SMEs are notrequired. In others, where SMEs are subject toinspection, inspectors may fail to visit many ofthose in the “informal sector”. Staff turnover canbe high in sectors where SMEs predominate.5 Fol-lowing up health and safety and other job-relatedproblems can therefore be difficult, even if inspec-tions have taken place.

The overlap between SMEs and the informalsector complicates efforts to study small business-es, or to communicate and work with them. Mostof the informal sector – in most countries – ismade up of SMEs. The International LabourOrganization (ILO) sees the informal sector as amajor source of jobs in poor countries, but it hasnot proposed a precise definition.

Does the informal sector include one-personmicro enterprises? For the ILO the answer is yes –except in the case of “administrative workers, pro-fessionals and technicians.” But many (perhapsmost) countries are likely to classify, say, a self-employed shoe repairer with no employees as amicro enterprise in the formal sector, so long as thatperson is registered with labour and tax authorities.

Countries and regions vary considerably withrespect to whether the informal sector is includedin definitions of SMEs. But whatever definitionsare adopted, SMEs and the informal sector facesimilar barriers to the adoption and practice ofenvironmental and social responsibility (Table 2).A recent UNIDO survey of SMEs participatingin the UN’s Global Compact reveals some of themost important motives for overcoming such bar-

riers, as cited by SMEs themselves. Employee wel-fare is by far the most significant (Figure 2).

Women in developed countries are responsiblefor significantly more business start-ups than men,yet they often face worse obstacles (e.g. in obtain-ing finance for start-up, development and expan-sion). They are especially active in the informalsector, where there are probably even more womenthan the rare available statistics suggest.

UNIDO has identified what it calls the “cor-porate social responsibility paradox” (i.e. is thebusiness case for CSR that applies to larger com-panies also applicable to SMEs?)

ReponsesOver half the SMEs in Europe take part in socialresponsibility activities. The larger the size cate-gory, the more companies are involved in envi-ronmental and social activities. More environ-mental and social responsibility activities takeplace in northern than in southern Europe.

Environmental activities appear to be more dif-ficult for SMEs to carry out than those concernedwith social responsibility. One explanation is thatmany SMEs are tightly woven into the social fab-ric. Relationships with the local community, andwith employees and their families, are of basicimportance to their survival. Environmentalissues can seem less urgent and unnecessarilyexpensive.

Lack of information is another factor. Smallerbusinesses generally have their hands full comply-ing with basic regulations, which they may notalways completely understand. Indeed, the mostpressing need in the case of many small businessowners and managers is for capacity building –not so much in environmental management as inbusiness management.

An increasingly common way to overcome bar-riers to the acceptance of environmental and socialresponsibility is for SMEs to work together toaddress issues like waste management and recy-cling. “Waste minimization circles”have been cre-ated in India, as has a network of UNIDO-supported “subcontracting and partnership ex-changes” (SPX) where small companies can sharetechnical information.6

A Web site with cleaner production and otherenvironmental information targeted to SMEs hasbeen developed by the Canadian Centre for Pol-lution Prevention.7 Other such sites, publicly orprivately supported, exist in many countries.8

The United States Small Business Administra-tion and a number of individual US state govern-ments offer low-interest loans to help smallercompanies adopt cleaner production techniques.Indonesia, with support from Germany, is under-taking a pilot Industrial Efficiency and PollutionControl Project in which SMEs receive loans forinvestment in efficient production and cleanertechnology.9

Another approach is to award grants for envi-ronmental assessments. The Eco-Efficiency Centrein Dartmouth, Nova Scotia, has a pilot Eco-Effi-ciency Business Assistance Program that providesfunding to SMEs for consultant fees, providing upto 75% (to a maximum of C$ 6000). AnotherCanadian programme, in Ontario, estimates thatthe assessments it has helped fund for 16 SMEshave resulted in an implementation rate of over90%, total savings of C$1.2 million per year, andtotal capital investment by the SMEs of C$ 1.2million, with a one-year payback period.10

There are similar support programmes inEurope.11 At EU level, assistance is based oninstruments such as the Community Eco-Man-agement and Audit Scheme (EMAS), the Euro-pean eco-label, and promotion of cleanertechnology and best available techniques.

Several forms of “light” or “SME-friendly” envi-ronmental management systems are being devel-oped in Europe. Examples are the recently adoptedBritish standard BS 855512 and the NorwegianEco-Lighthouse programme.13 Other Europeaninitiatives involve promoting integrated manage-ment programmes for SMEs, for example throughthe Austrian Chambers of Commerce.14

Financing institutions that offer small businessloans and micro-finance can also improve SMEs’sustainability awareness. Concerning micro-

Table 2SME barriers to adoption of

environmental and social responsibility

� insufficient technology, expertise, training and capital

� lack of initiatives tailored for small companies

� inadequate understanding of what the business case isfor SME environmental and social responsibility

� the need to deal with more pressing matters such asupgrading the quality of technology, management andmarketing

� price competition

� limited consumer pressureSource: UNIDO 2002

Table 1Employment breakdown by company size

Europe (1998) USA (1998) Japan (1996)

%

SMEs- Micro 34 11 n/a- Small 19 19 n/a- Medium-sized 13 16 n/a- Total 66 46 33

Large enterprises 34 54 67

Number of enterprises 118.3 million 108.1 million 57.3 million

Occupied persons per enterprise 6 19 10Source: SMEs in Europe, Including a First Glance at EU Candidate Countries (Observatory of European SMEs)



finance in particular, there is growing awarenessof the environmental implications of loans forsmall industry.

Perhaps the strongest influence on SMEs comesfrom multinational corporations, which increas-ingly ask their suppliers (including those in devel-oping countries) to meet social and environmentalstandards as a precondition for doing business.Such standards may be presented as codes of con-duct for individual supply chains or certificationsystems for entire sectors.

Large corporations usually find that their guide-lines cannot easily be imposed on smaller firms.Educational and “mentoring” approaches arebeing developed, often with the cooperation ofgovernments. Such an approach was announcedearlier this year by General Motors and automo-tive suppliers. The Suppliers Partnership for theEnvironment is a forum where companies canshare environmental best practices up and downthe supply chain. When GM and the US EPAannounced this initiative, they stressed that it wasespecially designed to benefit smaller companies inthe chain.15

Selected sources (organiztions)• Confederation of Indian Industry (www.ciion-line.org)• Environmental Business Information Center(www.environmental-center.com)• International Labour Organization (www.ilo.org)

• Japan Small and Medium Enterprise Corpora-tion (www.jasmec.go.jp/english)• Observatory of European SMEs (http://europa.eu.int/comm/enterprise_policy/analysis/observa-tory.htm)• Organisation for Economic Co-operation andDevelpment (www.oecd.org)• North American Commission for Environmen-tal Cooperation (Taking Stock reports) (www.cec.org/taking stock)• United Nations International DevelopmentOrganization (UNIDO) (www.unido.org) • United States Small Business Admisistration(www.sba.gov)

Selected publications• Corporate Social Responsibility: Implications forSmall and Medium Enterprises in DevelopingCountries. UNIDO, Vienna, 2002.• Hillary, Ruth, Small and Medium-sized Enter-prises and the Environment: Business Imperatives.Greenleaf, Sheffield, UK, 2000.• Wafta, Nabil T., Saeed Awan and Rodger Good-son. Chemical risk assessment and occupationalhygiene preventive measures in small and medi-um-sized enterprises. Paper for the ILO ActionProgramme on Safety in the Use of Chemicals atWork. International Labour Office, Geneva,1998.

Notes1. See article in this issue by Ricardo L.P. de Bar-

ros, Maria de Fátima F. de Paiva and Cristina L.S.Sisinno, “Cleaner production challenges in Brazil-ian SMEs” (p. 26). 2. See article in this issue by Gyula Zilahy, “SMEsand the environment in Hungary” (p. 29).3. See the annual pollution emission report by theNAFTA Commission for Environmental Coop-eration (www.cec.org).4. In Jiangsu Province 62% of all enterprises werenon-state owned SMEs, or “township villageenterprises”. See http://www.ffit.org/SMEEP/Menu/Frames/main.htm.5. For example, retailing and construction. SeeIndustry and Environment, Vol. 26, Nos. 1 and 2-3.6. See http://wmc.nic.in/chapter4.asp.7. See www.c2p2online.com/smep2.8. See page 15 of this issue.9. See www.unescap.org/drpad/vc/conference/ex_id_45_iep.htm.10. See www.oceta.on.ca/TORSUS/home.htm. 11. Examples from Austria, Belgium, Finland,Germany, the Netherlands and the UK are pre-sented on http://europa.eu.int/comm/environ-ment/sme/smestudy.pdf.12. See www.theacorntrust.org.13. See www.eco-lighthouse.com.14. See www.eval.at.15. See www/epa.govt/oppt/suppliers/pressre-lease.htm. An article about the retailer Swiss Coopand its work with smaller companies all along thesupply chain appeared in Industry and Environ-ment, Vol. 26, No. 1. �



In a globalizing economy liberalization, deregu-lation and privatization continuously redrawthe lines between state and market. They also

change the basis on which private enterprise isexpected to contribute to public wealth. As aresult of the growing legal, ethical, social and envi-ronmental expectations of various stakeholders,demand for corporate environmental and socialresponsibility (CESR)1 is continuously increasing.While pressure grows from a wide range of stake-holders, including governments, consumers,NGOs, research institutions and financial mar-kets, a number of companies are beginning to

implement CESR processes such as public com-mitment to standards, community investment,continuous improvement, stakeholder engage-ment, and corporate reporting on social and envi-ronmental performance.

CESR has been widely discussed in recent polit-ical and academic debates on the implementationof sustainable development in the business sector.Although there is no commonly accepted defini-tion of corporate environmental and socialresponsibility, it refers to business decision-mak-ing linked to ethical values, compliance with legalrequirements, and respect for people, especially

workers, employees, local communities and theenvironment. The aim is to encourage business tooperate in such a way that it meets or exceeds theethical, legal, commercial, public and environ-mental expectations that society has of it. Cur-rently a number of these issues are being discussedand debated in the public policy sphere: the Euro-pean Commission has published a green paper onintegrated product policy and on corporate socialresponsibility (CSR); a European Multi-Stake-holder Forum has been initiated; 2005 has beendesignated the European year of CSR; and theUN Global Compact is bringing together com-panies and UN agencies to address the topic.

However, the debates and responses concerningCSR’s objectives still mainly focus on largetransnational corporations (TNCs) serving north-ern markets but operating in developing countries.Large companies have recently developed andimplemented a wide array of tools and instrumentsincluding codes of conduct, environmental man-agement systems (EMS) and sustainability reports.These initiatives have been bolstered by a growingbody of empirical studies demonstrating that theapplication of CESR issues tends to have a positiveimpact on business’s financial performance.

Many SMEs remain at an early stage of envi-ronmental and social management, limited inmost cases to local philanthropic activities such ascharitable donations. But due to increased pressurefrom customers (mainly procurement agencies oflarge companies demanding standards within theirinternational supply chain, central wholesale orga-nizations and public authorities), environmentaland social concern is gradually growing. SMEs areincreasingly expected to comply with regulationsand sector-wide certification schemes. Neverthe-less, CESR initiatives developed by large compa-nies frequently fail when they are adopted bySMEs . In most cases they scarcely suit the partic-ular needs of these SMEs. If this is the case forSMEs in industrialized countries, the questionarising in the context of economic international-ization is how CESR issues can best be tackled bySMEs in developing countries and countries intransition.

The aim of this article is to identify efficientways to promote CESR, considering SMEs’ spe-cific conditions and needs. We describe the stateof the art of CESR in SMEs, followed by an iden-

Challenges for SMEs in a globalized world economy

Michael Kuhndt, European Senior Researcher, Wuppertal Institute, Eco-Efficiency and Sustainable Enterprise Team (and Director, Triple-Innova), Doeppersberg 19, 42103 Wuppertal, Germany ([email protected])

Justus von Geibler, European Researcher, Wuppertal Institute, Eco-Efficiency and Sustainable Enterprise Team, Doeppersberg 19, 42103 Wuppertal, Germany ([email protected])

Andreas Villar, European Research Assistant, Wuppertal Institute, Eco-Efficiency and Sustainable Enterprise Team, Doeppersberg 19, 42103 Wuppertal, Germany ([email protected])

SummarySMEs are increasingly expected to take responsibility for their own environmental and socialimpacts (just as multinational companies are), to understand different stakeholders’ interestsand demands, and to demonstrate responsible behaviour through greater transparency. Anumber of factors can either hinder or drive adoption by smaller companies of strategies pro-moting corporate environmental and social responsibility. To overcome barriers to the adop-tion of such strategies, available tools need to be adaptable to small and medium companies’requirements. Promising initiatives along these lines have been initiated in some areas, withtransnational corporations a key stakeholder group.

RésuméOn attend de plus en plus des PME qu’elles assument la responsabilité de leurs impacts envi-ronnementaux et sociaux (à l’instar des multinationales), qu’elles comprennent les intérêts etles attentes des différentes parties prenantes et fassent preuve d’un comportement responsablepar une plus grande transparence. Plusieurs facteurs peuvent soit dissuader, soit encouragerles PME à adopter des stratégies favorisant la responsabilité environnementale et sociale del’entreprise. Pour surmonter les obstacles à l’adoption de ces stratégies, il faut que les outilsdisponibles puissent être adaptés aux besoins des PME. Dans cet esprit, des initiatives promet-teuses dans lesquelles des entreprises transnationales jouent un rôle majeur ont été prises danscertaines régions.

ResumenLa expectativa de que las pymes, al igual que las empresas multinacionales, asuman la respon-sabilidad de sus impactos ambientales y sociales, comprendan los intereses y las demandas delas diversas partes interesadas, y demuestren un comportamiento responsable a través de unamayor transparencia es cada vez mayor. Hay una serie de factores que pueden obstaculizar oimpulsar la adopción de estrategias que promuevan la responsabilidad corporativa en mate-ria ambiental y social en las pequeñas empresas. Es necesario que las herramientas disponiblessean adaptables a las características específicas de las pymes para superar las barreras queimpiden la adopción de este tipo de estrategias. En este sentido, se han lanzado iniciativasprometedoras en algunas áreas y las corporaciones trasnacionales aparecen como un grupoclave.



tification of drivers and barriers to implementa-tion. We also outline what needs to be done topromote CESR in SMEs.

State of the art of CESR in SMEsSMEs make up over 90% of businesses world-wide. They account for 50-60% of employment.2Their work is strongly customer-oriented, andthey are a source of innovation, employment andcompetitive entrepreneurial spirit. SMEs are animportant source of businesses of the future, andtherefore play a crucial role in reaching sustain-ability targets, e.g. as set out in the Kyoto Protocolto the UN Framework Convention on ClimateChange”, the “factor 4/10 concept”3 and the UNMillennium Development Declaration”.4

SMEs are the backbone of most supply chains.Thus they are of crucial importance in gettingsupply chains ready to meet future standards. Theglobal trend of larger enterprises to reorganize,downsize and outsource, and the increase in fran-chising and self-employment, will lead to growthin number of SMEs in the future. Large productchain actors (e.g. TNCs) are continuously becom-ing more interested in having reliable, flexible andinnovative partners that produce high-qualityproducts which are environmentally sound andrespect social standards.

Some SMEs have already taken the lead inmanaging their environmental and social impactsin a well-structured way through implementingEMS, reporting on their environmental and socialperformance, training and qualifying their staffwith respect to environmental and social affairs,and working in cooperation with other firms inthe supply chain to reduce the environmentalimpacts of products and services.

Overall, SMEs tend to be most focused oninternal issues. Many of their responsible businesspractices concentrate on staffing issues, includingemployee skill development, team-building andmotivation within the organization. Even com-munity and environmental initiatives are some-times focused on or designed to impact onemployees. Internal benefits might be the mostdistinctive feature of SME involvement in CESRactivities. By tradition, many SMEs are integratedin the community through their employees andtheir limited spatial mobility. They maintain linksto the local surrounding civil society. They maybe more aware of local health and well-being thaninternationally managed companies. In terms ofstrategic actions, however, SMEs do not addresslocal civil and cultural issues as systematically asdo TNCs.

In summary, existing social and environmentalactivities of SMEs are fragmented and informal.Only a few SMEs feel the need for formal policiesor sector-wide approaches, as desired by largecompanies. Focusing on SMEs in developingcountries or countries in transition, the arenabecomes even more complex since the CESRthemes emphasized in these countries (e.g. cor-ruption and poverty alleviation) may differ fromthose of concern in industrialized countries. How-ever, many companies are engaged with at leastpart of the CESR agenda and practising some

kind of “inherent business responsibility”, gener-ally through employees and through services theymay provide for the community. In reality, thismay be a perception of their informal engage-ment. Often they are unable to articulate whatthey are doing and so do not have a common basison which new and innovative approaches and ini-tiatives could successfully be explored accordingto a more formal CESR definition.

Adoption of CESR in SMEs – influentialfactorsAs highlighted before, SMEs are important forreaching the goal of sustainable development andcould be more engaged in CESR. A number offactors influence adoption of CESR strategies inSMEs. The main drivers and barriers for CESRengagement in SMEs are described below, froman SME perspective.

Barriers to SME engagement in CESRSocial and environmental standards are increas-ingly a precondition for SMEs doing businesswith large companies. They can take the form of,for example, individual supply chain codes of con-duct and sector-wide certification systems. ManySMEs adopting this “big business” framework fearthe significant cost of implementing such com-plex monitoring and certification schemes.Among a large number of SMEs, the perceptionprevails that these systems are irrelevant or ill-suit-ed to their needs and that they create a counter-productive administrative burden. The “bigbusiness” framework may pose a particular threatto SMEs in developing countries. The focus ofmost issues and standards in such frameworksreflects the concerns and priorities of customersand consumers in the north, as well as prevailingtechnologies and best practice in countries wherethe frameworks (e.g. EMS, ISO standards) weredeveloped. The complexity of such certificationprocesses and the financial burdens are often amajor barrier to SMEs getting involved in CESR.

Another barrier is the low prices of many rawmaterials on international markets, which resultin margins being too small to make resource effi-ciency strategies, for example, financially feasible.Intensive price competition and limited con-sumer/stakeholder pressure on SMEs are also bar-riers in this context. Support projects of largersuppliers are scarce, owing to the bureaucracy andinertia that tend to characterize large companies.In addition, many smaller companies that buysmall amounts of raw materials are not in directcontact with the raw material producers sinceintermediate dealers supply smaller SMEs. Thesedealers could also constitute potential informationbarriers in the product chain.

In many cases SMEs’ customers, and oftenSMEs themselves, are unwilling to change theproduct system, which might be necessary in thecase of some product innovations in the chain.Stated reasons for this reluctance are the high costof production changes and the low cost of mostend-of-life management options.

Further barriers in SMEs are lack of time andfinancial and human resources, and fear of grow-

ing bureaucracy. In the case of product innova-tions, demand for R&D finance is high, leavingless or nothing for expertise, technology innova-tions or CESR training. The staff of SMEs alsoface the problem of locating (and having the timeto locate) good quality advice and information. AsSMEs are primarily concerned with short-termeconomic survival, they are not motivated to askfor – or use – environmental and/or social infor-mation or support. Moreover, smaller manufac-turing companies often do not have staff withsufficient environmental and social knowledgeand expertise to address problems and opportuni-ties related to environmental and social issues.

Another major barrier concerns the corporateculture and its attitudes. SMEs, which have oftendeveloped from small, “single fighter” firms, maybe unwilling to cooperate and to share informa-tion. Some SMEs fear the power of large compa-nies and the threat of acquisition by thesecompanies. Many SMEs are unaware that engag-ing in social and environmental issues is not just“goodwill”, but an essential part of responsiblebusiness practice. They lack awareness of the pos-itive impacts of CESR. In many cases, involve-ment of employees by top management andinternal cross-functional communication are lack-ing, which results in internal and external com-municational barriers.

A general management problem with respect toCESR improvement strategies is the fact thatimprovement opportunities are often seen as onlyprocess-related. Product-oriented CESR strate-gies, including upgrading the quality of technolo-gy, management and marketing, are frequentlynot within the scope of SMEs. The financial ben-efits of product management beyond the gate donot seem clear for many SMEs, and CESR maymainly be perceived as cost factor.

Drivers for SME engagement in CESRA significant driver for CESR seems to be largerbusinesses as customers of SMEs. Within inter-national supply chains, large corporate customersincreasingly ask SMEs to comply with health,safety and environmental practices. To a lesserdegree, this is also becoming more evident regard-ing SMEs’ social or community commitments.There is clearly a role for large organizations inpromoting and influencing SMEs (as opposed toenforcing), in combination with trusted serviceproviders and intermediaries. Shifting markets,the need to align production towards changingconsumer preferences, and internationalization ofstandards are another driver.

Suppliers are also drivers of activities in SMEs,as companies supply environmental informationon existing and new substances or life-cycle assess-ment data to customers. Providing leadership andinspiring SMEs to take action on CESR issuesseems beneficial to large companies throughincreased social and environmental responsibility,but also through enhanced customer relation-ships. However, very often little preventive coop-eration exists between large companies and SMEs.

Third-party involvement (e.g. in accreditation,endorsement) and award initiatives involving leg-



islation and/or regulating actors are key drivers ofCESR activities in SMEs. Local, regional andsupranational authorities (e.g. the European Com-mission) enforce both activities in SMEs throughinnovative policy frameworks, fees and other sanc-tions. Local pressure on SMEs is exerted throughregulation, public policy and civil society.

Personal interest in an “inherent businessresponsibility” and the internal benefits of moraleand increased employee motivation seem to be ofhigh importance as drivers. Respecting the envi-ronment and giving something back to the localcommunity is expected to result in a good busi-ness image or reputation. Personal fulfilment forthose involved is also a key driver – and an addedbenefit. CESR activities are often driven by thepersonal values and frame of mind of the ownerand the company’s senior management.

With regard to organizational drivers in thecompany, good internal process-related manage-ment practices are a precondition for CESR.Especially once an EMS is implemented, it cansupport the adoption of CESR activities provid-ed application of EMS is understood not only as aprocedural act but also as aiming at substantialperformance improvement. Other organization-al drivers for CESR activities are powerful moth-er companies. These companies provide intensivecommunication, as well as cooperation withoutcompetition. They can create high environmen-tal awareness among employees.

Concerning financial drivers in the company,good overall economic conditions are a prerequi-site for CESR activities. Cost savings throughthese activities are seldom mentioned as drivers.The range of employee benefits from CESR activ-ities range from improved morale and companyimage, to greater motivation, qualification andawareness, to better working conditions (e.g.when less hazardous substances are handled).CESR strategies can foster communicationbetween employees and management, though forstrategic reasons large companies try to reach theend customer, not intermediate SMEs, in mostindustry sectors. In addition, some SMEs fear theinfluential power of large companies. Acquisitionsfrom larger companies “seem to become a part oftheir product portfolio.”

Engaging SMEs in CESR – what can be done?SMEs can be engaged in CESR through provisionof suitable tools and improved communicationand cooperation with relevant stakeholders. Awide range of tools are already available for CESRin general. While these tools have been improvedand have become more sophisticated (especiallyfor large companies) in recent years, a growingbody of research on CESR tools in SMEs showsthat the existing tools are often too complex forSMEs to handle. To get a critical mass of SMEsmoving towards CESR improvements, morepragmatic assistance is needed.

For SMEs, the tools that seem most suitable arethose that can reflect their specific needs andenhance their information base cost-effectively. Inline with the saying “What gets measured gets

done,” companies commonly use indicators orindicator sets (e.g. for target-setting, monitoringand steering of performance, benchmarking, orreporting to internal and external stakeholders).Economic performance measures/indicators arealready commonly accepted as management toolsand are used throughout business. Considerableeffort has been made recently to develop CESRindicators for use by large companies. However,suitable indicators for SMEs have not been thekey focus of research. Research institutions coulddevelop indicator sets and measurement systemsthat are adaptable to the business case of SMEs.Simple tools can also raise CESR awareness with-in SMEs. This could motivate SMEs to becomeinvolved in CESR activities.

Adoption of CESR can be promoted external-ly through improved communication and coop-eration. Different “information gatekeepers” andpotential partners at international, national,regional and (most important) local level couldhelp SMEs raise awareness and promote activitiesaimed at improvements with respect to economic,environmental and social performance aspects.

Financial institutions can substantially motivateCESR activities. By demanding CESR informa-tion from SMEs within financial risk assessment(e.g. for credit giving) financial institutions cansteer SMEs towards CESR improvements. Suit-able screening methods and sustainability indexescould also be introduced for SMEs that may resultin increased competition on “best CESR practices”within small and medium companies. The devel-opment of industry-wide financial tools with acommon performance assessment format anddatabase can increase effectiveness when challeng-ing corporations. Sectoral framework guidelinescan be developed (e.g. as done in the GlobalReporting Initiative’s Sector Supplements). Alsoinsurance companies play a crucial role for SMEsand could offer insurance contracts with premi-ums that reward CESR engagement in SMEs.

Local, regional and international governmentsare “information gatekeepers”. They can helpovercome barriers and promote the drivers ofCESR in SMEs. Governments can initiate region-al networks for capacity building in SMEs, butalso networks between TNCs, business and tradeassociations and civil society organizations forpromotion of CESR in SMEs. Governmentscould also develop policy instruments supportingCESR in SMEs, e.g. purchasing policies reward-ing corporate performance improvements andcollaboration.

Ultimately TNCs seem to be the most impor-tant stakeholder group for CESR adoption inSMEs, as they can influence SMEs from differentperspectives. TNCs could give methodical sup-port to SMEs in designing indicator sets andCESR measurement systems, act as network part-ners promoting stakeholder dialogues, and pres-sure SMEs to address environmental and socialaspects of their business activities. Building onexisting links, TNCs could improve and deepentheir communication channels with SMEs toobtain a better understanding of their specificneeds and better insight into their particular busi-

ness case. TNCs might develop purchasing poli-cies rewarding corporate performance improve-ments and collaboration (not only certified EMS).It may be necessary for TNCs to provide financialincentives, management support and mentoringmechanisms that focus on general business devel-opment for SMEs and supply chain management.

Upgrading and training support for SMEscould integrate social and environmental man-agement skills in relation to entering into globalsupply chains and serving local markets. Existingtools for quality management improvements inSMEs can be integrated with tools to improve thesocial and environmental impacts of businessactivities. Supply chain CESR initiatives couldinclude support for quality management in SMEsand could focus on the business case as well as oncompliance mechanisms. Benefits might includebetter alignment with consumer concerns, part-nership opportunities with TNCs, improved pro-ductivity, and better capacity for learning andinnovation.

In conclusion, SMEs tend to have a goodunderstanding of their local cultural, political andenvironmental context and to have close linkswith local civil society. However, their inherentbusiness responsibility can be expanded to abroader environmental and social responsibility.Suitable strategies for this process consider thespecific conditions of SMEs and involve relevantstakeholders. Some promising initiatives havebegun to address the challenge of SMEs’ engage-ment in CESR. They may strengthen the role ofSMEs as a source of innovation towards sustain-able development.

Notes1. A number of terms are currently in use, includ-ing corporate responsibility (CR), corporate socialresponsibiltiy (CSR), corporate citzizenship, cor-porate accountability and socially responsiblebusiness (SRB). Although there are important dif-ferences in emphasis and approach, they sharebroad aims and outlooks. In this article the termcorporate environmental and social responsibili-ty (CESR) is used to cover these and relatedapproaches concerned with understanding andimproving the environmental and social impactof business.2. UNIDO (2002) Corporate Social Responsibili-ty: Implications for Small and Medium Enterprisesin Developing Countries, Vienna, p. 2.3. For an introduction to the “factor 4/factor 10”sustainability objectives, see E. von Weizsäcker,A.B. Lovins and L. Hunter Lovins, Factor Four:Doubling Wealth – Halving Resource Use, Earth-scan Publications Ltd., London, 1997, and TheFactor Ten Club: The Carnoules Declaration –Statement to Government and Business Leaders,Wuppertal Institute for Climate, Environmentand Energy, Wuppertal, Germany, 1997.4. The goals of the Declaration include eradica-tion of poverty and hunger, universal primaryeducation, gender equality, and combatingHIV/AIDS and other diseases. See www.un.org/millenniumgoals/.

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Policy on corporate social responsibility(CSR) in the Netherlands is geared towardsthe “triple p”: “people, planet and profit”.

Each government ministry or department has itsown issues to address in relation to sustainabledevelopment. The Ministry of Economic Affairscoordinates work on CSR; the Secretary of Statefor Trade, who is part of this ministry, is the cabi-net member responsible for CSR. The Ministryof Economic Affairs provides a platform for inter-departmental exchanges on CSR.

All ministries are invited to attend the CSRmeetings. The following ministries are especiallyactive within this structure: Development Coop-eration; Housing, Spatial Planning and Environ-ment (VROM); Social Affairs; Agriculture,Nature Management and Fisheries; and Interiorand Kingdom Relations.

Overall, no distinction is made between largerand smaller companies, either at policy level or in

activities that promote CSR. However, the themesdominating discussions on the topic are certainlyapplicable to small and medium-sized enterpris-es. These discussions are wide-ranging, as CSRconsistently generates a high level of interest onthe part of the public, the media and the govern-ment in the Netherlands. The main themes of thisdebate include:� the role of government – stimulating CSR byregulation or voluntary principles;� transparency and improvement of annualreporting;� making the supply chain sustainable and stimu-lating CSR;� organization of stakeholder dialogue;� self-enrichment of managers/CEOs;� accounting;� labour conditions in developing countries;� the effects of globalization on sustainability.

Discussions take place at meetings and confer-

ences, where all stakeholders (business, tradeunions, NGOs, government) are usually involved.Some debates on specific issues or on the behav-iour of a specific company take place through themedia and are often followed by questions in Par-liament.

The Netherlands developed its current nation-al and international action plans for sustainabledevelopment following last year’s Johannesburgsummit. The Secretary of State of VROM is thecoordinating member for sustainable develop-ment in the cabinet. As real change can only bereached internationally, Dutch delegations partic-ipate in meetings on sustainable consumption andproduction at European and global level.

To facilitate discussions and actively promoteCSR, the Dutch government follows a generalpolicy based on a report by the Social and Eco-nomic Council, Corporate Social Responsibility: ADutch Approach.1 The current government, whichis relatively new, is developing its own policies tocontinue to promote and stimulate CSR. TheNetherlands believes in seeking and promotingpartnerships and focuses on the voluntaryapproach while stimulating and facilitating CSRamong businesses. In short, the government takesthe role of change agent, brings different partiestogether, and invites them to engage in innovativecooperation. The 12 provinces and the munici-palities are partners in this approach.

Classifying companies according totheir environmental-social outlookVROM categorizes companies in three groups,based on the level of their environmental andsocial outlook and the different types of relation-ships this creates with the government (Figure 1).The ministry uses this classification system,described below, to determine how it can beststimulate and facilitate CSR, including trans-parency and communication, beyond simplecompliance with regulations. Most SMEs are inthe first or “compliance focus” group.

Environmental compliance focusThe first group is made up of companies thatfocus on compliance with regulations. This groupincludes both those that fall below current regu-latory standards and those that comply, often reac-tively. For these companies a combination ofpermitting, reporting, inspection and enforce-ment is the most practical approach.

Environmental optimization focusBusinesses in this group seek proactively to meet

CSR in the Netherlands: changingconsumption and production patterns

Jelle Blaauwbroek, senior policy adviser on CSR, Ministry of Environment, IPC 650, PO Box 30945, 2500 GX The Hague, The Netherlands ([email protected])

SummaryGovernments can play a significant role in helping small companies make their consumptionand production patterns more sustainable. In the Netherlands the national government hasa new sustainable consumption and production agenda covering the next few years. While itdoes not differentiate between small and large companies, many issues addressed in the Dutchdebate on corporate responsibility concern SMEs. An important element of Dutch policy is thecategorization of companies according to their readiness to use sustainability approaches. Themain challenge is to encourage voluntary approaches. Further regulation is not seen as a solu-tion. Companies are considered responsible for their own progress.

RésuméLes gouvernements peuvent faire beaucoup pour aider les petites entreprises à rendre leursmodes de consommation et de production plus compatibles avec un développement durable.Aux Pays-Bas, le gouvernement a mis au point pour les prochaines années un nouveau pro-gramme en faveur de modes de consommation et de production plus durables. Si ce pro-gramme ne fait pas de distinction entre grandes entreprises et PME, beaucoup de questionsabordées dans le cadre du débat sur la responsabilité des entreprises qui a été amorcé dans lepays concernent les PME. Un trait majeur de la politique néerlandaise est la classification desentreprises selon qu’elles sont plus ou moins prêtes à s’engager dans une stratégie dedéveloppement durable. La principale difficulté est d’encourager les démarches volontaires.Une nouvelle réglementation n’est en effet pas considérée comme une solution : on estime queles entreprises sont responsables de leurs propres progrès.

ResumenLos gobiernos pueden desempeñar un importante papel al brindar apoyo a las pequeñasempresas para que desarrollen patrones de consumo y de producción más sostenibles. El gob-ierno de los Países Bajos cuenta con una nueva agenda de consumo y producción sosteniblespara los próximos años. Aunque el debate en este país no diferencia específicamente las empre-sas pequeñas de las grandes, muchos de los temas de discusión sobre responsabilidad corpo-rativa competen a las pymes. Un elemento importante de la política holandesa es laclasificación de empresas de acuerdo con su receptividad para aplicar enfoques de sostenibil-idad. El principal desafío es alentar los esfuerzos de tipo voluntario. No se cree que la soluciónradique en el establecimiento de reglamentaciones adicionales, ya que las empresas sonresponsables de su propio progreso.



their legal obligations or perform beyond them.They actively look for ways to improve their envi-ronmental strategies. VROM asks many of thesecompanies to voluntarily sign sector-level agree-ments called “environmental covenants”. Eachcovenant involves a framework and a jointlydeveloped action plan for meeting environmentaltargets. Among other things, the covenant oblig-es companies to produce an annual environmen-tal report.

The benefits for participating companies aretangible and often financially advantageous,through incentives or rebates. If, for example, acompany buys new machinery with substantiallylow energy consumption, or with the latest tech-nology for emission reduction, it can obtain anextra tax reduction on the investment. NOVEM,the Netherlands Agency for Energy and the Envi-ronment, is promoting several environmental pro-grammes in which money from differentministries is used to stimulate research and devel-opment focused on new innovative technologieswithin companies.2

CSR focusThe companies in this group are concerned notonly with their environmental impact, but alsowith their societal impact and their “licence tooperate” – an accepted expression in CSR, mean-ing they know they must get and hold the supportof stakeholders. Without this support, they lose thecredibility to produce and sell (in fact, their licenceto operate). There is a strong connection with rep-utation management. They are stepping into theworld of CSR and “triple p.” This means lookingnot just at their own factories and short-term ben-efits, but also at what is happening outside, up anddown the supply chain; it means looking for pos-sibilities to improve the whole system.

Government’s role is very different at this level.Rather than sitting on the sidelines watching, or“just” providing some regulations and support,government is one of the players in the CSR dis-cussion. This is not only because government is akind of business itself, but also because it can wielda set of instruments to manage markets. The thirdgroup’s work is a complex network involvingNGOs, consumers, government and business. Itrequires VROM to continually form dynamicpartnerships with all stakeholders. The relation-ships are fluid and situation-based, which makesthem very complicated.

Covenants, used most in the case of the secondgroup, take account of SMEs’ needs. Each SME ina given sector is required to develop an EMS meet-ing the sectoral covenant’s requirements. However,in sectors where SMEs dominate (e.g. the printingsector, with over 3000 mostly small companies)enterprises are not required to develop the four-year company environmental plan that is part ofmost covenants. Since most SMEs would havetrouble planning this far in advance, they set annu-al targets based on their sector’s BAT workbook.

VROM works mainly with or on behalf of thetwo first groups. A majority of SMEs are in thefirst group. There are rather fewer in the secondgroup and very few in the third.

The Netherlands has developed a robust systemfor implementing environmental policy to reachits sustainable development goals. The systemincludes an annual environmental outlook, whichis presented to the Parliament,3 and a series ofnational policy plans. The fourth National Envi-ronmental Policy Plan (NEPP4, 2001)4 empha-sizes the need for managing transitions. Thegovernment has defined four paths for transitions– towards sustainable biodiversity, sustainableenergy supply, sustainable agriculture and sus-tainable mobility. This will require it to continueseeking new partnerships, as governments cannotmake the world sustainable on their own; inputand cooperation from other stakeholders, espe-cially from businesses, are essential.

The recent focus on CSR does not mean lessconcentration on the first two groups; this mustcontinue full speed ahead. CSR can be seen as atop level, part of the difficult process of managingtransitions. At this top level it is impossible to reg-ulate or even foresee the business practices thatneed to occur. But this does not mean the govern-ment cannot help. VROM is interested in how itcan stimulate a push forward in terms of technol-ogy and working methods, and what it can con-tribute to the network of players that will make abig transition possible. Transparency that goesabove and beyond what the current state ofreporting offers is essential.

The Duproco project on sustainableconsumption and productionInspired by the national policy on CSR, and withthe knowledge, experience and network from its“daily” environmental business, VROM beganwith several CSR activities. It conducted research,helped businesses with pilot studies and experi-ments, sponsored actions by NGOs, developedgreen-friendly tax rebate programmes, creatednew networks (e.g. with national banks), orga-nized national congresses, and introduced a con-test for “best in class” CSR manager.

In 2002 the Ministry decided to evaluate itsefforts so far in order to formulate a new strategyon sustainable consumption and production (inshort, and in Dutch, Duproco). An important partof the Duproco project was organizing a debateinvolving all stakeholders, in which they were

asked what they expected from the government,especially from VROM, in the process of stimu-lating CSR. The result, in the summer of 2003,was an agenda for the next few years in whichVROM will focus on six priorities:

Getting prices rightBecause the market doesn’t take all societal costsinto account and the consumer is not always capa-ble of making green decisions, VROM will con-tinue the difficult task of finding (international)ways to implement external cost into the price ofconsumer goods.

Helping partners set CSR goalsBecause of the complexity of CSR, people can runaway from their responsibilities. Companies findit difficult to take environmental aspects intoaccount in the decision-making process. There-fore, VROM will help businesses in making CSRtailor-made. This can be achieved by helpingcompanies and sectors formulate their businesscase, introducing sector-specific information (likeindicators), disseminating existing informationand tools, creating CSR covenants with the dairy,paper and chemical sectors, and more.

Stimulating transparencyBecause CSR takes place within a complex net-work of different stakeholders with differentexpectations, the current environmental report-ing approach does not meet the needs of themajority of stakeholders or provide them with thetriple p transparency companies hope for. Thereis a strong connection with the former prioritygiven to describing the CSR goals.

Since regulations can only prescribe behaviourup to a certain level, VROM is eager to find otherways to drive transparency and, ultimately, dia-logue. VROM initiatives will focus, among otherthings, on promoting the Global Reporting Ini-tiative (GRI) and stimulating development ofclear and reliable consumer information on prod-ucts and services. The plan is to establish a newinstitute that can develop inspirational high-levelindicators for sustainable consumption and pro-duction – sector-specific or product-specific – thatgo further than the existing indicators used forproduct labelling.

Be sustainable in business ourselvesNational and local governments can only be reli-able partners in the field of CSR if they demon-strate their own responsibility and if, for example,they intensify governmental programmes such asgreen procurement and work with managementsystems like that of ISO to optimize their internalprocesses.

Make use of the governmental network (national, provincial, local) by stimulating CSRVROM and the Ministry of Economic Affairs havejointly built up a network of experts working withcompanies at provincial and municipal level. It isthe provinces and municipalities that implementand regulate environmental law regarding compa-

Figure 1Company classification

Environmental optimization focus

CSR focus

regulation baseline

Leve

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tal a

nd

soci

al o

utlo

ok

3

2

1Environmental

compliance focus

Source: VROM



nies (especially applicable to companies in the firstgroup). Companies also receive financial and tech-nical support to improve their environmentalimpact (in particular, help to the second group).

VROM and the Ministry of Economic Affairsprovide the financial instruments. For severalyears the main focus of such instruments was onenvironment (waste, noise, air, water) and ener-gy-saving. Now the network is being transformedto a CSR network (stimulating the third group),which will constitute an essential bridge betweengovernment and companies, especially SMEs.

Taking an active role internationallyVROM will begin an implementation pro-gramme to establish the framework for increasingCSR. Of importance in this process is to bringideas originating in the Netherlands to the Euro-pean level, and to cooperate with similar initia-tives beginning within the EU and programmessuch as UNEP.

VROM’s agenda is part of the Dutch strategyon CSR. In addition, other ministries are devel-oping their new initiatives. Not everything will benew, as good existing activities are in place.

For example:� development of a national CSR knowledgecentreThe centre will not conduct new research, butmust function like a matchmaker between supplyand demand of information, experience and toolsfor organizations that want to make a start withCSR. The centre will start probably in 2004.� financial support of the CSR researchprogrammeCSR is not just a matter of good intentions. It is

also about feasibility. To bring policy into linewith principles, practical expertise is needed. Theuniversity research programme on CSR is goingto provide this.� stimulation of partnerships in B2B. The important thing is to encourage the Dutchprivate sector to work with its counterparts indeveloping countries, and to make partnership thebasis for initiatives in the field of CSR and busi-nesses working against poverty. During trade mis-sions this will be a regular item in the programme.� organization of a multi-stakeholder platformThe Dutch government believes it should havemore intensive contact with NGOs and interme-diaries and be more open to initiatives from socialorganizations. It is important to have a dialoguewith all the parties involved. This can be donethrough a multi-stakeholder platform. Potentialpartners are businesses, trade unions, intermedi-ary organizations, banks, pension funds andNGOs. VROM already talks with NGOs, banksand the Chambers of Commerce on a regular baseabout the CSR initiatives. � improving the quality of annual reportingin the NetherlandsIn October 2003 the Dutch Council for AnnualReporting will issue an advisory report on the pro-duction of social annual reports. Combined withthe activities of the GRI, the advisory council willprovide an important stimulus to improving CSRreporting.� improving the role of NGOs in the CSRdebate and in playing their role in “checking”on businesses Good initiatives from NGOs are financially sup-ported by VROM.

� supporting development of new CSR tools,often developed by consultants.

SMEs and CSRDutch policy promoting sustainability makes noparticular distinction between big and small com-panies. There have been few specific actionsinvolving SMEs, but much of VROM’s work hasbeen applicable to SMEs. As noted, in terms ofthe company classification system a majority ofSMEs are in the first group and are just striving tocomply with the law or the bottom line. Munici-palities are their partners in organizing the rightregulatory measures. CSR is not the main moti-vation of this group.

It is less common for SMEs to form part of thesecond group. In environmental policy VROMlooks at the group of companies responsible forthe major part of air, water and soil pollution.SMEs are often too small and diverse to be part ofthis group. However, to the extent they do fall intothis category they are covered by specific policy forindustry, which includes the 11 sector covenantsdescribed in the accompanying box.

The Ministry of Economic Affairs and VROM,together with Dutch industry, have also developedspecific plans for energy saving and CO2 reduc-tion. These include such approaches as the CleanDevelopment Mechanisms and Joint Implemen-tation (from the Kyoto Protocol), a benchmarkcovenant on energy efficiency and trading of CO2and NOx emissions. Many other internationallyknown instruments are also available for group 2.They are used not only by big industry, but alsoby SMEs; these instruments include implementa-tion of ISO 9000, ISO 14001 or EMAS systemsto improve production systems, exploration ofpossibilities for dematerialization, life-cycle analy-sis and eco-efficiency in designing and productionproducts, stimulation of cleaner productionthrough offering specific subsidies and tax rebates,funding of specific research programmes for tech-nical innovations, improving the environmentalreporting system, and enlarging the group of par-ticipating companies.

Only a few SMEs are part of the third group, i.e.companies with a focus on CSR. That doesn’tmean SMEs will be excluded from implementingthe CSR agenda in coming years. In general, small-er companies are in contact with municipalitiesand not directly with ministries. The new initia-tives will be developed through the governmentalnetwork mentioned above, and will be especiallydesigned for SMEs. Together with the new CSRknowledge centre, the government provides SMEswith the support they need for making their stepstowards CSR.

Notes1. Reviewed in Industry and Environment, Vol. 25,No. 2. See also www.ser.nl, Advisory Reports2000.2. See www.novem.org.3. See www.rivm.nl/en/ (reports on environmentand nature, Environmental Balance 2003).4. See www.minvrom.nl/international/ (down-loads environment, NEPP4). �

Negotiated environmental covenantsDeveloped at the beginning of 1990s, negoti-ated agreements (covenants) encapsulate theevolution of Dutch environmental policy,which sought to develop shared responsibilityby the different actors for environmental goals,integration of environmental media, andachievement of national targets set in NationalEnvironmental Policy Plans. Covenants nowexist in 11 industrial sectors.* These sectorscover over 20,739 enterprises, which accountfor 90% of all industrial pollution in theNetherlands. Among the tools included in thecovenants are environmental management sys-tems (EMS). Thus they can help increaseuptake of EMS by SMEs.

The existing covenants have been developedin the following manner:� Each sector specifies its integrated environ-mental targets for 2000 and 2010.� The regional licensing authorities and the sec-tor sign an agreement representing the sector-wide plan.� A consultative committee made up of repre-sentatives from industry and/or trade associa-tions, the licensing authorities and relevantministries (e.g. for economic affairs, environ-ment, transport, public works, agriculture) pro-vides workbooks on best available technology

(BAT) for the sector, coordinates and reviewimplementation, reports to VROM annually onprogress, ands acts as a solution provider.� In consultation with the licensing authorities,each company draws up a four-year companyenvironmental plan incorporating the sector’sBAT targets, on which companies must reportannually.

One area where covenants score highly isfeedback from users, with industry generallybeing very supportive of the agreements. Tradeassociations and their members gain from par-ticipation in consultative committees and in theprocess of drawing up BAT workbooks and sec-tor targets. They also benefit by hearing from thediverse range of licensing authorities that alsotake part in the committees. Companies basedin different regions sometimes have to deal withconflicting views from licensing authorities, butin the consultative committees the authoritiesare united with respect to BAT sector targets.

* Basic metals (37 enterprises covered), chemicals(112), dairy (66), metal products and electronics(17,000), textiles and carpets (47), paper and card-board (26), printing (3000), concrete and cementproducts (200), abattoirs and meat products (170),rubber and plastics (70) and oil and gas (11).



Aider les PME à intégrer une dimension envi-ronnementale à travers un partenariat avecles pouvoirs publics locaux, tel est l’objet de

l’Association Orée. Créée il y a plus de dix ans,cette association française regroupe des grandesentreprises comme : LVMH, L’Oréal ou 3M, despouvoirs publics locaux comme le ConseilRégional du Nord Pas de Calais ou de Picardie, laCommunauté Urbaine de Bordeaux, des gestion-naires de zones d’activités comme le Parc industrielde la plaine de l’Ain et d’autres associations.

L’association s’attache essentiellement à pro-mouvoir des démarches de gestion environne-mentale à travers la participation à des colloques etl’organisation de formations s’adressant principa-lement à ses adhérents. Elle réalise aussi de nom-breux outils issus d’expérimentations sur le terrain.Le site internet de l’Association Orée, avec ses8000 visiteurs par jour, est devenu une référencedans le domaine de la gestion environnementale.De nombreuses informations et exemples sontfournis sur le site, avec des exclusivités comme laliste des entreprises françaises certifiées ISO 14001.L’extranet de l’association, réservé aux adhérents,assure des services de questions-réponses en ligne,de recherches documentaires et de veille de l’infor-mation. Afin de compléter ces actions d’assistanceet de conseils, la Lettre Orée (bimensuelle) est dif-

fusée à environ 3 000 exemplaires. Elle met enavant les bonnes pratiques développées par sesadhérents.

L’Association Orée s’appuie sur des groupes detravail pour réaliser ces outils. Ces lieux d’échangesmulti-acteurs permettent une confrontationconstructive de points de vue. Aujourd’hui, l’asso-ciation en anime quatre : la gestion environne-mentale des zones d’activités, la relation client –fournisseur, la concertation locale et le transport demarchandises. Ces échanges, associés à une forte

expérience du terrain, lui ont permis de concevoirdes approches innovantes au service des PME.

Les PME : des petits et moyens émetteursLes PME, comme leur nom l’indique, peuventêtre caractérisées par un petit nombre d’employés.La priorité à l’embauche est rarement donnée àl’environnement. Les PME se retrouvent alorssans culture environnementale leur permettantd’appréhender pleinement leurs impacts surl’environnement et les solutions à y apporter. Uneétude menée par la fédération française des parcsnaturels régionaux a démontré que les chefsd’entreprises s’adressent en priorité à leurs amis,leurs familles ou leurs partenaires lors d’une prisede décision importante. Sans connaissance, desactions volontaires sont difficilement envisa-geables.

Les PME peuvent aussi être appréhendéescomme de petits et moyens émetteurs. Leursimpacts sur l’environnement sont souvent assezlimités. Par contre, les solutions techniques sontsouvent disproportionnées par rapport à cesimpacts. Les prestataires de services se sont peuintéressés à cette problématique et à l’adéquationdu matériel proposé. Certains trouvent auprès deces interlocuteurs peu informés un terrain favo-rable à des solutions disproportionnées. Mais laproblématique n’est pas simple. Par exemple,comment mettre en place un tri du papier dansune petite entreprise de 40 personnes qui ne rem-plit qu’une poubelle par semaine ?

Ces deux facteurs cumulés font que la prise encompte de l’environnement au sein d’une PMEreprésente un coût certain en raison de l’acquisi-tion d’une culture et de la mise en place de solu-tions peu optimisées.

Ce constat est aggravé par la faible qualité deslieux d’implantation des PME qui n’incite pas leschefs d’entreprises à l’initiative. Une majorité deszones d’activités en France n’est pas gérée et pré-sente bien souvent une image fort négative. Deplus, l’absence d’interlocuteur ne facilite pas ledéveloppement de relations entre les entreprises.

Forte de ce constat, l’Association Orée a cherchédes solutions d’amélioration à travers trois axes. Lepremier consiste à inciter les pouvoirs publicslocaux à montrer l’exemple par une gestion exem-plaire de leur territoire. Le second a été de recher-cher avec les PME des solutions de regroupementpour bénéficier d’économies d’échelle. Enfin, letroisième repose sur la relation client – fournisseurpour cerner au mieux le rôle positif que peuventjouer les grands groupes auprès des PME.

L’approche collective, de nouvelles solutionspour les PME

Jean-François Vallès, Responsable études et projets, Association Orée, 42 rue du Faubourg Poissonnière, 75010 Paris, France ([email protected])

SummaryWith respect to sustainable development, including environmental protection, small and medi-um-sized enterprises (SMEs) are of the greatest importance. They need to be aware of the chal-lenges to be met in the future. They also need to be informed about possible solutions,especially so they can go beyond some of the structural limits related to their size. Informa-tion and training tools, and collective approaches such as those increasingly used in France,allow SMEs to develop appropriate solutions. Some examples are presented in this article.

RésuméLes petites et moyennes entreprises (PME) représentent l’enjeu de demain dans le domaine del’environnement, et plus largement du développement durable. Mais pour cela, elles doiventêtre sensibilisées aux défis à relever, informées des solutions possibles, notamment pour dépass-er certaines limites structurelles liées à leur taille. Des outils d’information et de formation, desapproches collectives telles que celles qui se multiplient en France, permettent aux PME de trou-ver des solutions adaptées. Quelques exemples sont présentés ci-dessous.

ResumenLas pymes representan el desafío del futuro en nuestros esfuerzos por proteger el medio ambi-ente y alcanzar el desarrollo sostenible. Para enfrentar este reto, habremos de fomentar lasensibilidad de las pymes a los temas ambientales, proporcionarles información sobre posi-bles soluciones y, sobre todo, ayudarles a superar los límites estructurales inherentes a sutamaño. La información y las herramientas de capacitación, los enfoques colectivos comoaquellos que se practican en Francia, apoyan a las pymes en el desarrollo de soluciones dis-eñadas a la medida de sus necesidades. A continuación se muestran algunos ejemplos.



Un territoire propice au développement durable des PMELe lieu d’implantation d’une entreprisepeut influencer son comportement demanière notoire. Montrer l’exemple parune gestion environnementale des zonesd’activités, rechercher des solutions avec lesentreprises à travers de nouveaux serviceset favoriser un regroupement des entre-prises, tels sont les défis que doivent releveraujourd’hui les pouvoirs publics locaux.

Pour les aider dans cette démarche,l’Association Orée anime depuis dix ans ungroupe de travail national sur la thématiquede la gestion environnementale des zonesd’activités. Le groupe a cherché à dévelop-per des outils opérationnels directementinspirés des expériences sur le terrain.

Cela s’est traduit par la réalisation denombreuses fiches techniques d’une dizainede pages, consultables gratuitement sur lesite internet de l’association (www.oree.org,dans la partie Démarches ) comme :� la gestion collective des déchets par lesentreprises, � les chartes de qualité environnementaledes zones d’activités,� la gestion collective des rejets liquides,� la communication des actions environ-

nementales sur les zones d’activités.Elle termine actuellement une nouvelle

fiche : La gestion des risques industriels surles zones d’activités.

Elle a également publié plusieurs guidessur le sujet dont Le management environne-mental des zones d’activités 23 qui fait suite àun premier guide réalisé en partenariat avecle PNUE.

Cet outil apporte un véritable soutienméthodologique pour les gestionnaires dezones d’activités qui souhaitent mettre enplace un système de gestion environnemen-tale en vue d’une éventuelle certificationISO 14001. Parmi les nombreux outils pro-posés se trouve une nouveauté : les écocarteszones d’activités©. Ce système de cartogra-phie permet de visualiser simplement lesimpacts sur l’environnement et les actionsassociées pour en limiter les conséquences.Un site internet est dédié à cet outil :www.ecocartes-za.org.

Ce système de gestion environnementa-le permet de maintenir la qualité initiale dela zone d’activités. Ainsi les entreprises nesont pas incitées au laisser-aller et ne trou-vent pas d’excuses dans l’attitude des pou-voirs publics locaux. Il est courantd’entendre les chefs d’entreprises refuser de

Evolution of a popular SMEs tool: Efficient Entrepreneur calendar becomes The SMART Entrepreneur

The Efficient Entrepreneur calendar and guide is undergoing majorchanges, both in form and in approach. Originally produced in 2000 inwall calendar format by UNEP DTIE and the Wuppertal Institute’s Eco-Efficiency and Sustainable Enterprise Team, it will now be disseminatedin pocket or desk size. The accompanying “assistant guide” will be avail-able on CD and (partially) via Internet, as well as on paper.

The Global Reporting Initiative (GRI) and CSR Europe, a Europeanbusiness reference point for social responsibility issues, are joining theteam, reflecting a shift in emphasis from environmental responsibilityalone to the environment-social-economic approach that defines sus-tainability. The new product will therefore be a “triple-bottom-line per-formance toolkit” for SMEs. It will be called The SMART Entrepreneur(SMART comes from “Sustainability for the Small and Medium-sizedEnterprise committed to Accountability, Responsibility and Transparen-cy”).

Strictly environmental Efficient Entrepreneur material, however, is stillbeing produced. Developed in English, Spanish and French, this productquickly caught on with governments and corporations, some of which haveproduced their own versions. A Belgian company has published a Flem-ish version tailored to its own environmental, health and safety system.UNEP’s Regional Office for Latin America and the Caribbean (ROLAC),together with Costa Rica’s National Cleaner Production Centre, recentlybrought out a Spanish edition financed by USAID. There are also Ger-man and Italian versions, the latter a joint production of the Tuscanyregional government and the Banca Etica, based in Padua.

As in the case of the Efficient Entrepreneur, The SMART Entrepreneurconstitutes an open invitation to companies, governments, associationsand other organizations to adapt and translate the material it contains.Unlike the Efficient Entrepreneur, The SMART Entrepreneur will not beginin January and end in December. Reminders, themes and activities will beorganized in 12 sections but will not be dated; companies may start usingit any time they choose.

The Efficient Entrepreneur emphasizes practical advice and takes seri-ously the saying “What’s measured gets done.” It provides performancemeasures that can be easily assessed and evaluated by managers of small-er firms – or larger ones. Specifically targeted at SMEs, it can be used byany company that needs an introduction to performance managementand reporting.

In the SMART version under development, the calendar diary andassistant guide will continue to function as the core of the “toolkit”. How-ever, new material is being added in response to user surveys and partici-pation by GRI and CSR Europe. The new version, for instance, will comewith a supplement that tells companies how to use the GRI Guidelinesfor sustainability reporting. The supplement will present the business casefor SME reporting, along with case studies.

Some of the new material also builds on the SME Key, a product man-aged by CSR Europe as part of the European Business Campaign on SocialResponsibility. The “Key” is an online support tool that helps SMEs makethe case for environmental and social responsibility. A software tool, itallows companies to enter environmental/social reports into a database.(For more information see www.smekey. org.)

Another new element will be a training package to educate and informthose whose job is to distribute the “toolkit”. These “information gate-keepers” – such as cleaner production centres, environmental and socialauditors, chambers of commerce, industry associations – can use the train-ing package to help SMEs build capacity.For more information, contact: Cornis van der Lugt, UNEP DTIE, Tel: +33 144 37 14 45, Fax: +33 1 44 37 14 74, E-mail: cornis.lugt@ unep.fr; orMichael Kuhndt, Wuppertal Institute, Eco-Efficiency and Sustainable Enter-prise Team, Tel: +49 202 2492 241, Fax: +49 202 2492 138, E-mail:[email protected].

Global Reporting Initiative: see www.globalreproting.orgCSR Europe: see www.csreurope.org.



Networks and tools for SMEsNetwork Description + URL

International Network for INEM is the world federation of non-profit environmental management associations and cleaner production . Environmental Management centres. The INEM network comprises over 30 member and affiliated environmental management associations (INEM) and 10 cleaner production centres in more than 25 countries worldwide. The main goal is to minimize the

environmental impacts of industrial operations, and to help business and industry reconcile the imperatives ofdevelopment and the environment. www.inem.org

European Environment Sustainable Development Online (SDO) gives access to significant sustainable development sites. Agency (EEA) It provides descriptions of, and links to, many hundreds of sites covering the broad subject of sustainable Sustainable Development development, including networks and tools for business. SDO is continually updated and maintained. EachOnline site listed has been visited by one of the EEA’s researchers. http://sd-online.ewindows.eu.org

Oekoradar Oekoradar is an internet portal for businesses interested in sustainable development. The goal is to support companies in increasing their environmental performance. (In German only.) www.oekoradar.de/de/index.html

The following networks do not specifically focus on eco-efficiency/sustainability:

International Network The network’s goal is to stimulate innovation and technology transfer for SMEs by promoting a for SMEs (INSME) public-private partnership approach. INSME acts as a hub, multiplier and disseminator of knowledge.

www.insme.info/page.asp

International Small Business The ICBC is a congress held once a year since 1974. The basic objective of this network is to bring togetherCongress (ICBC) different actors such as businesses, researchers and financial institutions to exchange knowledge, and to

provide business opportunities among participating SMEs. www.isbc.or.jp

The Environmental The EMN is a capacity building package on environmental management tools. It is devised as a response toManagement Navigator SMEs’ need for assistance in selecting the most suitable environmental management tools according to internal

organizational and external market demands. Tools covered range from environmental management systems,cleaner production assessment and environmental cost accounting to environmental performance measuringand reporting. www.em-navigator.net

Sustainability Assessment For The aim of SAFE (Sustainability Assessment For small and medium sized Enterprises) is to supportEnterprises (SAFE) enterprises that are improving their competitiveness and tackling the difficult task of increasing their

eco-efficiency. Use of materials, energy and money is optimized by harnessing staff potential in order toincrease the success of the entire enterprise. www.wupperinst.org/safe

EMAS Tool Kit for SMEs A step-by-step guide to assist small companies to implement an environmental management system that meets the requirements of EMAS. www.inem.org/emas-toolkit

Environmental Management The Handbook looks at how SMEs can use environmental management to improve business performance. Tools for SMEs – A Handbook It focuses on three questions: What is environmental management? Why should SMEs use it?

How is the tool used? http://reports.eea.eu.int/GH-14-98-065-EN-C/en

SIGMA toolkit The SIGMA toolkit consists of a range of supporting tools, guides and case studies to support implementationof the SIGMA Guidelines and to address specific sustainability challenges. Some of the tools in the toolkit weredeveloped specifically for SIGMA. Others, such as GRI and environmental accounting, have been taken fromexternal sources as they present the best current approach. www.projectsigma.com/Toolkit/default.asp

Eco-Mapping A simple visual and practical tool for analyzing and managing SMEs’ environmental performancewww.inem.org/htdocs/toolkit/tools2_4_1_1.html

INEM Sustainability The INEM Sustainability Reporting Guide – A Manual on Practical and Convincing Communication Reporting Guide for Future-Oriented Companies – gives advice on how to draw up a good sustainability report. Focusing

on companies’ economic interests as well as on reliable and convincing communication, it tells abouttarget groups and their interests in information, outlines the principles of reporting, lists the elements ofthe Sustainability Report, and gives numerous practical examples for the presentation of companyperformance and the design of such reports. www.inem.org/free_downloads/index.html#Anchor-The-49575

Environmental Good The objective of the Guide is to enable SMEs to identify simple, practical, common sense good housekeepingHousekeeping Guide for Small measures that can reduce the costs of production, enhance the company’s overall productivity and mitigateand Medium-Sized Enterprises environmental impact. www.inem.org/htdocs/inem_tools.html#Anchor-Environmental-51548

Design for Environment Guide Design for Environment (DfE) is the systematic integration of environmental considerations into product andprocess design. It offers new perspectives, with a product and business focus, and is designed to make a companymore competitive, innovative and environmentally responsible. http://dfe-sce.nrc-cnrc.gc.ca



Increasing environmental performance in SMEs with environmental product declaration (EPD) indicators

Lennart Piper, Mikael Stenius and Maria Carty, Swedish Industry Association, Sinf Environment and Quality, Box 22307, Fleminggatan 14, 104 22 Stockholm, Sweden ([email protected])

Ruth Hillary, Technical Director of Corporate Sustainability, Scott Wilson, 17 Ruston Mews, London W11 1RB, UK ([email protected])

In scientific and policy discussions on improving the environment, one ofthe topics most often discussed is how to involve small and medium-sizedenterprises. We have identified six core environmental issues that need to beaddressed globally: global warming, ozone depletion, acidification, ground-level ozone, eutrophication, and hazardous waste.

The issue of SME involvement has implications in all six of these areas.However, there appears to be a gap between policy-makers and their envi-ronmental objectives on one hand, and SMEs’ achievements on the other.We mention here various approaches and experiences related to stimulatingenvironmental performance improvements in SMEs. In particular, we sug-gest a possible way to establish cooperation among countries, with the aimof improving the environmental performance of SMEs through using anenvironmental accounting system that incorporates tax reductions.

Sustainable entrepreneurshipSMEs are widely recognized as an important source of economic growthand of employment. Collectively, these enterprises exert significant pres-sures on the environment, as detailed in the final report of a project on envi-ronmental management systems in SMEs recently completed for theEuropean Commission.1 When SMEs implement such systems, internalbarriers (e.g. lack of human resources, frequent interruptions in the system’simplementation, lack of information on good practices and the benefits ofEMS) are more important than external barriers such as high implementa-tion costs, insufficient drivers, uncertainty about market benefits, and lackof good quality consultants and sector-specific guidance.2 Nevertheless,SMEs can reap benefits from an EMS, including organizational improve-ments, financial savings, meeting customer requirements, and better envi-ronmental performance.3

Companies working with integrated management systems, rather thanjust EMS, are closer to the idea of sustainable entrepreneurship. A pilotstudy in Sweden found that using integrated management systems or triplecertificates benefited SMEs.4 (An organization with a triple certificate is incompliance with the international ISO 14001 standards for environmentalmanagement, ISO 9001 standards for quality management, and OHSAS18001 standards for occupational health and safety management.) Robert

Isaak’s article “The Making of the Ecopreneur”5 also discusses benefits thatcan accrue to sustainable enterprises through such activities as green brain-storming, cost reduction, stimulation of innovation through green design,and networking and green marketing. Growth and benefits for a specificcompany depend on how the company manages its decisions and resourceallocation, based on significant environmental, occupational health andsafety, and quality performance indicators for its products and services.

Measuring environmental performanceAn environmental product declaration (EPD) describes the environmentalperformance of a product or service in a way that is standardized and com-parable with other products or services in a product and service category. Itis based on the six core environmental issues listed above.

The benefit of working with an EPD is that the company focuses on ana-lyzing environmental performance from a life-cycle management (LCM)perspective,6 and life-cycle assessments (LCAs) are used to identify key areasfor environmental improvements in product development. Since the over-all objective in establishing an EMS is to improve the organization’s envi-ronmental performance, the EPD system can serve as an effective way forSMEs to enter an EMS.7 This strategy was recognized in a pilot project byNUTEK, the Swedish Business Development Agency, which involvedpreparation of EPDs by five SMEs. It was found that SMEs can prepareEPDs in a resource-effective way. Moreover, focusing on environmentalperformance encouraged a life-cycle management approach to improvingenvironmental performance in products or services.

To assess the life-cycle environmental impact of a product’s components,all the SMEs in the NUTEK project had to do was keep track of each com-ponent’s volume, weight and transport distance to obtain information onthe impact with respect to each core environmental issue. The process ofcalculation, estimation and information flow was carried out automatical-ly, using a specially prepared Excel database for EPDs.

A conclusion of the project, and a prerequisite for SMEs working withEPDs, is that accessible national and international quality data are neededon the environmental performance of products, substances, materials,transportation, and energy use. If the EPD system were more widely imple-

s’intéresser à la gestion de leurs déchets car ilsréclament depuis des années des panneaux designalisation de qualité de leur site et leur mise àjour. La gestion des déchets devient alors unmoyen de pression sur les pouvoirs publics locauxet le refus d’engager des actions un moyen claird’exprimer leur mécontentement.

La gestion environnementale permet aussi deréfléchir à des aménagements des zones plus res-pectueux de l’environnement, comme l’aménage-ment de pistes cyclables, la construction deréseaux de pipeline pour favoriser l’échange dematières entre les entreprises ou de voies ferréespour favoriser le transport multimodal.

Une zone d’activités dotée de services perfor-mants pour les entreprises permet de réduire cer-tains impacts liés à leurs activités. La simple pré-sence d’un distributeur d’argent, d’un restaurantinter-entreprises ou encore d’un service de trans-port en commun contribue à limiter les déplace-ments. D’autres services proposés aux entreprises

sont plus complexes. Par exemple, le Parc indus-triel de la plaine de l’Ain propose aux entreprisesde se brancher sur une chaudière collective fonc-tionnant au bois pour leur chauffage, la vapeur etl’eau chaude. Cette dernière est alimentée par lesdéchets de certaines entreprises.

Le gestionnaire d’une zone d’activités peut faci-liter le contact entre les entreprises par l’organisa-tion de différentes manifestations : petits déjeu-ners, clubs de travail ou soirées culturelles oudivertissantes. De nombreuses zones d’activitésont créé des lettres internes afin de favoriserl’échange d’informations. Ce contact entre leschefs d’entreprises est une étape primordiale pouraboutir à des opérations de gestion collective del’environnement. La zone d’activités ZISRT deGrenoble a bien perçu cet enjeu et propose unéventail d’actions, notamment un journal trimes-triel (Infozirst), une plaquette de présentationbilingue, un annuaire papier des entreprises et unsite internet. Elle organise même, une fois par an,

une soirée musicale gratuite et une course à piedde 7 km à la périphérie de la zone.

Une recherche collective de solutionsLes principaux handicaps des PME sont liés à leurtaille : pas assez de personnel, pas assez de rejets oupas assez de moyens. Afin de pallier ces handicaps,des solutions collectives peuvent être recherchées.Elles nécessitent des regroupements par secteurd’activité, par lieu géographique ou par impactspécifique. De même que les entreprises se regrou-pent pour conquérir de nouveaux marchés, ellespeuvent collectivement trouver des solutions àleurs impacts sur l’environnement.

La prise en compte de l’environnement au seind’une entreprise nécessite un regard expert en rai-son d’une quantité florissante de textes de loi et desolutions techniques. Certaines PME réussissentà pourvoir à ce besoin en employant des respon-sables en charge de la qualité, de l’hygiène, de lasécurité et de l’environnement. Cette solution pré-



sente certains avantages, mais la multiplication destâches n’est pas propice à un travail de fond.

En se calquant sur des structures développéespour gérer les saisonniers dans les régions agri-coles, certaines entreprises mettent en place desgroupements d’employeurs. Ces structures juri-diques, proche des associations, permettent auxentreprises de se partager un responsable environ-nement. Afin de favoriser le développement dutravail en temps partagé, l’Association Orée alancé en 1998 l’opération 101 PMI. Cette opéra-tion consistait à mettre à disposition des entre-prises des stagiaires en environnement en tempspartagé. Après des réticences plus ou moins fon-dées, les opérations se développent lentement.Mais elles rencontrent un franc succès en Bretagneoù de nombreux responsables environnement tra-vaillent pour deux ou trois entreprises. Ce succèsest lié au travail de fond réalisé par les différentsacteurs, dont la Chambre régionale de commerceet d’industrie, pour sensibiliser les entreprises à

travers le programme Bretagne Environnement +.Parallèlement à ces emplois en temps partagé,

les PME recherchent aussi de manière conjointedes solutions à leurs impacts. En se regroupant,elles réussissent à augmenter les quantités à traiteret peuvent ainsi mettre en place des solutions leplus en amont possible. Cette approche collectivepeut se faire par branche d’activité, comme parexemple les Relais verts autos, campagne de gestiondes déchets des garages organisée par le Conseilnational des professions de l’automobile.

Elle peut aussi se mettre en place à l’échelle d’unterritoire comme une zone d’activités. En Moselle,dans la zone d’activités de Faulquemont, une ving-taine d’entreprises se sont regroupées pour mettreen place une gestion collective des déchets. Cettedernière porte sur différents déchets comme lespapiers, les cartons et les plastiques. Elle a permisde réduire de 50 % les déchets mis en décharge etde 15 à 40 % les coûts de traitement. Cette opéra-tion a débuté par des petits-déjeuners thématiques

organisés par la ville de Faulquemont pour les chefsd’entreprises. Les questions abordées étaientd’ordre économique, social ou environnemental.

On dénombre environ une centaine d’opéra-tions de ce type plus ou moins abouties en France.Elles permettent aux entreprises d’avoir les moyensde ne pas mélanger leurs déchets et d’obtenir ainsiune meilleure valorisation.

Cette approche collective permet de trouver denouvelles solutions avec des opérations d’écologieindustrielle. Du simple échange de palettes usées àla récupération de vapeur, des entreprises dévelop-pent de nouvelles synergies. Les matières considé-rées hier comme des déchets deviennent des sous-produits de production valorisables. Afin de favo-riser le développement de ces nouvelles synergies,l’association réfléchit avec ses adhérents, au sein duClub écologie industrielle, aux besoins enméthodes et en outils.

L’organisation de ces approches collectives sedéveloppe plus facilement dans les zones d’activi-

mented, it would focus more on benchmarking for products and servicesbased on their environmental performance.

Tax reductions for sustainable entrepreneurshipIn a study by the Royal Institute of Technology in Stockholm, three factorswere identified as crucial for SME decision-making when a voluntaryapproach to improving the enterprise’s environmental performance is used.First, the customer must be willing to pay for improved environmental per-formance; second, the customer must be involved in follow-up actions con-cerning environmental performance; third, the customer must haveconcrete and implemented criteria for the environmental performance in itsacquisition and tendering processes.8 These three factors may be indepen-dent of each other, and each may be a strong driver for prompting SMEs tomake a decision on improving their environmental performance.

From the producers’ point of view, they should be paid for the extra effortit takes to reduce their products’ environmental impact. Consumers wantto pay the same or less for more environmentally friendly products. Pro-ducers therefore need to develop methods that lead to products that areboth cheaper and more environmentally friendly. However, in the shortterm society may need to subsidize development of environmentally morefriendly products using various tax mechanisms.

Potentially, a good way to motivate SMEs to address their environmen-tal performance would be to integrate an environmental accounting sys-tem into their normal bookkeeping systems, and to couple this with thecreation of the necessary tax related drivers.

One approach would be to differentiate the VAT on eco-labelled prod-ucts and services from that on conventional products and services. Anoth-er might be to promote products with a lower environmental impact thancomparable products through tax reductions based on declared environ-mental performance. Measures and follow-up environmental performancein companies, products and services should be as natural as bookkeepingand the provision of economic reports.

Technically, that could be brought about by using the EPD system and itsindicators, based on the six core environmental issues already mentioned. Ifa company can provide a third-party audited EPD of a product or serviceshowing improved environmental performance with respect to one or moreof these environmental issues over a given period, this could lead to a lowerVAT. The likely long-term economic effects would be the internalizationof external environmental effects not now included in the pricing of goodsand services, leading to more environmentally friendly goods and servicesbecoming cheaper than conventional products and services.

The need for international cooperation While there is some knowledge of the barriers and drivers encountered bySMEs in industrialized countries when an EMS and/or EPD is established,there is little information on the drivers and barriers for enterprises in devel-oping countries. It is reasonable to suggest that the conditions will be a mixof issues for companies that want to improve their environmental perfor-mance in both industrialized and developing countries.

The main issue regarding the engagement of SMEs is identification ofthe structural frameworks needed to stimulate companies to improve theirenvironmental performance. Immediate efforts should be made in the areasof research and joint projects involving SMEs, NGOs, government agenciesand other interested parties in order to produce good examples of tax sys-tems in different countries that stimulate improved environmental perfor-mance.9

Notes1. Ruth Hillary and Scott Wilson, Best Project 2003. Best project on envi-ronmental management systems in small and medium-sized enterprises. Finalreport prepared for DG Enterprise. London, 2003.2. Ruth Hillary, Evaluation of Study Reports on the Barriers, Opportunitiesand Drivers for Small and Medium Sized Enterprises in the Adoption of Envi-ronmental Management Systems. Study carried out for the UK Departmentof Trade and Industry. 1999.3. Hillary and Wilson, op. cit.; Hillary, op. cit.; Robert Isaak, “The Makingof the Ecopreneur.” In: Greener Management International: The Journal ofCorporate Environmental Strategy and Practice, No. 38. Greenleaf Publish-ing, GMI, Sheffield, 2002; Lennart Piper, Mikael Stenius and Johan Törn-berg, Certified Environmental Product Declarations in SMEs as a Tool forBusiness Driven Development (NUTEK-EPD 2003), 2003.4. Hillary and Wilson, op. cit.5. Robert Isaak, op cit.6. See www.uneptie.org/pc/sustain/lcinitiative/home.htm.7. See the international EPD website (www.environdec.com).8. KTH 2001 (M. Stenius, F. Burström), Om offentlig-provat aktörs-samverkanI regionlat miljö- och utveckligsarbete, TRITA-KET-IM 2001:17.9. See the site for the international conference and workshops on environ-mental product information (how to develop the use of environmental dec-larations on product and services), which took place on 29-30 September2003 in Stockholm (www.sinf-mk.se/stockholm/index.htm).



Environmental risk considerations for commercial lenders working with SMEsChris Bray, Head, Environmental Risk Policy Management, Barclays Plc., Chatsworth House, 66/70 St. Mary Axe,

London EC3A 8BD, UK ([email protected])

Environmental considerations are not yet regarded as mainstream businessissues by a majority of commercial concerns. However, the trend appears tobe encouraging. Growing appreciation of “environment” by banks pro-viding debt capital to SMEs, as reflected in their credit appraisal processes,may not necessarily be matched by potential borrowers.

For instance, within the United Kingdom the government environ-mental regulator, the Environment Agency, recently suggested that in theSME market sector some two-thirds of businesses were not familiar withthe extent of their environmental “footprint”. Even the implications of leg-islation relating to high-profile environmental hazards such as asbestos maybe poorly understood. A leading provider of environmental insurance esti-mated that up to three-quarters of businesses in the UK SME market didnot fully appreciate their obligations under emerging asbestos regulations.Yet the risks associated with the environment will continue to represent akey component of the lending decision of commercial banks.

From a banker’s perspective, environmental risks in lending can arise ina variety of ways. Broadly, they can be classified under one of the headings:direct or indirect risk.

Direct riskDirect risks arise when the lender, in certain circumstances, can be heldresponsible for the environmental liabilities associated with customers’operations. Typically such a scenario may arise when the bank, as collater-al for a loan, holds a mortgage over the customer’s operating site. Thesecommercial premises can be the most significant tangible asset in a busi-ness’s balance sheet. They are frequently the principal component of thebank’s security, particularly in the SME sector.

One of the lender’s questions, then, has to relate to the value of the siteif the land is being offered as collateral. To what extent are the potentialenvironmental liabilities associated with the site reflected in the assumedvalue?

In a worst-case scenario, a lender should be cautious about enforcing amortgage over the site without understanding its environmental status. Pre-viously unidentified liabilities may erode, or even extinguish, the assumedvalue. In many jurisdictions the bank assuming ownership (as a step towardsselling the site to secure repayment) will also be assuming those environ-mental liabilities relating to the site. Such an onerous prospect is com-pounded because not only is the bank seeking recovery of a bad debt, but thesecurity on which it was relying as a contingent source of repayment may beworth significantly less than anticipated. Further, potential environmentalliabilities that could accrue to the bank might exceed both the original levelof borrowing and the previously assumed value of the site itself.

This risk is one of the reasons that banks, as part of their procedure for tak-ing commercial land as security, often require some form of environmentalscreening of the site. Not only would such screening be more likely if thecurrent operations on-site were perceived to be more environmentally sen-sitive, but for a commercial site being purchased its previous uses shouldalso be considered. This is to establish whether any previously unidentified,historic contamination is present that might trigger a future call for clean-upor need to remediated as a part of any redevelopment scheme.

Such considerations are sometimes perceived as an unnecessary addi-tional cost of borrowing. However, addressing the possibility of environ-mental degradation, possibly involving some form of site investigation byan environmental specialist (particularly where commercial land is beingpurchased), will also help protect the interests of the business acquiring thesite. As outlined above, assuming ownership may include assuming respon-sibility for any associated environmental liabilities. It would be as well toensure that if such liabilities do exist, they are identified ahead of the trans-action and preferably quantified. Then, if appropriate, they can be reflect-ed in the purchase consideration.

Indirect riskThe second category of environmental risks, indirect or credit risks, mightarise if a business buys a site and then faces unanticipated costs. This wouldimpact budgets and cash flow. In the SME sector such costs may representa significant reduction in the liquidity of the business, even to the extent ofthreatening its viability. There may be the prospect of the local environ-mental regulator identifying the site as one requiring clean-up even if itscurrent use continues.

Similarly, if contaminants have been washed off the site or have migrat-ed by other means, the business could potentially face third-party claims fordamages. It may be that some contamination had been identified, but thatthe scale or cost of remediation was significantly higher than anticipated.

In essence, if a business with bank lendings faces unanticipated envi-ronmental costs or liabilities, the resulting drain on liquidity can impactits ability to meet its obligations under the loan agreement. Such risksmight arise from a variety of sources.

For instance, inadequate management of storage and use of fuels orchemicals used in the business can lead to contamination of the soil, thegroundwater or sensitive watercourses. If spillage occurred because storagefacilities were not to the standard specified in the operating permit orlicence, this could prompt a fine from the environmental regulator.

Additional costs will also be incurred in bringing storage facilities up tothe required standard, possibly necessitating specific training for site oper-

tés où le gestionnaire et les pouvoirs publics locauxpeuvent faciliter leur émergence. Les opérationsmises en place sont très variées. Elles peuvent por-ter sur l’environnement avec la gestion collectivede stations d’épuration ou de chaudières à bois,mais aussi sur le risque avec le partage de matérielsde défense incendie, de bassins de rétention ou deservices de sécurité. Mais elles peuvent aussi per-mettre d’améliorer le quotidien des employés avecdes crèches mutualisées, de restaurants inter-entreprises, de transports en commun ou desmanifestations culturelles et sportives.

Des zones d’activités commencent à proposerdes services très spécialisés comme CHEMPARC,dans le sud de la France. Dédié à la chimie fine

CHEMPARC propose un système de réseau pourfournir aux entreprises certaines matières pre-mières et évacuer leurs déchets liquides toxiquesvers des points de traitement. D’autres servicessont proposés à prix coûtant comme l’entretien,la comptabilité, le secrétariat ou la sécurité.

Mais cette approche nécessite du temps, car ellerepose essentiellement sur l’homme et sa volontéde travailler avec ce voisin que l’on ne connaît pas.Un travail de préparation est donc nécessaire pourdévelopper une culture du collectif. Le gestion-naire de zone d’activités peut avoir un rôle pré-pondérant pour faciliter la rencontre entre leschefs d’entreprises. Il n’est pas souhaitable de com-mencer à faire travailler ensemble les entreprises

sur des sujets aussi complexes que la gestion desdéchets ou des rejets liquides. Par contre, uneapproche progressive permet de s’assurer de laréussite future des opérations plus complexes. Lesgestions collectives des déchets qui fonctionnentont souvent commencé autour d’un barbecue.

Une approche partenariale entre lesdonneurs d’ordres et les fournisseursNombre de PME sont des fournisseurs de grandsgroupes. Ces derniers ont bien souvent mis enplace depuis plusieurs années une politique envi-ronnementale, voire de développement durable.

Aujourd’hui, ils cherchent à élargir cette prise deconscience à leurs fournisseurs, souvent des PME,



atives in their use as well as training to deal with any future accidental spills.There is also the cost of cleaning up contaminated soils and water.

If it is perceived that damage has occurred off-site, third-party claimsmay arise, along with associated legal costs, possibly in challenging theclaim but certainly in agreeing the level of any settlement. If it is acceptedthat in smaller businesses one of the most limited resources is often theavailable management expertise, what business opportunities will be fore-gone if management time is devoted to contesting third-party claims andarranging clean-up instead of marketing?

In addition, opportunity costs will be incurred if “business as usual”operations are interrupted to allow specialists on-site to undertake theclean-up of any contaminated soils. A further potential consequence mayarise if there are residual levels of contamination, which may be acceptablefor the site’s continued use but nevertheless impact the value of the site (e.g.restricting potential redevelopment for higher value use, such as residen-tial).

As stated previously, for many SMEs the operating premises will repre-sent the most significant tangible asset in the balance sheet. If the value ofthat asset is impaired, the balance sheet may be weakened to such an extentthat access to debt capital is restricted or an increase in borrowing costs isjustified.

All the cost consequences condensed into this somewhat doom-ladenexample should be considered as environmental risks that may have animmediate and direct impact on the business. They also represent indirectrisks to the lender, the likelihood and impacts of which should thereforebe a consideration in the lending decision.

Reducing environmental impactsIf an SME can demonstrate a resilient approach to environmental man-agement, this can provide an encouraging signal to a lender. For instance,resource efficiency not only helps reduce any adverse environmental impactof the business but can have a significant benefit for the business in avoid-ing unnecessary costs through wasteful working practices. Similarly, anappreciation of the need for robust environmental management practicesto help protect the company’s assets (e.g. the premises) is an importantsource of comfort to a bank.

But environmental risks can also arise at a strategic level, by virtue ofchanges in market dynamics associated with environmental pressures. Towhat extent will the environmental market influences be on the proprietor’sagenda? For instance, a manufacturer of PVC packaging materials might seeits market move away if concerns regarding use or disposal of such materi-als prompts customers to consider adopting different materials in responseto consumer pressures further along the supply chain. Changing consumertastes that arise from perceived environmental sensitivities represent a further

valid environmental indirect risk for lenders to consider.In short, a lender is likely to be looking within the borrower for appreci-

ation of the consequences of the environment, coupled with the ability andthe preparedness to address these business drivers.

That said, a banker is not an environmental specialist. Neither should thebank be perceived as some form of surrogate environmental regulator. Itshould not hold itself out as knowing all the answers in identifying andassessing appropriate environmental benchmarks and thresholds. However,in reaching a lending decision the bank should at least be aware of relevantquestions to be addressed with regard to pertinent environmental businessdrivers. Where there are environmental concerns, the bank should appreci-ate when to seek technical input from environmental specialists.

Environmental management at its primary level is a means of minimizingrisks, for the business itself and for investors and lenders to the business.However, significant benefits can also arise. An example above raised thepotential risk of supply chain pressures working against a business, but theconverse can also apply. With greater awareness of sustainability among con-sumers, many larger businesses recognize the competitive advantages ofdemonstrating their environmental credentials. While such drivers may bemore evident among larger corporates, a recurring theme is for those busi-nesses to require their own suppliers to exhibit environmentally sound man-agement practices. SMEs, as potential suppliers to larger corporates, mayfind significant competitive advantage by demonstrating adherence to rec-ognized environmental management systems. There are instances wheremore lucrative markets may be opened to those SMEs able to show that theirprocedures and processes compliment and support the environmental aspi-rations of major players in their market.

This is not intended to be an exhaustive account of the potential envi-ronmental impacts and considerations for SMEs. Neither is it possible todraw on detailed examples of the advantages, and occasional shortcomings,witnessed through a lender’s assessment of specific clients. It is recognizedthat there are many examples of environmental best practice in the SMEcommunity. Without attaching the “environmental” label, many businesseshave been managing such matters as part of their scrutiny of costs, or pro-tection of their assets, while others have endeavoured to manage theirimpact on the environment because they have sensed that “it’s the rightthing to do”.

There remains a need for many in the SME sector to recognize environ-mental impacts as mainstream business issues. These need to be integratedinto “business as usual” strategies and tactics, as banks are increasinglydeveloping both the awareness and the tools to evaluate environmental per-formance as a part of their assessment of the quality of business manage-ment when making lending decisions. Environmental consciousness in themarket is very much here to stay.

en les aidant à intégrer à leur tour les composantesdu développement durable. Cette démarche n’estpas simple. Tout d’abord, elle fait appel à de nom-breux acteurs au sein de l’entreprise qui ne sont pasobligatoirement sensibles à cette problématique,comme les responsables achats ou les concepteursde produits. Ensuite, les donneurs d’ordre ont de ladifficulté à bien cerner les impacts des activités deleurs fournisseurs qu’ils connaissent souvent malen raison de leur nombre parfois élevé, de ladémultiplication des intermédiaires et de la locali-sation géographique. Subsite enfin la crainte queles fournisseurs voient en cette démarche unecontrainte économique supplémentaire.

Néanmoins, certains grands groupes s’attachent

à franchir ces barrières et essayent de mettre enplace des actions constructives avec leurs fournis-seurs. Les plus simples reposent sur la sensibilisa-tion des fournisseurs et l’obligation de respectercertaines règles du cahier des charges (certificationISO 14001, pas d’emploi d’enfants, etc…).D’autres essaient d’aller plus loin, comme 3M parla mise à disposition de spécialistes auprès desfournisseurs comme 3M, ou ST Microelectronicsavec l’organisation de séminaires de formationanimés par ses cadres pour ses fournisseurs commeST Microlectronics. Ces opérations permettent àcertaines PME de bénéficier d’un véritable sou-tien technique indispensable.

Pour accompagner ces précurseurs, l’Association Orée

anime depuis peu un groupe de travail sur ce sujet. Cegroupe permet de faire le point sur les actions entrepriseset d’aider à la réalisation d’outils de sensibilisation etd’accompagnement.

Les PME ne pourront intégrer une démarchede développement durable qu’à travers une ouver-ture sur d’autres entreprises, des partenariats avecleurs clients et un soutien des pouvoirs publicslocaux. Cette approche n’est pas simple car elle vaà l’encontre des pratiques actuelles de cloisonne-ment. Mais les premiers résultats démontrent lapertinence de cette recherche et la nécessité derepenser la façon d’aborder la PME.

�



The two great energy challenges of our timeare energy waste and energy poverty. Wastepatterns resulting from 150 years of indus-

trialization have brought about unhealthy air,water and soil, climate-changing greenhouse gasemissions, and losses from inefficient fuel conver-sion, transmission, distribution and end-use.Equally daunting is the need to deliver modernenergy to those who live in energy poverty: 1.6 bil-lion people in the world do not have electricity; 2.4billion depend on traditional fuels for cooking.1

Given the magnitude of these challenges, it mayseem ironic that one of the best hopes of eradicatingenergy poverty – and, in the process, providing a

model for ending energy waste – is to tap the poten-tial of small and medium-sized enterprises (SMEs).

Modern energy is a condition for development.It is a tool that can be used to reduce health andenvironmental threats, and it is an essential ingre-dient of quality-of-life improvements for thepoorest of the poor. Energy poverty is the tie thatbinds together the issues of environment, devel-opment and quality of life.

In 2001 a task force led by Sir Mark Moody-Stuart of the United Kingdom, then chairman ofRoyal Dutch/Shell, and Corrodo Clini of Italyresponded to the G8 countries’ request for rec-ommendations on how renewable energy use

could be encouraged in developing countries. Thetask force’s report provides a prudent assessmentconcerning a way forward with respect to elimi-nating both energy waste and energy poverty.2Most important, the report proposes a practicaltarget: provision of clean energy to 800 millionpeople over ten years (non-electricity improve-ments for 200 million people, off-grid electricityfor 300 million, and on-grid clean energy foranother 300 million).

SMEs are the untapped reserve that can makethis target practical, through people and institu-tions combining resources and ever-growing expe-rience.

Small firms with a big impactFor most of us, the term “SME” conjures up a pic-ture of tiny firms doing small local things with afew employees and a weak set of financial state-ments. When we think about clean energy initia-tives (on-grid or off-grid electricity, waste-to-energy conversion), the image likely to come tomind is one of big companies, “deep pockets”, andstrong balance sheets and banking relationships.However, big impact begins with small firms, notbig ones. SMEs may have few employees andassets, but they are anything but small in theirambitions. These companies originate and devel-op clean energy initiatives to the point where oth-ers can become involved. Without SMEs, mostenergy waste and energy poverty elimination pro-jects would never get beyond the idea stage.

For example:� Arturo and Marta Rivera, a husband-and-wifeteam, are the core of a small Guatemalan compa-ny bringing to market run-of-river hydroelectricprojects generating over 40,000 kilowatts –enough clean energy to serve a thousand house-holds. � Rural Area Power Solutions (RAPS), a SouthAfrican company formed by the brothers Mariusand Jurie Willemse, has been the driving forcebehind the organization of a programme to elec-trify 50,000 households in Kwa Zulu Natal. � In Thailand a small business headed by DavidDonnelly, a transplanted American and formerbanker, has carved out a market niche for conver-sion of agricultural waste to biogas which is equiv-alent to millions of barrels of liquid fossil fuel.� In Zambia, where charcoal production is a seri-ous threat to natural resources, Frederick Muson-da has organized the use of waste wood (slated for

SummarySME initiatives are a widely ignored – but potentially very effective – way to tackle energy wasteand energy poverty. It is time to stop thinking of SMEs as relatively unimportant local enter-prises that might contribute to an overall energy solution. Working with specialized interme-diaries, they represent the point at which the objectives of funders, policy makers and largecorporations can be addressed, together with the needs of hundreds of millions of citizen cus-tomers. SMEs are the untapped resource that needs to be brought to centre stage if the G8 taskforce energy provision target is to be met. The enterprise-centred model of modern energy pro-duction and use described in this article is market-driven and (within the broad category ofclean energy) “technology neutral”.

RésuméLes initiatives des PME sont un moyen, généralement ignoré mais potentiellement très efficace,de remédier au gaspillage et au manque d’énergie. Il est temps d’arrêter de considérer les PMEcomme des entreprises locales relativement peu importantes qui pourraient éventuellementcontribuer à une solution énergétique globale. Travaillant avec des intermédiaires spécialisés,elles occupent une position charnière pour prendre en compte les objectifs des bailleurs defonds, des responsables politiques et des grandes entreprises et satisfaire les besoins de cen-taines de millions de citoyens clients. Les PME sont une ressource inexploitée qui doit être misesur le devant de la scène si l’on veut atteindre l’objectif de fourniture d’énergie fixé par le groupespécial du G8. Le modèle moderne (centré sur l’entreprise) de production et d’utilisation del’énergie décrit dans l’article est soumis aux forces du marché et (au sein de la vaste catégoriedes énergies propres) « technologiquement neutre ».

ResumenLas iniciativas de las pymes constituyen un método frecuentemente pasado por alto (pero conun gran potencial de efectividad) para combatir el desperdicio y la escasez de energía. Ya eshora de dejar de pensar en las pymes como empresas locales de relativa o poca importanciaque quizá podrían contribuir a una solución general en cuestión de energía. Al trabajar conintermediarios especializados, representan la oportunidad de atender los objetivos de losproveedores de financiamiento, de los responsables de la formulación de políticas y de lasgrandes corporaciones, así como las necesidades de cientos de millones de consumidores. Laspymes son un recurso desaprovechado que debe recibir la mayor atención posible si se quierecumplir la meta de abastecimiento energético del Grupo de Trabajo del G8. El modelo para lageneración y el uso modernos de energía que se presenta en este artículo está centrado en lasempresas y orientado al mercado, además de ser (dentro de la amplia categoría de la energíalimpia) “neutral en un sentido tecnológico”.

A business model for clean-energy SMEs:small companies’ role in eradicating energywaste and energy poverty

Philip LaRocco, Executive Director, E+Co, 383 Franklin Street, Bloomfield, New Jersey 07003, USA ([email protected])



open-air burning) to produce market-grade char-coal and eliminate use of virgin wood.

All these companies are small by definition.However, they have a substantial impact on ener-gy waste and energy poverty. The trick is to pro-vide the services and early-stage capital (whichconventional financing sources and developmentprogrammes tend to ignore) that allow a smallcompany to mature a high-impact idea.

The Riveras, the Willemses, David Donnelly,Frederick Musonda and many others illustrate anapproach to SME business development that isgetting (and requires) more attention. Thisapproach recognizes the potential of small busi-nesses. It bridges the gaps that tend to keep SMEsfrom carrying through initiatives with substantialand sustainable impact. (For the main barriersfaced by such SMEs, see Figure 1.)

These examples can be imitated and adapted tolocal circumstances. The critical element is not thelocal setting, or a country’s macroeconomic cir-cumstances, or the policy environment, or a bigcompany ready to step in. It is the entrepreneur –the man or woman who decides to make his or herliving organizing clean energy initiatives.

Some SMEs (and programmes that supportthem) specialize in renewable energy technologies,others in “modern energy” (i.e. technologies thatmove the local market “up the modern energy lad-der”). Still others focus on “least-cost” or “bestavailable” technologies. Thus some may shun liq-uid petroleum gas because it is a liquefied, non-renewable petroleum product, while others mayembrace LPG since it moves the local market fromdirty, dangerous, locally irreplaceable fuels tosomething cleaner and more protective of thelocal environment. Still others may not under-stand what the fuss is about, as long as the marketwants LPG and it can be delivered profitably. Inthe final analysis the enterprise-centred model isindifferent to the technology employed, as long asthe model is market-driven.

The role of intermediaries: servicesand capitalTo assist SMEs, this business model depends onspecialized service and capital providers (some-times called “intermediary organizations”). E+Cois such an organization. Successfulimplementation of the energy-cen-tred model depends on “blending,”“balancing” and “adapting”. That is: � blending resources (grants, con-tracts, loans) from various sources toprovide services and capital to com-panies; � balancing the mix of services andcapital to enable a small company tosucceed; � adapting as experience in local mar-kets increases.

The role of an intermediary organi-zation is illustrated in Figure 2. Theenterprise-centred business model isnot a cookie-cutter formula. Itdepends on a combination of servicesand capital. A centralized programme

from a national or international developmentorganization or funder, with pre-set formulae andno intermediary, is unlikely to succeed.3

Another characteristic involves partnerships.Intermediary organizations like E+Co cannot doeverything, nor can they influence all the dimen-sions that could contribute to success. However,they can work with international organizationsthat have invaluable expertise in policy formation,training, capacity-building, government commu-nications, programme management and problemsolving. By definition, intermediary organizationsare specialists. They are task and implementationdriven, just as the energy enterprises they assist arerevenue, profit, service and product delivery dri-ven.

However, there is more to success than X num-ber of companies, Y households to which modernenergy has been brought, and Z amount of ser-vices delivered. To build a sustainable future,someone has to worry about the policy environ-ment, about building local capacity to sustain thebusiness model, and about bringing and promot-ing lessons learned to other members of the inter-national community. In the enterprise-centredbusiness model, the organizations that take this

role are called “programme partners”.4Local presence is another essential feature of the

business model. Companies cannot be served fromafar. It is essential – not important, not helpful, butessential – for service delivery to be locally ground-ed and personal, whether through an implemen-tation partnership with a local NGO committedto this business model5 or through a local repre-sentative of the intermediary. This holds truebefore an investment is made as well as during fol-low-up. There are no exceptions to this rule.

Training and toolsOne more characteristic must be addressed beforethe types of investment made in this businessmodel are reviewed. This characteristic involvesboth a process and a product, i.e. training andtools.

Through training, the intermediary organiza-tion that provides services and capital to energyentrepreneurs can identify the truly serious entre-preneurs. Training in this business model is atwo-way street. The intermediary provides in-formation and shares experience, but the entre-preneur must produce critical analyses, verifiedfacts and clear documentation leading to an

investment proposal and a businessplan. Training eliminates those whoare not serious, as this process involvessubstantial work and commitment. Itquickly turns off opportunists whothink all they need to do is fill outsome paperwork to receive funding.

The product that enables this workto be done is a toolkit of building-blockexercises that convert an entrepreneur’score idea to a work programme: gath-ering all that he or she must learn (fact-finding); converting this informationto an analysis of conditions underwhich the core idea does or doesn’tmake sense (feasibility analysis); andthen, if the idea is feasible, organizingthe information into a document forpresentation to others (business plan or

Figure 1Main barriers faced by SMEs

Strategicinvestors

Energy enterprises Energy services Customers

Specialized intermediary

Commercialinvestors

Social and environmental

investors, grant-makersand contract

service providers

Capital seedand growth

Servicespre- and post-investment

Figure 2The role of an intermediary organization

Lack of informationand track record

Newertechnologies

Start-upbusiness risk

Immaturemarkets

Small firsttransactions

Anti-rural, anti-poor bias



investment proposal).To summarize, key characteristics of the enter-

prise-centred model are:� It is technologically neutral (within the broadcategory of clean energy, technology choices aredriven by local market conditions).� Specialized intermediary organizations provideservices and capital to entrepreneurs before andafter investments are made.� Implementation partnerships address policy,sustainability and expansion issues.� Local presence assures hands-on implementa-tion.� Tools and training cost-effectively identify entre-preneurs and allow them to draw up a businessplan or investment proposal at their own pace.

The intermediary organization, acting for agroup of funders, does not simply write a check inresponse to a well-written business plan. First, thebusiness plan or investment proposal needsapprovals and documentation. A professionalinvestment committee, independent of the pro-ject manager within the intermediary organiza-tion, must review and approve the proposedinvestment. Then legally binding contracts andregistrations are put into place.

Rarely are all the financial resources a companyneeds covered by the first investment. This invest-ment typically covers a pilot approach to a newmarket, or the detailed planning and engineeringneeded to bring a larger project forward. Onlyoccasionally does the initial investment involveover US$ 250,000. Early-stage investments in-volve considerable risk. Since the intention is topave the way for later investment by others, theseearly investments need to be documented andorganized as professionally as possible.6

An investment portfolio created using this busi-ness model will consist in a number of types ofinvestment. A certain percentage of the invest-ments will begin small and stay small (e.g. US$25,000-40,000 worth of time and US$ 75,000 ininvestment capital provided to a company thatwill supply cleaner fuel to a group of villages or toa town). Over a certain period the $75,000 can berecovered from the company, with interest, fromcash flow through debt-like instruments (pureequity investments prove too difficult to exit).However, up-front investment of time by theintermediary organization cannot be recovered ona cash basis. The substantial health, environmen-tal and development benefits, combined with thelearning that can be applied elsewhere, will needto compensate for the time invested to launch thisenterprise.

Within the investment portfolio of invest-ments, a certain percentage will grow and willneed additional resources. These resources cancome from the same source as the first investmentsor from others. Because they will grow, it is possi-ble to recover both the first direct investment and(through subsequent investments over time) thecost of the time and services provided in estab-lishing the investment.

An intermediary organization therefore needsto have both start-up and growth capital at its dis-posal. Moreover, providers of growth capital

should be willing to bear part of the burden ofproviding proportionately smaller amounts ofstart-up capital.

Consider, for example, the case of investmentof US$ 185,000 in cash and US$ 75,000 in timein XYZ company. This company has a specificproject to convert agro-industrial waste to a sus-tainable fuel that would substitute for fossil fuel. Areasonable return to expect on the cash infusionwould probably be around 10%, while the pre-dictable return on the US$ 75,000 is zero. Thusthe investor could receive an overall return of 7%on the total investment (US$ 185,000 at 10%,and US$ 75,000 at zero).

The intermediary may be able to generate a bet-ter return if it can also participate in the later stagesof investment in XYZ’s development – say, byputting up US$ 250,000 of the US$ 1.4 millionthe company will need to build the waste conver-sion plant. A reasonable assumption is that thislater round of investment would bring a return ofover 15%, in which case the intermediary’s totalreturn would be a very acceptable 11% (US$185,000 at 10%, US$ 75,000 at zero, and US$250,000 at 15%).7

In addition to these two types of investment –an SME destined to stay small, and an SME des-tined to grow – there is a third type, which is oftenthe most difficult for some funders to accept. Acertain portion of these investments will fail. For-tunately, though, even first-stage investments canbe divided (“tranched”) and these amounts can beclosely monitored and controlled. Of the 88investments made by E+Co, 12 have been writtenoff, accounting for 14% of the number of invest-ments but less than 9% of the amount invested.

Combining resources to spreadbenefitsA few other elements that round out this businessand investment model should be noted. As experi-ence is gathered in a market, the involvement oflocal financial institutions and programmesbecomes crucial for long-term success since con-ventional finance is not available to these SMEs.While returns on such investments are not com-mensurate with the risks involved (single-digitinternal rates of return are the norm, after lossesand taking into account grant and contract subsi-dies for services), the environmental, developmen-tal and long-term market maturity benefits aremore than commensurate. What is important is tocombine resources – or rather commingle them –so that “layered” benefits will be received by all.

For example, if pure financial investors canaccept a base return of, say, 5%, returns above thaton a portfolio basis can be shared with socialinvestors and funders (keeping in mind that grantmakers and contract providers must defray a sig-nificant portion of the cost of services). Experi-ence to date suggests that you cannot compart-mentalize these activities, giving financial returnsto financial investors and depending on grantmakers for preparatory work and losses. At thatstage of this business model’s implementation,combining funds in “one big boat” and holdingthe intermediary organization responsible seems

to have the highest likelihood of success.Experience is also being gained with diversify-

ing the product offerings of energy enterprises.This is especially important when there is anopportunity for these enterprises to offer productsand services that increase the incomes of their cus-tomers. While much has been learned in the lastdecade regarding the establishment of energyenterprises and investment in small companies, themarket will really grow only when these enterpris-es offer products that make their customers richer.

For instance, a local producer of nutmeats whohas always removed the husks from the nuts byhand can become more efficient and profitable ifan energy enterprise offers biomass-based powerto run a small husking machine. The energyenterprise might also make it possible for the pro-ducer to operate a heat-based packaging machine,adding value and further profit.

A village could combine various services – tai-lor, barber, communications kiosk, crafts produc-tion and packaging – at a single location, servedby a mini-utility. A solar-powered unit of thistype, based on a cargo container and photovolta-ic panels, was showcased at the Johannesburgsummit last year. It is now being tested under realconditions in South Africa. The result of offeringproductive use and income-generating applica-tions to customers will be market deepening,meaning that small energy enterprises can sellmore products in already established markets, har-vesting the benefits of prior work.

The final point to mention is consumerfinance, which is particularly critical to eliminat-ing energy poverty. Many households could affordmodern energy today if they were able to financeit over periods ranging from a few months to a fewyears. It is a myth – and a dangerous one – that thepoor cannot afford modern energy. They alreadypay dearly in time, health and cash for dirty, dan-gerous and inefficient energy sources (e.g. look atthe cost per kWh of the batteries used in a homeradio). Methods of delivering consumer financeto poor communities are known. In fact, theyhave advanced in parallel with the knowledgedescribed in this article concerning investment inSMEs. To eliminate energy poverty, these twopaths need to converge.8

Eight intermediaries, 800 millionservedIt has been stated (somewhat glibly) by far-think-ing experts that the way to clean up our energymess and eradicate energy poverty is clear. All thatremains, say some of these experts, is “50 years ofimplementation.” While we agree that the wayforward is a lot clearer in 2003 than it was in1993, we tend to listen to other experts who pointout that “the devil is in the details.”

Just how much needs to be done? An organiza-tion such as E+Co and its local partners, properlycapitalized and organized, could provide servicesto between 1600 and 2000 companies over thenext decade. These companies would serve 10 to20 million people in 2.5 million to 5 millionhouseholds. To meet the G8 task force’s goal of800 million, something like 16,000 small compa-



nies (some of them possibly units or “franchises”of larger companies) are needed.9 This means thateight to ten full-scale intermediary organizationslike E+Co are also needed, with about US$ 4 bil-lion in funding for services and capital (over halfof which would be fully recovered with interest)and related consumer finance (which would alsobe recovered with interest).

The “details” that need attention if this businessmodel is to succeed and grow (Figure 3) involve afour-part approach: � increase the combined and coordinated servicesand capital resources available for investment inenergy enterprises;10

� increase the number and size of intermediaryorganizations providing specialized services andcapital to this sector;� strengthen the link between enterprise develop-ment and consumer finance;� support activities and organizations that are

already working (rather than pursuing whatever isnew this month or year, a distracting tendency inthe world of international development activities).

The summary point is this: whether they arecalled SMEs or small businesses or small compa-nies with big ambitions, these men and womenrepresent (properly prepared) a largely ignoredand potentially potent weapon to successfullyattack the twin problems of energy waste andenergy poverty. We have to stop thinking of themas some tiny little local activity that may be a smallpart of the solution, and realize that these entre-preneurs (working with specialized intermedi-aries) are the linchpin that can connect theobjectives of funders, policy makers and large cor-porations with the hundreds of millions of citizencustomers who will benefit from the eliminationof energy waste and energy poverty.

Notes1. International Energy Agency (IEA) (2002) IEAWorld Energy Outlook 2002, pp. 32-33 and Chap-ter 13, “Energy and Poverty”. OECD, Paris.2. Clini, Corrodo, and Mark Moody-Stuart(2001) Renewable Energy: Development That Lasts.G8 Renewable Energy Task Force. 3. The United Nations Foundation has been a

major supporter of this business model. It hasadvanced the thinking on establishment of moreintermediary organizations as a condition forgrowth. In other words, to reach the G8 taskforce’s target of 800 million involves not onlystarting some 16,000 enterprises but also found-ing at least eight to ten specialized intermediaryorganizations to expand the experience andknowledge base.4. A notable example is UNEP and its Rural Ener-gy Enterprise Development (REED) programme,developed in partnership with the United NationsFoundation and E+Co. There are three “REEDs”so far: AREED in Africa (five countries), B-REEDin northeastern Brazil, and CREED in westernChina. See Open for Business: Entrepreneurs, CleanEnergy and Sustainable Development (UNEP/United Nations Foundation, 2003; reviewed inIndustry and Environment, Vol. 26, No. 1).5. Examples include ENDA in Senegal, KITE inGhana, BUN-CA in Central America andCEEEZ in Zambia.6. This does not mean that all the requirements ofconventional banks or international financialinstitutions are met. Such conditions are met tothe degree practical, given the newness of the

activity.7. Based on an actual E+Co case. The actualreturn on the US$ 1.4 million portion of the pro-ject was more than 15%. Unfortunately, E+Codid not have at its disposal the US$ 250,000 need-ed to participate in that tranche and was unableto take advantage of the opportunity to recover itsearlier costs.8. This is one of the important policy issues thatorganizations such as UNEP can grapple with,while intermediary organizations like E+Co andindividual companies can have only a slightimpact. Why is it that national policy in mostcountries is to finance – and subsidize! – the costof connecting the grid to a poor household, butnot offer the same terms to households off thegrid? Shouldn’t the policy on how much society iswilling to finance and subsidize be neutral, ratherthan biased towards energy by wires?9. 4000 non-electricity enterprises, such as stovemanufacturers, each eventually with 10,000 cus-tomers; 12,000 off-grid energy service companies,each with 5000 customers; and 500 on-grid cleanenergy project developers with 50 MW each.10. Through programmes such as the UnitedNations Foundation-UNEP REED initiative. �

Figure 3Making the business model

succeed and growSuccess factors

experienced teamwith localpresence

Strong partners;policy and consumer

finance linkages

Market driven and technology neutral;

integration ofproductive uses

Professional approval and

documentation

Tools and trainingIntegration ofservices and

capital

The energy enterprise

How chemical industry initiatives contribute to environmental, safety and health protection in SMEs: an example from BASF

Carolin Kranz, BASF Aktiengesellschaft, ZOA/N – C100, Sustainability Center, 67056 Ludwigshafen, Germany ([email protected])

Ingo Sagasser, BASF Aktiengesellschaft, GRC/KN – BENCK, Global Purchasing, Benckiserplatz 1, 67056 Ludwigshafen, Germany ([email protected])



As a chemical company, BASF has a special responsibility for its own prod-ucts. The company can also promote compliance with its high standardsamong suppliers, which are often SMEs.

BASF manufactures and sells over 8000 products worldwide to cus-tomers in 170 countries. Its product portfolio includes chemicals, plastics,coatings systems, dispersions, agricultural products and fine chemicals, aswell as crude oil and natural gas. To reduce the impacts on humans and theenvironment from production, storage, transportation, distribution, useand disposal of our products, we have implemented globally valid standards– together with an environmental management system that applies farbeyond our factory gates.

We expect our suppliers to comply with these standards within the frame-work of Responsible Care. We joined the global chemical industry’s ini-tiative over ten years ago and are committed to its goals and principles.These include continuous improvement in:� environmental protection;� product stewardship;� occupational safety;� occupational health;� process safety;� emergency response;� distribution safety;� dialogue.

Our efforts as a member of this initiative focus first and foremost on ourown company. For example, we install wastewater plants and filter systemsto reduce environmental emissions. We build ultra-efficient power plantsthat help conserve natural resources and reduce CO2 emissions. And wehave occupational safety programmes in place to further reduce accidentrates and promote workplace safety.

Responsible Care also plays an important role in shaping our businessrelationships with, for example, our logistics service providers (who trans-port our products to customers), employees of contract companies whowork on our sites, and suppliers who produce our input materials. It is ini-tially up to these business partners to define the standards they use. How-ever, to promote our high Responsible Care standards, we work closely withour business partners using a number of different tools.

Using Responsible Care to assure safe deliveries to ourcustomersMaintaining high safety standards for transportation of our products is atop priority. Our logistics partners are assessed by independent third partiesusing the Safety and Quality Assessment System (SQAS), a key element ofResponsible Care. Jointly developed by chemical companies in the early1990s, SQAS uses standardized assessment criteria. It provides us withinformation on service providers’ management systems, how staff aretrained, response times in the event of an emergency, how vehicles areequipped, and whether safety plans are in place.

Not until we have ensured that carriers meet our safety requirements dowe entrust them with our products. Whether transport is by rail, barge ortank trucks, SQAS-assessed haulers already transport almost 100% of ourproducts from our Ludwigshafen site.

Bonus system for safe working practices for contractorsWhether it concerns repair work, transportation or installation, much ofthe work at BASF’s Ludwigshafen site is done by contract workers. Around4000 people work on-site every day, all employed by SMEs. To enhanceoccupational safety among contract staff, we recently started to awardbonuses for safe working practices. All agreements BASF signs with con-tractors now include a bonus clause. If an employee of a contract companybreaches one of BASF’s safety regulations, the bonus will fall by a certainpredetermined percentage.

Forgetting to wear safety gloves, for example, costs 2.5% of the contrac-tual sum. A lost-time accident exceeding three days lowers the bonus by30% and the sum is credited to BASF. This means the higher contractors’safety levels, the more bonus is left for them to collect at the end of the pro-ject.

We are convinced that this new system will help us achieve our target forthe Ludwigshafen site of “zero accidents by 2010”, while enhancing thesafety and health awareness of our contract partners.

Responsible Care in raw material purchasingIn 2002 BASF bought over 10,000 different raw materials (worth severalbillion euros) from about 5000 different suppliers worldwide. The share of



raw materials coming from non-OECD countries hasbeen increasing, largely reflecting economic growth inAsia.

In addition to price, quality and supply security, com-pliance with specific environmental, safety and healthstandards is a precondition for business partnerships withraw materials suppliers. Our purchasers negotiate terms,but they also evaluate the risk associated with each prod-uct and supplier. For this purpose we have developed asafety matrix (Figure 1).

According to this matrix, all the raw materials we pur-chase are classified into one of three hazard categoriesaccording to their environmental, toxicological and safe-ty properties, i.e. A (safe), B (harmful) and C (e.g. toxic).Sodium chloride, or table salt, would be in category A.Ethanol, the alcohol in alcoholic beverages, is classifiedas highly flammable and would therefore be in categoryB. Methanol, a highly toxic type of alcohol, would be incategory C.

Suppliers and potential suppliers are initially classifiedaccording to whether they are located in OECD or non-OECD countries.The reason for this is that, as a first approach, the risk of non-compliancewith environmental and safety standards is expected to be higher in non-OECD countries. However, a final decision depends on an actual plantaudit.

Products/producers assigned a C3 rating are potentially high-risk andtherefore subject to particularly careful scrutiny. This means BASF employ-ees from our purchasing organization, along with environmental healthand safety (EHS) experts, visit the supplier and carry out an EHS assess-ment to determine whether the supplier’s plant operates according toResponsible Care standards (e.g. regarding wastewater treatment, mainte-nance, safety equipment, quality control).

If a potential supplier’s facilities meet our requirements, the product/pro-ducer is upgraded to a C2 rating, which means we can begin regular pur-chasing of raw materials from this supplier.

We set great value on fairness and a long-term business relationship. If itturns out that certain suppliers do not meet our EHS requirements, we sup-port them in solving the problems by developing a joint action plan. Oncethe improvements called for in the action plan have been put into practice,regular purchasing of raw materials can commence.

A good example of this practice is provided by one of our suppliers, audit-ed for the first time in 2000. While the audit revealed good performanceoverall, the supplier failed to meet certain EHS requirements (e.g. toxic

products were handled in open systems without proper personal protec-tion equipment and workers were exposed to dangerous fumes). We didnot accept this company as a supplier until its production processes hadbeen switched from open to closed systems and adequate safety equipmentfor its employees had been introduced.

Other typical measures implemented by suppliers are: � installation of emergency showers (body or eye showers);� installation of sprinkler systems;� use of personal protection equipment (e.g. hard hats, safety glasses, appro-priate boots, gloves, masks, respirators with external oxygen tanks);� an action plan in case of an emergency.

Thus we try to convince our suppliers that compliance with internationalstandards is essential and of benefit to them. This procedure is part of riskmanagement. We are convinced that it represents a competitive advantagefor BASF.

These three examples – logistic partners, contractors and suppliers –demonstrate that our commitment to Responsible Care’s impact on ourbusiness environment transcends our direct activities. We can help carri-ers, contractors and raw materials suppliers adopt the standards we aim toput into place. Since so many of our partners are SMEs, our commitmentto Responsible Care means we are not only making progress within ourown company but also promoting environmental, safety and health pro-tection, particularly in SMEs.

Figure 1Safety matrix for raw materials purchasing

Supplier risk

Pro

du

ct r

isk

Minor riskSafe region II

Safe region IA

1 2 3

B

C Potentiallyelevated

risk



Brazil covers an area of 8.5 million km2 and hasa population of over 170 million. Rio deJaneiro and São Paulo are two of the world’s

largest cities. According to the IBGE (BrazilianGeography and Statistics Bureau (InstitutoBrasileiro de Geografia e Estatística), Brazil’s GNPhas reached R$ 570 billion.1 Its main industrialactivities are the production of consumer goods and

of agricultural and mineral products for export.The mining, chemical, petrochemical, metal-

mechanical, non-metal minerals, paper and cellu-lose sectors have some of the greatest environmentalimpacts. Brazils’ most significant environmentalproblems are associated with surface water conta-mination, mainly reflecting lack of treatment ofuntreated industrial discharges and inadequate dis-

posal of solid industrial waste (which is usually sentto open dumps).

Groundwater contamination is increasinglyfrequent, presenting risks to the environmentand to human health. Soil contamination hasalso become a critical problem. In the past, largequantities of industrial waste from productionprocesses were stored or buried on-site, resultingin the contamination of large underground areas.

The worst impacts of air pollution generated byindustry in Brazil are associated with emissions fromstationary sources. By contrast, many of the world’smore developed countries are no longer looking forend-of-pipe solutions but have turned their atten-tion to diffuse pollution (e.g. from transport).

Brazil’s environmental legislation has pro-gressed in many ways. There is a strong tendencytowards even stricter controls. The Law AgainstEnvironmental Crimes establishes severe penaltiesand assigns administrative, criminal and civilcharges not only for the owners concerned, butalso directors and other parties considered to sharethe responsibility. It also establishes that, in almostall cases, failing to take environmental protectionmeasures is a crime.2

Brazil’s micro and small enterprises There are about 4 million micro and small enter-prises in Brazil. The vast majority are in the ser-vices and commercial (retail) sector. Most arebased in the South-East region (55.5%), followedby the South (22.4%), North-East (14.3%), Cen-tral-West (6.5%) and North (1.3%). The govern-ment has defined a micro enterprise as one withup to 19 employees; a small enterprise hasbetween 20 and 99 employees. Under a 1999 law,micro and small enterprises have under R$ 1.5million in gross income.

The IBGE reports that micro and small enter-prises are choosing to locate in the South-Eastregion in order to benefit from its wider marketvariety, better urban infrastructure, more qualifiedworkforce and larger consumer market (43% ofthe population lives in this region). In so doing,they are following the same trend as medium andlarge companies.

In many cases micro and small enterprisesdepend on or are complementary to medium andlarge businesses; that is, they supply goods and ser-vices to larger companies or serve niche markets.They are usually subcontractors, operating in net-works consisting of the main large and mediumcompanies and their clients, suppliers, subcon-tractors and competitors.

Cleaner production challenges in Brazilian SMEs

Ricardo L.P. de Barros, Maria de Fátima F. de Paiva and Cristina L.S. Sisinno, Cyclos Consultoria Ambiental, Rua Ministro Viveiros de Castro, 99/501, Copacabana, Rio de Janeiro, Brazil, 22021-010 ([email protected])

SummaryMicro, small and medium-sized enterprises are the basis resource generation in Brazil. Suchcompanies have difficulty responding to environmental legislation. In this context cleaner pro-duction has great signficance; it can allow application of simpler, cheaper and continuoussolutions to help smaller businesses reduce the environmental impacts of their activities as wellas risks to employees’ health and safety. Cleaner production strategies improve environmen-tal conditions while focusing on the reduction of waste and losses. In applying cleaner pro-duction measures, several measures are evaluated for environmental effectiveness andeconomic feasibility. Simple measures like good housekeeping are most often adopted. Goodhousekeeping includes optimization of operational parameters, standardization of proce-dures, improvement of purchasing and sales systems, and optimization of maintenance, infor-mation and training procedures. The predominance of good housekeeping strategies in Brazilindicates a preference for low-cost solutions.

RésuméLes micro-entreprises et les PME sont à l’origine des ressources produites par le Brésil. Or il estdiffficile pour ces entreprises de se conformer à la législation relative à l’environnement. Dansce contexte, la production plus propre prend une importance particulière : elle permetd’employer des solutions plus simples, moins onéreuses et permanentes qui aident les petitesentreprises à réduire les effets de leurs activités sur l’environnement ainsi que les risques pourla santé et la sécurité de leur personnel. En mettant l’accent sur la réduction des déchets et despertes, les stratégies de production plus propre améliorent l’état de l’environnement. Avant deles mettre en œuvre, il convient d’évaluer plusieurs mesures afin de déterminer leur efficacitéenvironnementale et leur faisabilité économique. Ce sont des mesures simples, comme unebonne gestion, qui sont le plus souvent adoptées. Une bonne gestion consiste par exemple àoptimiser les paramètres d’exploitation, à normaliser les procédures, à améliorer les systèmesd’achat et de vente, à optimiser les procédures d’entretien, d’information et de formation. Laprédominance des stratégies de bonne gestion est, au Brésil, le signe d’une préférence pour lessolutions à faible coût.

ResumenLas micro, pequeñas y medianas empresas constituyen la base de la generación de recursos enBrasil. No es fácil para este tipo de negocios cumplir con la legislación ambiental. En este con-texto, la producción más limpia adquiere una mayor relevancia, pues permite la aplicación desoluciones menos costosas, más sencillas y continuas para ayudar a las empresas máspequeñas a reducir los impactos ambientales de sus actividades y los riesgos para la salud y laseguridad de sus empleados. Las estrategias de producción más limpia mejoran las condi-ciones ambientales al concentrarse en la reducción de desperdicios y pérdidas. La aplicación demedidas de producción más limpia va acompañada de la evaluación de diversas medidas paraasegurar su efectividad ambiental y su factibilidad económica. Con frecuencia, se adoptanmedidas sencillas, como la buena administración interna. Esta medida incluye la optimizaciónde parámetros operativos, la estandarización de procedimientos, el uso de mejores sistemas decompras y ventas, y la optimización de los procedimientos de mantenimiento, información ycapacitación. El predominio de estrategias para la buena administración interna en Brasil esun indicador de la preferencia por soluciones de bajo costo.



SMEs and the service and commercial(retail) sectorsBusiness generated in the service and retail sectorsrepresents around 80% of the total activities ofBrazil’s micro and small enterprises, according toan IBGE report based on 2001 data. This reportfound that 2 million enterprises of that size in theservice and retail sectors hired 7.3 million peoplein the study year, representing 9.7% of Brazil’stotal employed population.

The share of micro and small enterprises intotal income from Brazil’s service and retail sectorgrew from 19 to 22.3 % between 1985 and 2001.An even more remarkable increase occurred withrespect to job creation: these enterprises employed3.5 million people in 1985, or 50.7 % of the totalemployed in this sector; by 2001 this number hadmore than doubled, to 7.3 million or 60.8% ofthe sector’s workforce.

The report also found that areas strongly repre-sented among micro and small retail businessesincluded textiles and clothing, jewellery-making,watch-making and construction materials. Whilecompanies selling fuels represented 1.2% of allmicro and small enterprises in 2001, they wereresponsible for 11.2% of total income producedby companies in this size category (Figure 2).

The Cleaner Production Network The reference point for cleaner production inBrazil is the setting up of the UNIDO/UNEPNational Cleaner Production Centre (CentroNacional de Tecnologias Limpas, CNTL), whichbegan in 1996. Among its objectives has been thetransfer of technical skills to Brazilian experts inindustry, environmental consulting companiesand government agencies to further the creationof a network of institutions and trained individu-als committed to promoting CP.

Established in late 1999, the Brazilian CleanerProduction Network is coordinated by the Brazil-ian Business Council for Sustainable Develop-ment (Conselho Empresarial Brasileiro para oDesenvolvimento Sustentável, CEBDS) and sup-ported by a partnership of seven bodies.3

The network consists of the CNTL, located inRio Grande do Sul, and seven regional state cen-tres in Minas Gerais, Bahia, Santa Catarina, MatoGrosso, Rio de Janeiro, Ceará and Pernambuco.4State centres are responsible for multiplying theknowledge transferred to them by the nationalcentre. To establish the state centres, the CNTLhas trained professionals drawn from Brazilianindustrial federations and experts from environ-mental control agencies, universities and privateconsulting companies.

The Cleaner Production Network promotes sus-tainable development in micro and small business-es. It is dedicated to disseminating the concept ofeco-efficiency and the cleaner production method-ology as tools with which to increase competitive-ness, innovation and environmental responsibility.

Initial investments and resultsThe partner institutions invested R$ 3.3 million informing the network between 1999 and 2002. The76 companies of all sizes that were chosen to take

part in the pilot phase invested R$ 2.8 million toimplement measures recommended by the experts.Following the pilot phase, 77 companies eventual-ly committed to apply cleaner production. Up to2002, these companies had invested R$ 1.1 millionin making the recommended improvements. Theprojects are still ongoing; this amount representsonly part of the total investment required.

As a result of these investments, participatingcompanies have saved R$ 18 million per year oninput materials, water and energy (amounting toannual reductions of 6 million tonnes of rawmaterials, 350 million m3 of water, 3 million kWhof electricity and 1 million m3 of natural gas).Their abatement of atmospheric emissionstotalled 5500 tonnes per year. Other direct envi-ronmental and economic benefits have stemmedfrom companies not having to treat and/or dis-pose of 167,000 m3 per year of industrial dis-charges to water, 911,000 tonnes per year of solidwaste, and 3500 tonnes per year of hazardouswaste. External recycling initiatives have madepossible the recovery of 230 tonnes per year of var-ious other types of waste.

Between 1999 and 2003, participants camefrom 33 participating segments of the Brazilianproduction community; the number of micro andsmall enterprises gradually increased in this peri-

od. The largest industry branch involved was elec-trical-electronics, with 14% of the total, reflectingthe strong demand for environmental standardsin this area. Other major branches were tanning(12%) and footware (8%), both with great poten-tial to damage the environment. Significantgrowth has been seen each year in the number offirms in the building and construction (7%), met-allurgy, (6%), metal-mechanical (6%), food (4%)and hotels (3%) areas.

Also participating were logging, printing andgraphics, welding, packaging, organization ofevents (business, commercial, social), auto partsand electricity distribution, at around 1% each.Others (e.g. non-metal minerals, furniture-mak-ing, petrochemicals, pharmaceuticals, chemicals,animal feed, ornamental rocks, environmentalservices, textiles, steel production, ceramic finish-es and medical/hospital materials) have growth ofless than 1% individually but represent 27% in all.The importance and diversity they give to thecleaner production programme should be noted.

Simple solutions, low costs, large benefitsIn the application of cleaner production measures,several measures are evaluated for environmentaleffectiveness and economic feasibility. Simpler

Figure 1Cleaner production measures most often implemented in Brazil

Product modification

Production of useful subproducts

Change in process technology

Change or substitution of equipment

Reuse recycling

Better process control

Change/substitution of raw material

Good housekeeping

42%

7%20%

15%

6%

7%

2%

1%

Figure 2Number of employees in individual cleaner production programmes in Brazil

above 400

300-399

200-299

100-199

50-99

20-49

-19



measures like good housekeeping are those mostoften adopted (Figure 1). Good housekeeping isthe term used internationally to refer to “organi-zation, cleanliness and good practices in qualityand/or product processes.” Besides housekeepingsolutions, this methodology includes optimizingoperational parameters, standardizing procedures,improving purchase and sales systems, and opti-mizing maintenance, information and trainingprocedures. In Brazil the predominance of goodhousekeeping strategies demonstrates the prefer-ence for low-cost solutions.

On average, pilot companies and those thatcontracted to form the CP network are medium-sized, with about 30 employees and annual grossincome of around R$ 10 million.

Environmental management in microand small enterprises: concerns andmotivationMicro and small enterprises usually have the great-est difficulty dealing with environmental issues.Normally they need to use scarce financial, tech-nical and human resources to implement ade-quate environmental control measures.

While they are often able to recognize theimportance of environmental issues, most of thoseresponsible for micro and small enterprises havelittle knowledge of environmental managementand have never introduced environmental controlpractices in their production processes. Environ-mental problems in these companies are usuallyhandled by a manager responsible for several otheractivities, who does not have time to dedicate toenvironmental issues, lacks adequate understand-ing, and above all attaches little economic signifi-cance to environmental opportunities.

For the most part, public opinion pays sub-stantially less attention to the environmental,health and safety issues of micro and small enter-prises than to those of larger companies. In addi-tion, many small businesses do not consider theirenvironmental impacts significant compared tothose of large companies.

According to the Brazilian Industry Competi-tiveness Report, prepared in 2002 by the Brazil-ian National Development Bank (Banco Nacionalde Desenvolvimento), the Brazilian Association ofIndustries (Confederação Nacional das Indústrias)and the Brazilian Support Services for Micro andSmall Enterprises (Serviço Brasileiro de Apoio àsMicro e Pequenas Empresas, SEBRAE), compli-ance with legal requirements is the main motiva-tion for investing in the environment for micro(56.9%) and medium-sized (65.3%) enterprises,while for small enterprises (65.3%) the mainmotive is improving their image.5 Many of thesecompanies are part of the supply chain of largerclients, but there little environmental concern hasbeen stimulated through stakeholder pressure.However, large companies are beginning torequire their chain of suppliers to meet the sameenvironmental requirements they do.

Needed: better financing andunderstanding of the barriersThe reality of Brazilian industry indicates a situa-tion that could benefit from the implementationof cleaner production programmes in micro andsmall enterprises. According to the BrazilianIndustry Competitiveness report, 57.5% of thecountry’s micro enterprises have not yet adoptedany environmental management practice, com-pared with only 5% of large companies.

The same report indicates that large companiesare better at accepting suggestions from theiremployees than micro, small and medium ones.Since a key element of cleaner production isemployee participation, this attitude can be con-sidered one of the barriers to the success of clean-er production measures.

In 2000-01 the main environment-related invest-ment by micro enterprises concerned reducingfinancial losses and waste, while small enterprisesinvested in training for environmental managementand medium ones in energy conservation.

The vast majority of SMEs in Brazil use theirown resources for such investment (amounting toabout 0.9% of net operational income in microand small enterprises and 1.4% in medium ones).A larger allocation of financial resources wouldcertainly constitute a great incentive for imple-mentation and maintenance of cleaner produc-tion programmes in these companies.

Brazilian micro and small enterprises can use aprogramme from the Serviço Brasileiro de Apoioàs Micro e Pequenas Empresas (Sebrae) for tech-nological consulting (Sebraetec).6 Its objective isto create financial and technical conditions givingthese companies access to technological innova-tions. The programme, coordinated by the Inno-vation and Technology Access Unit, includesconsulting services concerned with technology,technical and economic feasibility, design andpreparation of business plans.

Despite the many benefits of cleaner produc-tion, especially for Brazil’s micro and small com-panies, technical and financial factors can impedesuccess and make implementation of these pro-grammes very difficult.

Besides technical and financial barriers, there isa need for better marketing with respect to envi-ronmental management in Brazil, as knowledgeof this field is still limited. Because of this lack ofinformation, owners of businesses are often com-placent and would rather adopt end-of-pipe solu-tions to solve problems than to prevent theproblems. Another common phenomenon isentrepreneurs’ resistance to sharing informationabout their companies and to reviewing opera-tional procedures.

Due to a general lack of trust on the part of entre-preneurs and the need for short-term solutions,many owners find themselves uncomfortable withthe idea of implementing changes – or even withsimply acknowledging that changes are needed.

The future: expansion of the BrazilianCleaner Production NetworkThe CNTL is currently carrying out trainingmainly for the Sebrae, which has created Ecoeffi-ciency Centres in 10 of the 23 Brazilian states –with the goal of changing the culture in micro andsmall enterprises to make it possible for them toproduce more while spending less and reducingenvironmental impacts of the production process.

At the end of the training programme (estimat-ed as December 2003) several case studies ofmicro and small enterprises, which are serving aspilot companies, will be available to demonstratethe main cleaner production practices adopted.Sebrae centres are being developed in the states ofRio de Janeiro, Espírito Santo, Rio Grande doNorte, Amazonas, Pará, Amapá, Mato Grosso doSul, Distrito Federal, Sergipe and Alagoas.

Summing up, it is worth pointing out that fur-ther development of cleaner production pro-grammes in micro and small enterprises in Brazilrequires (in addition to the need for improvedmarketing and education concerning benefits,human resources training, adequacy of procedurescompared with the reality of the small companyand the breakdown of cultural barriers) moreincentive from financing entities.

Notes1. See www.ibge.gov.br and IBGE, “Cresce a par-ticipação das Micro e Pequenas Empresas no Setorde Comércio e Serviços,” Comunicação Social, 11September 2003. (As of November 2003, the USdollar was worth 2.86 Brazilian reals.)2. Law 9.605 of 30 March 1998.3. Conselho Empresarial Brasileiro para o Desen-volvimento Sustentável (Cebds); Banco doNordeste (BN); Serviço Brasileiro de Apoio àsMicro e Pequenas Empresas (Sebrae); Confeder-ação Nacional das Indústrias (CNI); Financiado-ra de Estudos e Projetos (Finep); UNEP; UnitedNations Industrial Development Organization(UNIDO).4. State centres are hosted by the local industryfederations or universities: Fiemg (Federação dasIndústrias de Minas Gerais; Fieba (Federação dasIndústrias do Estado da Bahia); Fiesc (Federaçãodas Indústrias do Estado de Santa Catarina; Fiemt(Federação das Indústrias do Estado do MatoGrosso); Firjan (Federação das Indústrias do Esta-do do Rio de Janeiro); Universidade Federal doCeará (UFC); and Universidade Federal de Per-nambuco (UFPE).5. Banco Nacional de Desenvolvimento, Confed-eração Nacional das Indústrias, and ServiçoBrasileiro de Apoio às Micro e Pequenas Empresas(2001) Relatório da Competitividade da IndústriaBrasileira. See also: Conselho Empresarial Brasi-leiro para o Desenvolvimento Sustentável (Cebds)(2003), Relatório de Atividades da Rede Brasileirade Produção Mais Limpa (1999-2002), Rio deJaneiro. www.ibge.gov.br6. See www.sebrae.br. �



Transition to a market economy in Hungarybegan over a decade ago. The transitionperiod will be completed with accession to

the European Union in 2004. Significant changesin the country’s corporate sector have taken placeduring this period, including privatization ofstate-owned enterprises.

In an economy dominated by oversized state-owned companies, the scope for privately ownedenterprises was very limited until the 1990s. How-ever, some forms of private business ownershipwere tolerated in the 1980s (e.g. joint venturesand very small enterprises). Once the transitionprocess began, the SME sector grew much morerapidly in Hungary than in most of the other cen-tral and eastern European countries.

Multinational organizations began to build uptheir regional strongholds after 1990, investingheavily in newly emerging markets. However,SMEs provided a fragile but still important liveli-hood in a period of high unemployment and verylow incomes.

After 1990, multinational organizations start-ed to build up their regional strongholds andinvested heavily in the newly emerging markets of

the region. At the same time SMEs provided afragile but still important livelihood in an era ofhigh unemployment and very low incomes. Theirrole in the economy is still quite significant in abusiness environment where the number of enter-prises with more than 500 employees is onlyabout 1% of the total (Table 1).

At the same time the environmental expendi-tures of SMEs are low relative to their number andimportance (Table 2).

Environmental regulations were implementedin Hungary as early as the first half of the 1970s,though compliance remained at a very low level.As public environmental awareness grew in the1990s, environmental issues started to play an

important role on the political scene. While thenumber of environmental regulations increased,compliance was still low compared with that inmore developed countries.

In the first half of the 1990s new SMEs – orthose resulting from privatization of state-ownedcompanies – had few resources with which toaddress long-term environmental problems. To acertain extent, this is still the case. Together withpoor environmental performance, SMEs mustaddress inherited poor environmental quality,necessitating expensive clean-up operations. Thusnewly established and financially weak SMEs areoverburdened.

The business environment is gradually chang-ing. EU accession requires adoption of a vast bodyof legislation, including legislation concernedwith the environment. Especially for multina-tional organizations, environmental considera-tions are becoming more important all the time.These organizations have started to establish envi-ronmental criteria for their suppliers, many ofwhich are SMEs (in Hungary and other coun-tries). An example of this phenomenon is theincreasingly apparent need for SMEs to imple-ment environmental management systems.

Environmental NGOs have traditionally beenweak in this region, but there has been an upsurgein environmentally related activities since thetransition process began. Local initiatives (e.g.those related to investment in waste managementinfrastructure) can no longer be neglected by thecorporate sector.

Approaches to environmentalprotection at the corporate levelCleaner production and other preventiveapproaches have a number of advantages overend-of-pipe approaches. Awareness of the variousapproaches to environmental protection is stilllow in the region, but there have been positivetrends in the last decade. Foreign and – increas-ingly frequently – Hungarian investors often pre-fer to replace obsolete equipment rather thancontinuing to repair it. Whether or not invest-ment in new equipment is considered a cleanerproduction initiative, this trend has contributed

SMEs and the environment in Hungary

Gyula Zilahy, Managing Director, Hungarian Cleaner Production Centre, Budapest University of Economic Sciences and Public Administration, 8 F´́ovám tér, Budapest, 1093 Hungary ([email protected])

SummaryHungarian SMEs’ overall environmental performance is improving. Awareness of the impor-tance of environmental management is promoted by environmental authorities and by otherbusinesses (e.g. important customers). However, there are a number of barriers to the imple-mentation of environmental management systems by SMEs in Hungary, and many of thesecompanies still give low priority to environmental issues. In this article recommendations aremade for improving the situation. Several relevant cleaner production initiatives have beentaken by the Hungarian Cleaner Production Centre (HCPC) in cooperation with other organi-zations.

RésuméDans l’ensemble, le comportement des PME hongroises dans le domaine de l’environnements’améliore. Les autorités responsables de l’environnement et les autres entreprises (par ex. lesclients importants) favorisent la prise de conscience de l’importance de la gestion environ-nementale. Mais la mise en œuvre de systèmes de gestion de l’environnement par les PMEhongroises se heurte à plusieurs obstacles et beaucoup de ces entreprises continuent dereléguer les problèmes d’environnement au second plan. L’article fait des recommandationspour changer cet état de choses. Plusieurs initiatives intéressantes de production plus propreont été prises par le Centre hongrois de production plus propre (HCPC) en coopération avecd’autres organisations.

ResumenEl desempeño ambiental general de las pymes húngaras está mejorando. Tanto las autori-dades ambientales como otras empresas (grandes consumidores) están promoviendo la impor-tancia de la gestión ambiental. Sin embargo, hay una serie de barreras que obstaculizan laaplicación de sistemas para la gestión ambiental en las pymes húngaras, y muchas de estasempresas todavía consideran la cuestión ambiental como una prioridad menor. Este artículoofrece algunas recomendaciones para mejorar la situación. El Centro de Producción másLimpia de Hungría (CPMLH) ha adoptado diversas iniciativas importantes de producción máslimpia en forma conjunta con otras organizaciones.

Table 1Number of enterprises by staff size, third quarter 2003

0 or 1-9 10-19 20-49 50-249 250-499 500+ Totalsunknown

Manufacturing 10,578 23,643 3704 2993 1981 321 242 43,462enterprises

All enterprises 152,187 216,881 15,590 9408 4856 540 438 399,900 Source: Hungarian Statistical Office



to a much more environmentally friendly econo-my compared with 15 or 20 years ago.

Nevertheless, much remains to be done. SMEshave great environmental protection potential, inthat their development has been slower than thatof larger companies and no-regrets environmen-tal options still abound.

Initiatives by the Hungarian CleanerProduction Centre: an emphasis onSMEsThe Hungarian Cleaner Production Centre coor-dinates a country-wide network of informationcentres, educational and research institutions, andconsultants in the field of cleaner production andpreventive environmental management.1

The HCPC’s mission is to promote preventiveenvironmental practices and improvements incorporate environmental management using theprinciples of cleaner production, and conse-quently to improve the environment in Hungary.HCPC activities include consulting; organizationof corporate sector training, with a focus onSMEs; provision of policy advice on corporateenvironmental management and performance,with an emphasis on EU environmental regula-tions; and other forms of information dissemina-tion, including conferences and workshops.

The work of the centre in Budapest is assistedby regional cleaner production centres.

To integrate the principles of prevention intohigher education, and thereby educate thedecision-makers of tomorrow, the HCPC isalso involved in education.

By participating in international projects,the HCPC has succeeded in implementingthe principles of cleaner production at anumber of SMEs. Implementation of ECO-PROFIT, a programme for sustainable eco-nomic development that entails cooperationbetween local authorities and companies (aswell as networking by participating compa-nies), has occurred at a number of Hungari-an manufacturing companies since the late1990s.2 Kisalföld Volán Rt., the regionalpublic transport company for north-westernHungary, has implemented a number ofmeasures including replacement of its buses’

engines (Figure 1). In recognition of the compa-ny’s achievements in the environmental protec-tion field, it was awarded the ECOPROFIT prize,which it has continued to hold ever since. It is cur-rently rationalizing its energy use and consideringfurther vehicle modernisation vehicles.2

Training sessions in the Pollution Preventionand Environmental Management System(POEMS) project, offered by the HCPC andKövet-INEM Hungária, respond to the needs ofthe corporate sector. They incorporate topicsrelated to the principles and practical implemen-tation of environmental management systems.Offered to SMEs whose financial resources areinadequate to cover the high costs of private con-sulting, this project has played an important rolein the development of the environmental man-agement systems at several dozen organizations.For example, Guardian Hunguard, part of themultinational Guardian Industries group (a majorplayer in the world glass industry) has imple-mented an environmental management systemthat complies with ISO 14001.Similar systems areto be set up in other countries, based on the Hun-garian experience.

The recent Transfer of Environmentally SoundTechnologies (TEST) project, run by the HCPCand coordinated by the UN Industrial Develop-ment Organization (UNIDO), emphasizes theimportance of an integrated approach to usingenvironmental management tools at the compa-

ny level. This project incorporates managementtools such as cleaner production and environ-mentally sound technology assessments, theimplementation of environmental managementsystems and environmental accounting, and theestablishment of a sustainable enterprise strategyat participating organizations. Originally intend-ed for use at pollution hot spots in the Danube,the Hungarian project mainly involves SMEs thatwere not active in environmental protectionbefore it started. Since 2001 a number of impor-tant measures have been undertaken at participat-ing organizations, whose environmentalperformance has improved significantly (Figures2 and 3).

In the framework of the TEST project,Nitrokémia 2000 Rt., a medium-sized chemicalcompany, adopted an environmental manage-ment accounting (EMA) system. With its obso-lete production facilities located in a fragilenatural environment, the company decided it wasimperative to be able to measure and monitor itsenvironmental performance. Data from environ-mental assessments carried out at the company inthe 1990s (e.g. on emissions, resource use) werereadily available, but the link needed to associatethese data with the decision-making process wasmissing. The new system is intended to correctthis deficiency, so that investment decisions willbe more precise in the future. At the same time,EMA assists communications within different

parts of the organization. Table 3 shows envi-ronmental costs identified and consideredduring the project.

Barriers to environmentalmanagement in SMEs While good examples of environmental man-agement practices at Hungarian SMEs exist,there is still a lot to be done. A number of fac-tors hinder implementation of more elabo-rate tools and their wider dissemination.

In general, the technological backgroundfor enhancing the environmental perfor-mance of SMEs is readily available, as is infor-mation concerning potential solutions.Domestic and foreign suppliers of environ-mentally sound technology solutions offer a

Table 2Environmental investment and expenditure by

enterprise size, 2001

Number of % end-of-pipe % integrated % current employees environmental environmental environmental

investment investment expenditure

20-49 0.2 0.5 2.0

50-99 4.5 2.9 4.2

100-249 8.4 21.3 10.5

250-499 20.2 17.2 21.3

500-999 16.4 18.6 25.4

1000-1999 10.6 9.3 14.0

2000 39.7 30.1 22.6

Total 100 100 100Source: Hungarian Statistical Office

Source: www.kisalfoldvolan.hu

Figure 1Percentage of Kisalföld Volán Rt. buses equipped with low emission engines

1993 1994 1995 1996 1997 1998 1999 2000

1009080706050403020100

%

Source: HCPC (2003)

No costoption

Cleanerproduction

option

ESToption

50

40

30

20

10

0

Identified options Approved options

Figure 2TEST project results: cleaner production

and EST assessments(number of options identified and approved

for implementation)



wide variety of products and services.The organizational factors influencing compa-

nies’ environmental performance remain to beaddressed. They include aspects of company oper-ations specific to a certain organization, such as itsfinancial and market situation, its awareness ofenvironmental problems, the priority it gives toother issues, and resistance to change.

These factors exist in all organizations, but theymay be particularly evident at SMEs. Coupledwith a much lower level of external pressure, theycan result in less favourable environmental per-formance than that of, for example, organizationswith greater public exposure.

HCPC experience demonstrates that Hungar-ian SMEs continue to give relatively low priorityto environmental issues. More conscious environ-mental management occurs only when there ispressure from environmental authorities or sig-nificant customers. Market opportunities mayalso provide environmental benefits to SMEs (e.g.in the case of ecotourism or health products), butthe number so affected is relatively low.

In some economic sectors (e.g. the textile indus-try) companies have taken only very basic envi-ronmental measures or none at all. In others,characterized by higher environmental risks, thereis greater awareness of environmental considera-tions and more environmental management toolsare used, even by SMEs.

Many SMEs continuously struggle to survive

economically, which is reflected in short-termthinking and ignoring of environmental issues. Inthese enterprises production has a very high pri-ority; quality issues have much lower priority, andenvironmental issues are perceived as a luxury andare not taken into account at all.

These problems are compounded by weakenforcement by environmental inspectorates,which do not have adequate financial or humanresources. A number of SMEs still see “gettingaway with” poor environmental performance as a

possible strategy. Fortunately, the number of suchenterprises is gradually decreasing.

Conclusions and recommendationsThe environmental performance of SMEs inHungary is generally improving, but a lot moreneeds to be done.

One way to improve this situation is to raiseawareness. This can produce significant results inthe long term. In the short term, however, otherincentives should be implemented and presentedto these companies.

A national cleaner production programme,similar to those in some other transition countriesin central and eastern Europe, should be agreedand put into effect. Such a programme shouldinclude promotion of preventive environmentalpractices not only through distribution of infor-mation, but also using financial incentives.

At the same time, new environmental regula-tions should consider pollution prevention in thecorporate sector not just in terms of the principlesinvolved, but also in terms of practical imple-mentation of these principles.

Notes1. The HCPC was established in 1997 in theDepartment of Environmental Economics andTechnology at the Budapest University of Eco-nomic Sciences and Public Administration.2. ECOPROFIT, the Ecological Project For Inte-grated Environmental Technology, was estab-lished by the city of Graz (Austria) in 1991. Thename was subsequently trademarked.

ReferencesHungarian Cleaner Production Centre (HCPC)(2003) An Integrated Approach to EnvironmentalManagement – Experiences of the TEST-project inHungary.Kerekes, S. and K. Kiss (1998) Hungary’s Acces-sion to the EU: Environmental requirements andstrategies. In: European Environment, Vol. 8, No.5 (Sept.-Oct.), pp. 161-170.Zilahy, G. Organizational Factors Determiningthe Implementation of Cleaner Production Mea-sures in the Corporate Sector. In: Journal of Clean-er Production. Published by Elsevier. In press. �

Table 3Environmental costs identified and calculated at Nitrokémia 2000 Rt.

in the framework of the TEST project

Costs used before the Costs included in the new environmental Costs to be added in the TEST EMA project management accounting (EMA) system longer term

waste and emissions treatment: occasional wastewater treatment costs material and labour for wastehazardous waste incineration incineration of non-hazardous waste treatment (e.g. filter)wastewater treatment treatment of sludge

depreciation of environmental equipment energy costs for non-product output

work by environmental personnel; environmental water costs for non-product outputwork by non-environmental personnel

material costs of waste treatment

environmental fines

processing of non-product output

auxiliary materials Source: HCPC, 2003

100

80

60

40

20

0

Figure 3Water consumption at

participating companies

* Data shown for whole company except in the case of Nitrokémia 2000 Rt. (where process is under assessment)Source: HCPC, 2003

Günter TataHútótechnica

Kft.

Indukciós ésVédógázos

Hókozeló Kft.

Nitrokémia2000 Rt.*

Before the project After the project

Other topics


Corporate social responsibility is becominga major issue for an increasing number ofcompanies of all sizes in the UK. Accord-

ing to UK Department of Trade and Industry fig-ures, approximately 80% of FTSE 100 companiesnow provide information about their performanceon social responsibility matters, demonstrating agrowing recognition of the importance to corebusiness of such issues as protection of the envi-ronment, use of natural resources and their impacton society as a whole. (See the “Developing Cor-porate Social Responsibility in the UK DTI” Website, www.societyandbusiness.gov.uk.)

Within the context of CSR, sustainable devel-opment underpins many of these issues, balanc-ing the three elements of the triple bottom line –environmental, social and economic components– and helping organizations to move towards busi-ness viability in the long term.

There has been growing corporate interest inenvironmental issues. However, an organizationcarrying out its day-to-day business can also havesubstantial social impacts on employees, suppliers,customers, and particularly on the local commu-nity within which it operates. Poor relationshipswith local people may create significant problemsfor businesses. They are often caused by compara-tively minor and easily resolved issues such as park-ing, noise, or perceived lack of consideration by thecompany in general.

A recently completed BRE project, “Workingwith the Community”, investigated these impactswith a view to enhancing relationships betweenthe construction industry and local communities.Although research focused on construction pro-jects, the lessons learned are relevant to any typeand size of organization in any sector.

BackgroundBetter consideration of the needs of local commu-nities is being seen as increasingly important in theconstruction industry. As well as reinforcing thesocial dimension of sustainable construction bydemonstrating a commitment to corporate socialresponsibility, improved relationships with thelocal community can bring substantial businessbenefits both in the short and long term. Examplesof these include:� time and cost savings resulting from a smootherplanning process;� increased goodwill towards a construction pro-ject, both during and post construction;� reduction of the time and money spent dealingwith complaints;� a greater sense of ownership of the projectamong local people, leading to less vandalism andimproved security;� enhanced PR for the client and contractor;� increased potential for repeat construction busi-ness in the locality;� improved job satisfaction and motivationamong the workforce on-site.

“Working with the Community” was commis-sioned by the DTI under its policy of improvingthe industry’s performance on people issues andincreasing “respect for people”. The project’sobjectives were to identify the impacts of majordevelopments on local communities both duringand after construction, and to develop guidancefor the industry in addressing the concerns of localpeople and businesses.

MethodologyThe study began in July 2000 with initial researchbased on five major construction projects aroundthe UK. Chosen to provide variety in the type ofproject and location, so as to eliminate any sourceof bias in the type of impacts reported, the projectswere:� a junior school in the south of England;� a leisure facility in the Midlands;� a supermarket development in east London;� a hospital in the north-east of England;� a major housing development in the north-west.

A series of focus groups and interviews wereheld with a variety of stakeholders concerned withthe case study projects.

Key personnel from each project, includingrepresentatives from the main contractor, client,architect, project manager, site manager and localauthority, were interviewed about the perceivedimpacts of their project on the local communityboth during construction and post completion,

Sustainable development: improvingcommunity relations

Mindy Hadi, Senior Consultant, Centre for Sustainable Construction, BRE, Garston, Herts WD25 9XX, UK ([email protected])

Summary An organization conducting day-to-day business has social impacts on the local community.Poor relations with neighbours can result in significant problems for business, often relating tocomparatively minor and easily resolved issues such as parking, noise or perceived lack of con-sideration by the company. A recently completed BRE project investigated these impacts, witha view to improving relationships between the construction industry and local communities.While research focused on construction projects, the lessons learned are relevant to any typeand size of organization (in any sector). In particular, research demonstrated that ongoingcommunication and information provision is a key to improving community relations.

RésuméDans la conduite de ses activités quotidiennes, l’entreprise a des impacts sociaux sur la popu-lation locale. De mauvaises relations avec le voisinage peuvent être une source de problèmesmajeurs, souvent liés à des questions relativement mineures et faciles à régler comme le sta-tionnement, le bruit ou une impression de manque de considération de la part de l’entreprise.Un projet du BRE récemment mené à terme s’est intéressé à ces impacts dans le but d’amélior-er les relations entre le secteur du bâtiment et les populations locales. Bien que centré sur leschantiers de construction, il a permis de tirer des enseignements qui sont valables pourn’importe quelle entreprise (de n’importe quel secteur), quels que soient son type et sa taille.L’analyse a montré, en particulier, qu’une communication et une information permanentessont primordiales pour améliorer les relations avec la population.

ResumenToda organización que realiza actividades comerciales en forma cotidiana tiene impactossociales en la comunidad local. Las malas relaciones con los vecinos pueden causar problemasimportantes para los negocios, problemas casi siempre relacionados con cuestiones relativa-mente menores y fáciles de resolver, como dificultades de estacionamiento, ruido o la percep-ción de que la empresa no muestra consideración por la comunidad. Un reciente estudio delBuilding Research Establishment investigó estos impactos a fin de mejorar las relaciones entrela industria de la construcción y las comunidades locales. Aunque la investigación se concen-tró en los proyectos de construcción, las lecciones aprendidas son útiles para todo tipo ytamaño de organización en cualquier sector. De manera específica, los resultados de la inves-tigación demostraron que la comunicación continua y el constante intercambio de informaciónson esenciales para mejorar las relaciones comunitarias.

Other topics


what measures were taken to address theseimpacts, and how successful they were. The inter-view with the main contractor concentrated onimpacts during the construction phase, whilethose with the designer/developer and client cov-ered impacts during and post construction.

In addition to the interviews, two focus groupsof local community members including residentsand local business representatives were organizedfor each project. The focus groups were designedto initiate discussion on impacts the projects werehaving on local residents and businesses, measurestaken to address their concerns, and what sugges-tions they could make for improvement. The rela-tionships between the local community and theindustry throughout the whole constructionprocess were also covered.

The case study consultation was complement-ed by interviews with additional industry repre-sentatives – architects, engineers, local authoritiesand contractors – in order to identify their aware-ness of (and opinions about) existing best practiceinitiatives and guidelines for considering localcommunities, and what additional guidance theyneeded.

Attitudes to the construction phaseAlthough each case study was very different,research results highlighted similar concernsamong the local communities during the con-struction phase. These included: noise; dust anddirt; increased traffic, congestion and parkingproblems; access restrictions; health and safetyissues; and the attitudes of some of the workmen.Neighbouring businesses had particular problemsin connection with restricted access and inconve-nience for their staff and customers.

Interestingly, despite the efforts made by devel-opers to mitigate many of these problems, thelocal people often felt the measures taken wereinadequate. This feedback enabled BRE to high-light a number of good practice measures thatwould benefit both the construction companiesand local communities in future developments,such as:� planned measures to control dust, noise andtraffic;� use of local labour, involvement in local labourschemes and sponsoring of traineeships;� good site security, 24-hour security guards andsecure site hoardings;� highlighting opportunities for local businesses,(e.g. provision of a site canteen and use of localsuppliers);� establishing good relationships with the localcommunity, including visits to schools, charityevents, and invitations to view the site.

Attitudes to the completeddevelopmentsThe completed developments were generally wel-comed as an improvement to the local area, as old,dilapidated buildings were replaced with a newand visually pleasing amenity that regenerated andincreased the status of the area. The new develop-ments were also seen to benefit local businessesand increase job opportunities.

However, there were some common issuesabout the new buildings that caused concern:� parking problems for residents and local busi-nesses;� reduced access to bus stops, shops, etc., particu-larly affecting the elderly;� an increase in traffic;� loss of facilities for the community, particularlyfor children;� an increase in noise and disturbance;� an increase in crime due to changes in the localarea;� obstruction of views;� final plans or development usage being differ-ent from what was expected.

Communication and informationConstruction of a new development in a neigh-bourhood may often cause problems for local res-idents and businesses. The construction processitself can be noisy, dirty and lengthy and the fin-ished building can also bring changes to the areathat may be unwelcome. However, the studyfound that it is not necessarily the obvious physi-cal problems that cause irritation, but the per-ceived lack of information.

In all the case studies, most of the local peoplefelt that they would have been prepared to put upwith the majority of the problems if there had beenbetter communication and consideration through-out from the client organization, construction com-panies, local councils and developers. Althoughcommunication was seen to be essential to the suc-cess of a development by all parties, and all casestudy projects tried to involve the local communi-ty, lack of information was still a major issue.

There appeared to be a gap in the perception ofwhat constitutes adequate communication be-tween the developers and construction companiesand local communities. For example, companiesreported that they had displayed telephone num-bers or sent out letters, while the local communi-ties said that they had not seen any of these. Thelocal communities also felt that provision of com-plaints procedures was inadequate. It was often sodifficult and time consuming to make a complaintthat most people did not bother; and when theydid, they felt that little action was taken.

There could be a number of reasons for thesedifferences in perception: � People often do not read written materials thatare delivered to their homes and even ignorenotices unless they are drawn to their attention.They do, however, remember visits and meetings. � The discrepancy could partly arise from the factthat much communication activity was limited tothe immediate vicinity of the site rather than thewider neighbourhood. � There could be differences in expectations of theamount and type of communication used. Forexample, on a long-term project lasting a numberof years, local people expected continuing involve-ment and often preferred face-to-face methods,while the companies often relied on a single ini-tial meeting and subsequently on written com-munication, e.g. letters, posters. Communicationshould therefore take place at all stages of a devel-

opment and a variety of methods should be usedto capture different audiences.

New guidanceThe case study consultation highlighted areaswhere there appeared to be gaps in the provisionof advice, guidance, etc. to support the work ofproject teams in terms of considering the localcommunities where new developments are situat-ed. In particular, there was felt to be little guidancein the area of communication and provision ofinformation – despite the fact that both local peo-ple and the industry regarded this as critical.

The BRE team therefore developed a packageof communication guidance and supporting toolsthat could be used by the construction industry todeliver better community relations. These toolsincluded:� awareness-raising workshops for site personnel;� information leaflets for the local community;� questionnaires to monitor the attitudes of thelocal community towards the development andprovide feedback on the success of measures toinvolve local people and businesses.

A large retail development in Yorkshire was cho-sen as a test bed for the new guidance. Both theclient and the main contractor were very happy tosupport the initiative, which reinforced their cus-tomer-focused approach.

The development was ideal for the needs of theBRE research team. It was a town centre site, sur-rounded by homes and existing retail and com-mercial properties. The pilot study hosts, a majorsupermarket, had already done a considerableamount of work in terms of community liaison.This included:� an introductory letter to 80 local residentsinforming them of the works and introducing thesite manager together with his photograph andcontact details;� the appointment of a dedicated public relationsconsultant to oversee relations with the commu-nity during the planning stages;� the establishment of monthly liaison meetingsbetween the project team and the council andlocal community representatives;� an established complaints procedure includingthe logging of complaints;� additional traffic light pedestrian crossingsmanned by project staff;� provision of escorts for school children aroundareas adjacent to the site

The start of the BRE pilot study coincided withthe first stages of construction of the new super-market in January 2002.

Workshops for site personnelIn the course of the case studies the researchersfound that the personnel working on a construc-tion site were the main focal point for the localcommunity, as they tend to be the visible face ofthe development. However, those personnel feltthey did not necessarily have the skills to deal withthe concerns of the general public. To address this,the project team developed a programme of work-shops on “Dealing with the Public”, and deliveredtwo half-day workshops on the test site.

Other topics


The objectives of the workshops were:� to raise awareness of the impacts of a site on thelocal community and the issues that concern localpeople;� to encourage the development of the commu-nication skills needed to address these issues byproviding participants with strategies for dealingwith the public.

The course content focused on both technicalissues, with examples of best practice, and com-munication skills, using role-play exercises. Par-ticipants were encouraged to share experiencesand make suggestions for improvement.

Participants were nominated by the construc-tion company. They represented a variety of roleson site from site manager, foreman and engineerto drivers and security staff. Their reactions to thesessions were very favourable both immediatelyafter the sessions and later on, during follow-up.

Information for the local communityThe initial research had shown that local commu-nities felt they would benefit from guidance onwhat is involved at all stages of a construction pro-ject. As well as developing their understanding, itwould help them cope better with issues thatmight arise. They also reported frequent difficul-ties in tracking down the appropriate person todeal with any problems or complaints.

The research team therefore produced a shortinformation leaflet for local residents and busi-nesses written in clear, non-technical language.The leaflet included: � general information about what to expect whena new development takes place in a neighbour-hood, including a construction timeline and aglossary of terms;� site-specific information, including timescalesand names and contact details of key personnel(e.g. site manager, building control) and a shortdescription of their roles.

The leaflet was designed to be widely distrib-uted at an early stage so that local people couldkeep it for reference. The draft leaflet was pilotedon a sample of local residents via face-to-faceinterviews and refined in the light of their com-ments and suggestions.

Performance feedback questionnaireThe research team had found that although therewas much good practice in working with the com-munity on individual sites, there was little moni-toring or feedback on the success of thesemeasures. A performance feedback questionnairewas developed to provide a method of indepen-dently monitoring the impacts of constructionsite operation, the success of mitigation measuresand the satisfaction of local residents and busi-nesses. The questionnaire focused on generalissues derived from the earlier research findings,including:� communication;� impacts of the site in general;� specific impacts on local businesses;� dealing with complaints.

Site personnel distributed the questionnaire to200 local residents and business premises at anearly stage of the development to provide a base-line measure of local attitudes and opinions. It wasdistributed again upon completion of the projectto monitor any changes. To encourage participa-tion, all respondents were given the opportunity toenter a prize draw. The results were reported to theproject sponsors, together with recommendationsand suggestions. The main findings were that: � the most commonly used source of informationabout the development was the local paper;� awareness of information about the develop-ment increased considerably between the begin-ning and end of the project;� perceived helpfulness of people on site in deal-ing with concerns rose by more than 20% over thesame period, possibly as a result of the increasedefforts of site personnel; � if people had any concerns, they tended to takethem to the site manager, who was the focus forthe local community;� there were many positive messages (behaviourof workmen, security and access factors were veryhighly rated).

The results of such surveys can be used in twoways. During the course of a long-term project thequestionnaire raises awareness of issues that arecausing concern within the local community andenables an effective response. At the end of a pro-

ject it can be used to provide feedback for theclient and construction company to gather learn-ing points for future developments and to supporta system of continuous improvement via bench-marking.

The way forwardGood community relations are an important ele-ment in developing long-term sustainability, notonly for construction companies and their clientsbut for any organization. The “Working with theCommunity” project has demonstrated that oneof the keys to building better relationships withlocal residents and businesses lies in improvedcommunication and more effective informationprovision. The guidance and tools that have beenpiloted on the test bed project, and that will bepublished shortly, provide a framework for a com-munication strategy. However, to be successful thecommunication process must be ongoing. Thisrequires a commitment from all parties involved.

The test bed project provided an excellentexample. From the outset the client, contractorand the rest of the project team placed greatemphasis on providing a coordinated approach tomaintaining good relations with local people thatbenefited all concerned. This model can be use-fully followed by any company contemplatingmaking changes that will affect the neighbour-hood to a greater or lesser degree – for example, achemical company deciding to produce a newproduct, the opening of a new waste disposal facil-ity or an increase in hours of operation. There aremany instances of “scare stories” in the press thathave been built up as a result of local speculationwhich could have been avoided through carefulcommunication planning.

For further information on Working with theCommunity or the forthcoming guidance, pleasecontact Mindy Hadi at BRE or visit the projectWeb site: http://projects.bre.co.uk/productive_workplace/improve_relations.html.

Also see Industry and Environment ,Vol. 26, No.2-3, the sustainable building and constructionissue (www.uneptie.org/media/review/ie_home.htm). �

revenues through better utilizing existingassets. Smaller manufacturers, in particu-

lar, have yet to fully grasp this opportunity.”A companion report, Strategic Energy Efficiency:

Reduce Expenses, Build Revenues, and Control Risks,elaborates on the relationship between energy effi-ciency and business performance.

Both reports are available at www.ase.org/pro-grams/industrial/e4ee.

For more information, contact: The Alliance toSave Energy, 1200 18th Street, NW, Suite 900,Washington, DC 20036, USA, Tel: +1 202 8570666, Fax: +1 202 331 9588, E-mail: [email protected], Internet: www.ase.org. �

Winners of China’s greenbusiness competition An organic food company, a manufacturer of test-ing kits to detect genetically modified organisms,and the country’s first producer of organic honeyhave won the first green business competition inChina. Chosen from among ten finalists, the win-ners were announced at the end of China’s firstNew Ventures Investor Forum in Shanghai.

Products from Beijing Organic Foods Co., apioneer in China’s organic foods market, are forsale in 60 supermarkets located in 12 Chinesecities. The ChongQing Jinbiao BiotechnologyCompany manufactures and markets testing kitsthat can detect GMOs in one minute. The kitscost 25% less than the industry average. The Nan-jing Ruikang Agriculture Company produces andexports organic honey to the United States, Japanand Europe. It supplies 66% of the global marketfor organic royal jelly.

The New Ventures Investor Forum is spon-sored by the Sustainable Enterprise Program ofthe World Resources Institute and by Citigroup.New Ventures has hosted three investor forums inLatin America since September 2000, facilitatinginvestments of US$ 6.4 million in sustainablebusinesses. WRI and Citigroup brought NewVentures to China in 2002.

At the Shanghai Forum, the InternationalFinance Corporation signed an agreement to ex-pand the New Ventures programme to Indonesia.

For more information, contact: Virginia Barreiro,World Resources Institute, 10 G Street, NE, Suite 800,Washington, DC 20002, USA, Tel: +1 202 7297700, Fax: +1 202 729 7610, E-mail: [email protected], Internet: www.new-ventures. org. �

New European Commissionstrategy for resource useThe European Commission has introduced anew strategy intended to assure sustainable use ofnatural resources. The EC says this is the first EUinitiative to address resource use in a truly com-prehensive way.

The strategy is based on three core tasks:� gathering information and keeping it updated;


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Huge investment in worldenergy supply will probably be required

Over the next 30 years, US$ 16 trillion will needto be invested in maintaining and expanding theworld energy supply if present trends continue.This is the conclusion of World Energy InvestmentOutlook, a new report by the International EnergyAgency (IEA) that predicts a two-thirds increasein world energy demand by 2030 if new policyactions are not taken. This level of investment(equivalent to 1% of annual global GDP) wouldgreatly surpass the comparable figure for the past30 years in real terms.

World Energy Investment Outlook is the latestreport in the IEA’s World Energy Outlook series.It is the product of a collaborative effort involvingexperts, organizations including OPEC and theWorld Bank, and major energy companies andfinancial institutions. Energy investment needsare broken down by fuel sector and region, andobstacles to mobilization of capital on therequired scale are identified.

“To the best of my knowledge,” says ClaudeMandil, Executive Director of the Paris-basedagency, “no previous attempt has been made tobuild such a comprehensive picture of future ener-gy investment, worldwide, in all parts of the ener-gy supply chain.”

Some of the findings were unexpected. Forexample:� Power generation, transmission and distributionwill absorb almost 60% of global energy invest-ment (over 70% if investment in the fuel chain tomeet power station fuel requirements is included).� Transmission and distribution will account formore than half of global electricity sector invest-ment.� The bulk of US$ 4 trillion in upstream invest-ment in the oil and gas sectors will be required justto maintain production capacity at current levels.� The coal industry will require only US$ 400 bil-lion (2% of total global energy investment).

The IEA report, published following majorblackouts in North America, Italy and the UK inthe summer of 2003, points out that OECDcountries face challenges in financing electricityinvestments as transition to competitive marketshas introduced new risks. Liberalization can havemany benefits, but it increases risks for investors,especially with respect to peaking capacity. Otherproblems include public resistance to expansionof transmission networks.

In Iraq alone almost US$ 5 billion will be need-

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ed in order to increase the country’s oil produc-tion capacity to a projected level of almost 4 mil-lion barrels a day by 2010.

Investment in liquefied natural gas chainsworldwide must increase to meet sixfold growthin LNG trade.

Financing investment in developing countriesand transition economies is the greatest and mostpressing challenge. Russia’s investment require-ment will amount to 5% of its GDP and Africa’sto 4%, compared with 0.5% in OECD countries.Investment risks are generally greater in non-OECD than in OECD countries.

Investment at the projected rate would leave 1.4billion people without access to electricity in 2030(only 200 million fewer than today). Providing aminimal level of supply to the world’s poorestareas would require investing an additional US$665 billion in regions that are already strugglingto raise capital.

New technology, such as carbon sequestrationand use of hydrogen fuel cells and advancednuclear reactors, could dramatically alter energyinvestment patterns and requirements in thelonger term. Technology deployment depends onfiscal and regulatory incentives to accelerate com-mercial viability.

The IEA report emphasizes that governmentswill increasingly need to abandon state-financedinvestment or ownership, to and adopt policiesand create conditions that promote privateinvestment.

For more information, contact: Fiona Davies, Tel:+33 1 40 57 65 50, E-mail: [email protected].

�

Energy efficiency in industryincreases competitivenessManufacturers can boost competitiveness andguard against fuel supply problems through en-ergy efficiency, according to a new report thatprovides guidance to US plant managers and en-ergy programme officials.

Motivating Business Leaders to Improve Prof-itability through Energy Efficiency, produced by theAlliance to Save Energy and its Executives forEnergy Efficiency programme, stresses that indus-trial energy efficiency could help offset potentialwinter shortages of natural gas supply.

“Energy efficiency’s benefits only begin withreduced utility bills,” says Christopher Russell,who wrote the report. “Plant managers also canreduce raw material waste, offset energy supplyrisks, avoid emission penalties, and even build new

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� assessing policies that directly or indirectly affectresources;� identifying measures (which will primarily beintegrated with other policies).

“Natural resources ensure our economic andsocial development,” says Environment Commis-sioner Margot Wallström, “but the ways in whichwe use them create waste, emissions and effluentswhich affect water, air and soil. We have to utilizeresources differently – more efficiently and withless damage to the environment and humanhealth.”

According to the Commission, adverse effectson the environment (e.g. air pollution and globalwarming) are the most pressing problem withrespect to resource use. The strategy will focus onreducing environmental impacts and on enablinggrowing economies to use resources efficiently,both environmentally and economically. Its over-all goal is to decouple economic growth fromenvironmental degradation. The stragegy willexamine the entire life cycle of natural resources.

The Commission has announced that it willfinalize the strategy via stakeholder consultationin the next 18 months. This is one of the seventhematic strategies called for in the Sixth Envi-ronment Action Plan adopted in 2002, which willguide EU environmental policy priorities until2010.

For more information, see: http://europa.eu.int/comm/environment/natres/index.htm. �

Corporate responsibility inEurope: teaching and researchTeaching programmes and research on corporateresponsibility are increasing at European academ-ic institutions, according to a study described byits sponsors as the most comprehensive ever car-ried out on the subject.

The study, by the European Academy of Busi-ness in Society (EABIS) and the InternationalCentre for Corporate Responsibility (ICCSR) ofthe Business School of Nottingham University,also indicates that there is a greater focus on envi-ronmental issues and sustainability at such insti-tutions in Europe than in the US. The studycovered 600 institutions in 20 countries.

In addition, a report by the Aspen Institute andthe World Resources Institute says North Ameri-can business schools need to better equip graduatestudents with environmental and social manage-ment skills. Beyond Gray Pinstripes 2003: PreparingMBAs for Social and Environmental Stewardship,which includes data from 100 business schools, alsoin 20 countries, highlights six top schools that givefuture executives solid training in environmentaland social impact management: George Washing-ton University’s School of Business and PublicManagement in Washington, DC; the Universityof Michigan Business School in Ann Arbor; theUniversity of North Carolina Kenan-Flagler Busi-ness School in Chapel Hill; the Stanford GraduateSchool of Business in Stanford, California; the YaleSchool of Management in New Haven, Connecti-

cut, and York University’s Schulich School of Busi-ness in Toronto, Canada.

The report says these are among the few schoolsthat focus on relationships among social, envi-ronmental and financial factors.

For more information, see: www.csrcampaign.org/initiatives/EuropeanAcademy_page96.aspx andwww.beyondgreypinstripes.org. �

WWF reports on water qualityand quantity A WWF report on water management in 23European countries says efforts to maintain orimprove water quality in lakes, rivers and seas arefailing in nearly two-thirds of these countries dueto agriculture, urban sprawl and lack of politicalwill. It points out that over-consumption of wateris a problem throughout Europe.

The second study, carried out by the WWF andthe World Bank, reports major cities could savebillions of dollars in water treatment facilitiesinvestment by focusing on forest conservation.Forests naturally purify drinking water. One-thirdof the 105 large cities studied, including NewYork, Tokyo, Barcelona, and Melbourne, receivemuch of their drinking water via protected forests.

The WWF studies can be downloaded atwww.panda.org/downloads/europe/wwireport.pdf and www.panda.org/downloads/freshwater/runningpurereport.pdf.

Another study on US cities, presented at theNational Urban Forest Conference, reports thatcities are rapidly losing trees that could be coolingbuildings, cleansing polluted runoff and filteringcity air. Satellite images of 448 US urban areasrevealed that these areas lost over 20% of theirtrees in the last decade. American Forests, theorganization commissioning the study, estimatesthe value of the ecosystem services provided bythese trees at US$ 234 billion.

For more information, contact: WWF Interna-

tional, Av. du Mont-Blanc, 1196 Gland, Switzer-land, Tel: +41 22 364 91 11, Fax: +41 22 364 8836; www.americanforests.org/graytogreen. �

Proposed EU legislation onchemicals controlSweeping new European Commission chemicalscontrol legislation would oblige manufacturers todisclose the hazards of tens of thousands of chem-ical products that are on the market but have notbeen subjected to safety tests. Under the proposedregulation, any company that manufactures orimports over 1 tonne of a chemical substance peryear will be required to register the substance in acentral database.

The EU executive body has worked on this leg-islation for something like five years. Reflectingvigorous chemical industry lobbying, Germany,France and the UK successfully urged the Com-mission to modify the initial draft.

The Commission has legalized use of one con-troversial substance, the herbicide paraquat, basedon advice received from European scientists.Paraquat use was previously authorized in only tenEU countries. Commission officials say condi-tions for its use will be strict and sale to the gener-al public is unlikely.

For more information, see: http://europa.eu.int/comm/enterprise/chemicals/chempol/whitepaper/reach.htm. �

Investors’ summit on climate changeEight US state and city treasurers and comptrol-lers, and the heads of two major trade union pen-sion funds, have issued a ten-point “call for action”.It requests that the US Securities and ExchangeCommission (SEC), corporate boards and Wall

Efforts to maintain or improve water quality in lakes, rivers and seas are failing


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Street firms take strong measures to increase cor-porate disclosure of the risks of climate change.

The call for action was announced at the firstInstitutional Investor Summit on Climate Risk,which took place at UN Headquarters in NewYork in mid-November. There were plans to peti-tion the SEC immediately to enforce environ-mental risk disclosure requirements, seek climaterisk disclosure by companies in the oil and gas,electricity, automobile and other industries, andcreate an Investor Network on Climate Risk tofollow through on the action plan.

The founders of the network and those whosigned the call for action are the state treasurers ofCalifornia, Connecticut, Maine, New Mexico,Oregon and Vermont, the comptrollers of NewYork City and the State of New York, and thedirectors of the pension funds of the ServiceEmployees International Union and Communi-cation Workers of America.

“In global warming,” says California State Trea-surer Phil Angelides, “we are facing an enormousrisk to the US economy and to retirement fundsthat Wall Street has so far chosen to ignore. Thecorporate scandals over the last couple of years havemade it clear that investors need to pay more atten-tion to corporate practices that affect long-termvalue. As fiduciaries, we must take it upon ourselvesto identify the emerging environmental challengesfacing the companies in which we are shareholders,to demand more information, and to spur neededactions to respond to those challenges.”

This is the first time major pension funds andother institutional investors have met to considerthe risks of climate change to portfolios. Alsoattending were senior executives of Bank of Amer-ica, Bank of New York, Goldman Sachs, LazardAsset Management, Lehman Brothers, Marsh andMcLennan, Morgan Stanley, Moody’s and Stan-dard and Poor’s, as well as other state, city andpension fund representatives.

The summit was organized by the CERES coali-tion, which is co-chaired by Connecticut StateTreasurer Denise Nappier and UN FoundationPresident Timothy Wirth. The CERES coalition issupported by UNEP, the UN Fund for Interna-tional Partnerships and other UN agencies.

For more information, see: www.incr.com. �

Other climate change news

In a report for WWF, Innovest Strategic ValueAdvisors estimates that many of the world’s largestpower companies could face costs equivalent toover 10% of their 2002 earnings if they do notadequately prepare for regulations associated withglobal warming. Power Switch: Impacts of ClimatePolicy on the Power Sector analyzes the financialrisks and opportunities of existing and expectedclimate policies for 14 major international electricutilities. Key findings include:� The general effect of global and national poli-cies will be internalization of the costs of utilities’CO2 emissions for the first time.� At companies that have switched to cleaner nat-

ural gas and renewables (and that have maximizedefficiency or plan to do so in the near future) notonly can costs be reduced, but profits can be made.� The sooner companies switch to cleaner fuelsand increase efficiency, the more cost-effectivelycan CO2 emissions be reduced.

For more information, see: www.innovestgroup.com/publications.htm.

❖ ❖ ❖Glaciers in the Alps, Africa and parts of Asia aremelting due to climate change. This will have sig-nificant effects on water supply, according toreports presented at the annual conference of theRoyal Geographical Society and the Institute ofBritish Geographers in London. Research in thenorthern Tien Shan mountains of Kazakhstan,where glacier-fed rivers are a source of irrigationwater, indicates that the 416 glaciers had lost near-ly two cubic metres of ice per year between 1955and 2000. There were also reports on Switzerland,New Zealand, Uganda’s Rwenzori Mountains andthe Himalayas.

For more information, see: www.rgs.org.

❖ ❖ ❖

The World Resources Institute is the first NGOto become a charter member of the Chicago Cli-mate Exchange (CCX). Jonathan Lash, the presi-dent of WRI, says this will “strengthen apioneering effort to create market-based solutionsto the problem of climate change…CCX helps usmaintain our own organizational commitment tokeep our net carbon dioxide emissions at zero.”CCX began its market operations on 30 Septem-ber 2003.

For more information, see: http://newsroom.wri.org . �

High returns on greenbuildings investmentInvestment in green buildings will be repaid tentimes over, according to what participants consid-er the most definitive cost-benefit analysis of suchbuildings. The study was conducted for 40 Cali-fornia government agencies by the Capital Egroup, the Lawrence Berkley Laboratory and par-ticipating agencies. Its findings, drawing onnational data concerning 100 green buildings anda review of hundreds of earlier studies, has led theCalifornia Department of Finance to acknowl-edge for the first time the existence of financialbenefits associated with green buildings’ improvedhealth and productivity and lower operational andmaintenance costs. Based on early findings, theCalifornia Board of Regents supports the conceptthat all new construction in higher educationshould be green.

The California study concluded that in a build-ing certified by the US LEED system, the finan-cial benefits of green design and constructionamount to over ten times the additional costsinvolved. “Energy savings alone exceed the aver-

age increased cost associated with building green,”say the authors.

The California Energy Commission has alsoadopted new standards for energy efficiency inbuildings, to take effect in 2005. These standardsare expected to reduce the state’s peak energy useby over 180 MW a year, enough electricity for180,000 average homes.

In New York City a sustainable building designcompetition has been announced. Its purpose isto demonstrate how the principles of green build-ing principles can be incorporated into existingand new buildings. The US Environmental Pro-tection Agency (USEPA), the American Instituteof Architects (AIA), Earthpledge, the Departmentof Environmental Protection of the State of NewYork and the Museum of the City of New York aresponsoring the competition.

For more information, see: www.cap-e.com (Cal-ifornia government agencies report), www.energy.ca.gov/2005_standards/rulemaking/index.html(California Energy Commission) and www.nyc.gov/html/moec/html/competition.html (New Yorksustainable building competition). �

Phasing out leaded petrol in Africa An international effort to phase out lead in petrolin Africa has gained momentum since last year’sWorld Summit on Sustainable Development inSouth Africa (where it received strong support).According to a report issued at a recent meetingof the Partnership for Clean Fuels and Vehicles inNairobi, Kenya, a growing number of countriesare developing and implementing action plans forswitching to unleaded petrol.

The Partnership is a new alliance of the fuel andvehicle industries, African and internationalNGOs, the United Nations (including UNEP)and other international organizations, and gov-ernments. Ethiopia, Ghana and Mauritania,which are among the most recent countries to jointhe effort, have set a date of January 2004 forremoving lead from road vehicle fuels, partici-pants at the Nairobi meeting were told.

Southern African countries are expected toannounce similar national strategies following aworkshop in Cape Town. Such phase-out work-shops have been a key part of the lead phase-outcampaign. Central African countries are expectedto participate following a workshop planned forearly 2004.

The report says Africa is on track for completephase-out of leaded petrol by early 2006. In thelonger term, the Partnership is working to improveair quality generally in the developing world byencouraging the use of cleaner fuels and improvedtechnologies.

For more information, see: www.unep.org/pcfv.�

“Virtual university” for thesteel industryAmid growing concern among members of theInternational Iron and Steel Institute (IISI) aboutsteel companies’ ability to recruit high-calibremetallurgists, its board has approved a package ofsophisticated e-learning resources concerned withsteel processes and applications.

Citing the success of a pilot project begun in2002 that involved two demonstration modules,the board authorized spending EUR 2.5 millionon additional modules covering all aspects of steel-making (e.g. raw materials, properties, applica-tions and manufacturing). The modules willaddress underlying scientific principles and theissues of recycling, environmental managementand sustainability. Each module is to be developedby leading academics and steel industry experts.

Modules will be reviewed by panels of expertsbefore they are integrated into a virtual “steel uni-versity.” The steel university Web site (ww.steelu-niversity.org) will include directories of lecturersand researchers in academic institutions, researchinstitutes and the steel industry.

The IISI is a non-profit research group. Mem-bers are steel-producing companies, national andregional federations, and steel research organiza-tions in over 50 countries. These countriesaccount for more than 75% of world steel pro-duction. The board met in Chicago during theIISI Annual Conference, which was attended byover 200 top executives of the world’s major steelcompanies.

The board also reviewed progress on a steel sub-

sidy agreement being negotiated by the principalsteel producing countries under the auspices ofthe Organisation for Economic Co-operation andDevelopment (OECD). IISI member companieshave been asked to make their host governmentsaware of the importance of respecting thetimetable for achieving a full negotiating text ofthis agreement by the end of February 2004. IISIdirectors said the agreement should ban all subsi-dies for new capacity and for maintaining existingoperations, while allowing those for social andenvironmental purposes associated with perma-nent plant closure.

In addition, the IISI has announced a globalinitiative called the “CO2 Breakthrough Pro-gramme” to explore opportunities for radicalreduction of carbon dioxide emissions in the steelindustry.

For more information, contact: John Fewtrell,General Manager, Communications, IISI, 120 rueColonel Bourg, B-1140, Brussels, Belgium, Tel: +32 2 702 89 13, E-mail: [email protected], Internet:www.worldsteel.org. �

European steel packagingindustry meets 2005 recyclinggoal

The European steel packaging industry hasannounced an 8% increase in recycling between2001 and 2002. It has already met its voluntarytarget of recycling an average 60% of materials inEurope by 2005.

Recycling rates in individual countriesare: Belgium (93%), Austria, the Nether-

lands, Switzerland, Sweden and Luxem-bourg (70-80%), Norway (60%), France (57%),

Italy (55%), Spain and Ireland (51%), the UK(42%), Finland (39%) and Portugal (28%). Thissector has established a mandatory minimum recy-cling rate of 15% for 2005.

In Belgium’s steel packaging recycling systemthere is a high rate of coverage for household col-lection services, with 90% of the population ableto participate (100% participation is expected bythe end of 2004).

For more information, see: www.apeal.org. �

Sustainable companiesperform better Recent studies by Innovest Strategic Value Advi-sors show that environmental leaders in the glob-al food and drug retailing, food products, andcomputer industries are outperforming othercompanies in their sectors financially.

During the three-year period ending June2003, global food and drug retail companies withabove average Innovest environmental ratings hadfinancial results some 22% higher (as a group)than those with below average ratings. Innovestrelied on two rating tool. The EcoValue’21 ana-lytical platform assesses environmental perfor-mance based on 60 indicators, including energyand waste management; the Intangible ValueAsset (IVA) rating assesses social performancebased on 80 indicators, including labour relations,commitment to fair trade, and use of minorityand female suppliers.

Two UK retailers, Sainsbury’s and Boots, wereawarded the highest EcoValue’21 ranking, AAA(rankings roughly correspond to bond ratings, i.e.AAA to CCC). The two companies also had socialratings of AAA, placing them second and third onthe EcoValue’21 list of top companies belowKesko of Finland. The US-based company Wild

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Tighter transport pollutionmeasures in India and China

The Government of India has announced anational motor fuel policy to reduce increasing airpollution. Ram Naik, the federal minister forpetroleum and natural gas, says the goal is to meetEuro-III vehicle emission norms by 2010. Thispolicy will require India’s mostly state-run oilrefineries to invest up to 300 billion rupees (US$

6.7 billion) and automakers to invest 250 billionrupees. Sales of vehicles that do not meet these EUnorms will be banned by April 2005 in 11 majorcities, including New Delhi, and countrywide byApril 2010. Cities will be required to meet themore stringent Euro-IV norms by 2010.

In China the city of Shanghai, working with theWorld Resources Institute and the Shell Founda-tion, has announced new measures to reduce traf-fic congestion and air pollution. Under theShanghai Sustainable Transport Partnership, a set

of indicators will be developed to provide anoverview of the condition of the city’s transportsystem. The next step will be to establish a “busrapid transit system” as an alternative to individualvehicle use. The WRI’s Center for Transport andEnvironment, EMBARQ, is to undertake a feasi-bility study for the project.

For more information, see: http://pib.nic.in/fea-ture/feyr2003/fnov2003/f031120031.html (India)and http://embarq.wri.org (Shanghai).

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Industry Updates


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Oats, which also received an AAA rating, wasranked fourth. It had an AA EcoValue’21 rating.

Out of 50 companies in the computer industry,the “sustainability leaders” substantially outper-formed industry competitors. The report assessesa wide spectrum of key computer industry trendsand market activity associated with social, envi-ronmental and corporate governance issues andtheir impacts on financial results and share price.Results for companies with above-average ratings,including the three leaders (HP, IBM and Dell),were around 19% higher than those for compa-nies with below-average ratings. The best per-forming companies also had better results in otherbusiness performance and market valuation cate-gories, including operating profit margin (green-er companies averaged 4.3% compared with 1.5%for the others), return on equity (14.6% versus3.6%) and return on assets (3.6% versus 1.6%).

For more information, see: www.innovestgroup.com. �

Tourism increasing inbiodiversity “hot spots”Tourism in the world’s biodiversity “hot spots”more than doubled between 1990 and 2000,according to Tourism and Biodiversity: MappingTourism’s Global Footprint, a new report by Con-servation International. “Hot spots” are species-rich regions that face extreme threats to theirbiodiversity. In the decade studied tourism grewover 2000% in Laos and Cambodia, almost 500%in South Africa, over 300% in Brazil, Nicaraguaand El Salvador, and 128% in the DominicanRepublic.

The travel and tourism industry generates 11%of global GDP, employs some 200 million peopleand accounts for nearly 700 million internationaltravellers per year. This figure is expected to dou-ble by 2020. Nature and adventure travel is one ofthe most rapidly growing segments within thisindustry. Most of the expansion is therefore likelyto take place in these areas.

“We are at a crossroads in the Earth’s last strong-holds for biodiversity, where nature, strugglingcommunities and the expanding world of tourismmeet,” says Costas Christ, Senior Director forEcotourism at Conservation International and thereport’s lead author. “By linking tourism develop-ment with biodiversity conservation and the well-being of local communities, we can developstrategies that both conserve Earth’s most endan-gered ecosystems and help make a significant con-tribution to alleviating poverty.”

Tourism development is of growing importanceto the economies of developing countries, wherethese high-biodiversity areas are often located.Tourism is a principal export of the world’s 49least developed countries and the number oneexport of 37. “Integrating biodiversity conserva-tion into tourism planning can result in betterbusiness for the industry, while destroying theenvironment would be considered synonymouswith killing the goose that lays the golden egg,”

says Russ Mittermeier, President of ConservationInternational.

In addition, the Sustainable Tourism Certifica-tion Network of the Americas, the first system ofits kind, was recently launched in Brazil as part ofan international partnership led by the RainforestAlliance, the World Tourism Organization, TheInternational Ecotourism Society and UNEP.Certification is perceived as a way to help assurethat tourism operations accept environmental andsocial responsibility, particularly in fragile, biodi-versity-rich areas. Increased nature tourism hasstimulated the development of a growing numberof independent certification programmes. Thenew network is designed to encourage dialogueamong programmes and to provide a regionalclearinghouse for certification information andtechnical assistance.

For more information, see: www.conservation.organd www.rainforest-alliance.org. �

New offshore wind farm in the Irish SeaThe UK’s first major offshore wind farm began tooperate in late November. The 30-turbine NorthHoyle development, built in just eight months offthe coast of northern Wales by National WindPower, is expected to generate enough clean elec-tricity to supply up to 50,000 homes per year.CO2 emissions would therefore be reduced byabout 160,000 tonnes per year.

National Wind Power is part of RWE Innogy,Britain’s largest renewable energy producer. A sis-ter company, npower, recently announced (withGreenpeace) the creation of the “npower JuiceFund” to encourage renewables projects. For everycustomer of 12 months’ standing, npower willcontribute £10 to the fund (up to a maximum of£500,000 per year).

For more information, see: www.natwindpow-er.co.uk. �

Corporate social responsibilityin central and eastern EuropeA survey of publicly traded countries in central andeastern Europe has found that 22% of the largestfirms in six of these countries disclose informationabout their operations’ environmental impact.Carried out by the US-funded Partners for Finan-cial Stability (PFS), the survey analyzed listed com-panies’ disclosures concerning a broad range ofcorporate social responsibility (CSR) issues.

Reporting on CSR by CEE Listed Companies isbased on English-language information availablein the 2002 annual reports and on the Web sites ofthe ten largest listed companies (by market capi-talization) in each of six countries scheduled forEU accession in 2004: the Czech Republic, Esto-nia, Latvia, Lithuania, the Slovak Republic andSlovenia. The PFS analysis includes accountingstandards, corporate governance, and environ-

mental and social policies.Once these countries become Member States,

the listed companies will be required to complywith EU disclosure requirements on corporateresponsibility issues. The East-West ManagementInstitute, which commissioned the survey,emphasizes that these companies “will face moreCSR-conscious investors and consumers, in amore global marketplace.”

Of the companies surveyed, 80% have Websites in English, 72% published their 2002 annu-al reports in English, 48% mentioned sociallyrelated sponsorship or patronage on their Web siteor in the 2002 annual report, and 22% presentedinformation on the environmental impact of theiroperations.

For more information, see: www.ewmi.hu/capi-talmarkets_research.php. �

International biogas initiativein CaliforniaAn international team has announced an initiativeto explore and support biogas use in California.The California-Sweden Biogas Initiative is a jointeffort by CALSTART and Business Region Göte-borg, a Swedish industry organization that is one ofthe partners in that country’s biogas programme.The Swedish biogas programme has installed 18biogas stations supporting 2000 vehicles.

California has limited fuel supplies and some ofthe worst air pollution in the US. “When we lookat the challenges of fuel supply and sources, severepollution caused mostly by vehicles, and globalwarming impacts, biogas stands out,” says JohnBoesel, President and CEO of WestStart-CAL-START, North America’s largest transportationorganization. “We need to focus on those solu-tions that can help solve multiple problems – notsolve one and add to another. We think a fuel thatcan also turn waste materials from our farms andcities into a clean solution instead of smog – andwhich reduces global warming impact – needs ourattention.

For more information, see: www.calstart.org. �

Green Power MarketDevelopment Group makesrecord energy purchases

Members of the World Resources Institute’sGreen Power Market Development Group pur-chased 97 MW in green power during the pastyear. The members of the Group are Alcoa,Cargill Dow, Delphi, Dow Chemical, DuPont,General Motors, IBM, Interface, Johnson &Johnson, Kinko’s, Pitney Bowes and Staples. Pur-chases include:� 36 MW of energy certificates for renewablewind, biomass and landfill gas, the largest suchpurchase in the US thus far. These certificates rep-resent the amount of pollution avoided when elec-

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tricity is generated from renewable resourcesrather than fossil fuels. (Purchasers: DuPont, Sta-ples, Alcoa, Cargill Dow, Delphi Corporation,Interface, Johnson & Johnson, Kinko’s, PitneyBowes and the WRI.)� 35 MW of hydrogen fuel cells, the world’slargest corporate fuel cell purchase to date. (Pur-chaser: Dow Chemical, from General Motors.)� 11 MW of wind power. (Purchaser: Johnson &Johnson, from sources in Texas and on the EastCoast. Johnson & Johnson thus becomes one ofthe largest corporate wind power users in the US.)

Kinko’s and IBM also increased their use ofwind power by 4 MW.

The Green Power Market Development Groupwas convened by the WRI and Business for SocialResponsibility in 2000. It is committed to develop1000 MW of new cost-competitive green power forcorporate markets between 2000 and 2010.

For more information, see: www.thegreenpower-group.org. �

E-waste recycling initiatives

Not long before he was voted out of office, Cali-fornia Governor Gray Davis signed an e-wasterecycling act intended to eliminate existing stock-piles of the cathode ray tubes found in computermonitors and televisions by the end of 2007.

The California Electronics Waste Recycling Actestablishes a management and handling pro-gramme. Retailers and manufacturers will financethe programme by charging fees on sales of theelectronic devices covered. Fees will be based onactual recycling costs. As of 1 July 2004 they willbe US$ 6-10 per device. The revenue will be paid

into an Electronic Waste Recovery and RecyclingAccount, which will fund payments to waste col-lectors and recyclers.

The California Integrated Waste ManagementBoard may impose fines of up to US$ 5000 forviolations. Beginning in July 2005, electronicproduct manufacturers must report approximateannual sales of covered products.

In addition, the Cellular Telecommunicationsand Internet Association, a US trade association,has launched an initiative to increase recycling ofwireless telephones. There are about 150 millionwireless subscribers in the US. On average, theyswitch to new telephones every 18 months. TheCTIA campaign will encourage them to donateold models to charity or recycle them. CTIAmembers have pledged to enhance existing recy-cling programmes and to make efforts to limitnew products’ environmental harm.

For more information, see: www.ciwmb.ca.govand www.recyclewirelessphones.com. �

USEPA creates WasteWise Hallof FameThe US Environmental Protection Agency’sWasteWise programme has established a Waste-Wise Hall of Fame. The first three inductees willbe Eastman Kodak, the Public Service EnterpriseGroup and Virco Manufacturing. The Hall ofFame will now be the highest honour awarded inthe nine-year-old WasteWise voluntary partner-ship programme.

WasteWise helps over 1300 participants findpractical ways to reduce municipal solid waste andimprove financial performance. In order to be

inducted into the Hall of Fame, an organizationmust have been a long-time programme partnerand have reported outstanding waste reductionresults for many years.

For more information, see: www.epa.gov/ epaoswer/non-hw/reduce/wstewise. �

Regulation drivesenvironmental technologyinnovation

A new study reports that regulation is one of themost important drivers of innovation in the envi-ronmental technology field. Margaret Taylor,Assistant Professor of Public Policy at the Univer-sity of California at Berkeley, explains that the six-year study was carried out to assess howgovernment actions are related to innovation inpollution reduction technologies.

“Our findings indicate that government regula-tion appears to stimulate invention more effec-tively than government-sponsored researchsupport,” says Professor Taylor. “Indeed, even theanticipation of regulation spurs inventive activity.”

The study, published in Environmental Scienceand Technology, analyzes the evolution of emissioncontrols for sulphur dioxide (SO2) from burningof fossil fuels and nitrogen oxide (NO) from vehi-cles. It concludes that emission control technolo-gies might never have been developed, or wouldhave evolved slowly, without the strict emissionlimits that created a market for them.

For more information, see: www.nature.com/nsu/030915/030915-4.html#b1 and http://pubs.acs.org/journals/esthag. �


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New television series profitsfrom UNEP’s know-how

“EcoWatch,” a new environmental televisionseries produced by the Florida-based UnitedMedia Communications Group, will use UNEP’sknowledge, expertise and scientific resources forstory ideas and content. The series, which willfocus on some of the greatest threats facinghumankind and propose solutions, will reach anestimated 60 million American homes on cabletelevision networks such as the Outdoor LifeChannel, as well as through syndication. “Eco-Watch” will also be broadcast in some US region-al markets on CNN and FOX News. It will reacha worldwide audience through international syn-dication on WorldNet.

The purpose of the series is to show in a down-to-earth way how everyday decisions by individ-uals, companies and governments affect theenvironment today and for future generations.

For more information, contact: Rebecca McKin-non at UMCG, Tel: +1 561 347 0607; or Eric Faltat UNEP, Tel: +254 2 62 3292, E-mail: [email protected]. �

Strategic internationalchemicals management:planners meet in Bangkok

A major effort to change the way the world dealswith chemicals got under way in Bangkok in mid-November, when over 500 delegates concernedwith environment, health, agriculture, industry,labour, foreign affairs and development met in apreparatory committee to develop a “StrategicApproach to International Chemicals Manage-ment.” The SAICM, initiated by UNEP, wasendorsed at last year’s World Summit on Sustain-able Development in South Africa.

UNEP has brought together a broad range ofinternational organisations to oversee the SAICMprocess. Represented at the Bangkok “PrepCom”as SAICM steering committee members wereUNEP, the Intergovernmental Forum on Chem-ical Safety, the Food and Agriculture Organiza-tion, the International Labour Organization, theOrganisation for Economic Co-operation andDevelopment (OECD), the World Health Orga-nization, the World Bank, the UN IndustrialDevelopment Organization (UNIDO), the UNDevelopment Programme (UNDP) and the UN

Institute for Training and Research.Representatives of 150 governments and

of NGOs and intergovernmental organiza-tions also attended the meeting. Consultations areexpected to lead towards a high-level internation-al conference in late 2005.

In 2001 the OECD estimated that the chemi-cal industry accounts for nearly 10% of interna-tional trade and employs over 10 million people,and that global chemical sales increased ninefoldbetween 1970 and 2000 (to US$ 1.5 trillion).Sales are expected to continue to grow, with pro-duction shifting increasingly to developing coun-tries. A 2002 World Bank study emphasized thestrong link between exposure to toxic substancesand poverty.

One of the main objectives of the SAICMprocess is to ensure that chemical safety is recog-nized as intrinsic to sustainable development.

For more information, contact: Tim Higham,Regional Information Officer, UNEP RegionalOffice for Asia and the Pacific, Bangkok, Tel: +66 2288 2127, Mobile: +66 9 1283803, E-mail: [email protected], Internet: www.chem.unep.ch/saicm. �

Convention to protect theCaspian Sea signedMinisters from Azerbaijan, Iran, Kazakhstan, Rus-sia and Turkmenistan met in Tehran in earlyNovember to adopt and sign the FrameworkConvention for the Protection of the MarineEnvironment of the Caspian Sea. The first legallybinding treaty on any subject to be adopted by thefive neighbours, it will coordinate regional effortsto reverse an environmental crisis resulting fromhabitat destruction, pollution, and the overex-ploitation of fish and other sea life.

The convention was negotiated under UNEPauspices. “By ensuring the sustainable use of theCaspian Sea’s valuable living resources,” saysShafqat Kakakhel, UNEP Deputy ExecutiveDirector, “the convention will contribute enor-mously to the well-being of millions of people liv-ing in this region.”

The Caspian Sea is under severe stress fromindustrial pollution, toxic and radioactive waste,agricultural runoff, sewage, and leaks from oildrilling and refining. Other threats include over-fishing of sturgeon for caviar, overexploitation ofother sea resources, and destruction of local bio-diversity (some 400 species are unique to theCaspian and its surroundings). Moreover, risingwater levels threaten coastal communities andecosystems.

The convention must be ratified by the partic-ipating governments (a process that could take acouple of years) before it is legally binding. Onceit is in effect, signatory counties will be requiredto prevent and reduce pollution, restore the envi-ronment, use the Caspian’s resources sustainablyand reasonably, and cooperate with one anotherand with international organizations.

The Caspian Environment Programme wasestablished in 1995 by the five governments con-

U N E P F o c u s

If There Must Be War, There Must Be Environmental LawThe following is an excerpt from UNEP Execu-tive Director Klaus Toepfer’s statement on 6November, the second annual International Dayfor Preventing Exploitation of the Environmentin War and Armed Conflict.

The environment has, since the dawn of time,been one of the casualties of war. In the fifthcentury BC, the retreating Scythians scorchedthe earth and polluted drinking water suppliesto slow the advancing Persians. During theVietnam War of the 1970s, the United Statesused defoliants to expose enemy positions inheavily forested areas. During the first GulfWar of the early 1990s, Iraqi troops deliberate-ly sabotaged oil installations.

While humankind’s ability to wage war con-tinues apace, international rules and lawsdesigned to minimize the impact on the Earth’slife support systems have lagged far behind. Wehave the four Geneva Conventions of 1949that do have environmental implications.However, their primary aims are the protectionof civilians, prisoners of war, the sick andwounded and cultural objects.

This does not mean that there have not beenattempts to specifically address the environ-

mental aspects of war. But most legal expertshave concluded that these fall far short of whatis needed.

Civilian casualties, the displaced and the dis-possessed, will be and should be the focus ofour attention during and immediately afterhostilities cease. But the environment, whichhas a key role in ensuring the stability of a coun-try and its citizens, cannot be ignored.

The world is slowly waking up to the power-ful links between a healthy environment andnational and regional stability, and there aremany ways in which the world can improve thesecurity of natural resources and nature’s lifesupport systems during conflict.

Should striking an oil tanker sailing near acoral reef be deemed unacceptable or a legiti-mate act of war? Does the crippling of anenemy’s oil supplies justify the killing of anecosystem upon which hundreds, maybe thou-sands, of the poor rely for food in the form offish? These are the kinds of issues that the worldneeds to grapple with. International law is in itsinfancy, war is not. It is time for internationallaw, or at the very least the rules of engagement,to achieve some kind of maturity if not fulladulthood.

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cerned, following an environmental assessment byUNEP, the UN Development Programme(UNDP) and the World Bank. The conventionwill strengthen and support this programme.

For more information, contact: Nick Nuttall atUNEP, Tel: +254 2 62 3084, Mobile: +254 733632 755, E-mail: [email protected], Internet:www.caspianenvironment.org. �

Winners of the SasakawaEnvironment PrizeXie Zhenhua (China) and Dener Jose Giovanini(Brazil) are co-winners of this year’s UNEPSasakawa Environment Prize.

Mr. Xie, as Executive Vice Chair of the ChinaCouncil for International Cooperation on Envi-ronment and Development and Minister of StateEnvironmental Protection Administration ofChina, has long worked to steer China on an envi-ronmentally friendly path.

Mr. Giovanini, who founded the National Net-work for Combating Wild Animal Trafficking,developed an innovative approach to curbing ille-gal traffic in wildlife. It has become a model notonly in Latin America, but also in the rest of thedeveloping world. He and Mr. Xie will share theUS$ 200,000 prize.

For more information or to request nominationforms for the 2004 prize, contact: Nick Nuttall (seeabove). �

Environmental project inAfghanistan At the request of the Transitional Islamic Govern-ment of Afghanistan, UNEP, the European Com-mission and Afganistan’s Ministry of Irrigation,Water Resources and Environment have launcheda EUR 4.27 million programme to promote goodenvironmental governance and rehabilitation ofthe country’s environment.

The European Commission is providing EUR3.75 million for the two-phase project, which willaddress key priorities in the transitional govern-ment’s national development budget. These pri-orities reflect many of the recommendations ofUNEP’s January 2003 post-conflict environmen-tal assessment, which considered that much ofAfghanistan’s environment had been degraded toan alarming extent with potentially serious impli-cations for human health.

In the first phase, under the EC’s PublicAdministration Programme, a specialized Afghanenvironmental administration will be organizedand trained. In the second, to begin in 2004, fur-ther capacity building will take place in the min-istry’s Environment Department and otherpressing environmental needs will be addressed,such as the development of a protected areas net-work (and related management plans) and envi-ronmental education at the university, secondary,primary and community levels.

The project will involve a team of six Afghanand international experts, supported by a pool ofshort-term experts.

For more information, contact: Eric Falt, Tel:+254 2 62 3292, Mobile: +254 733 682 656, E-mail: [email protected]; or Michael Williams, Tel:+41 22 917 8242/8196/8244, Mobile: +41 79409 1528, E-mail: [email protected]. �

New reports from conservationmonitoring centreUNEP’s World Conservation Monitoring Centre(WCMC) has published two new marine-relatedsurveys and announced a strategy to “mobilize andconnect networks of data-rich organizations.”

The World Atlas of Seagrasses draws on the workof international researchers to produce the firstever global estimate of the extent of the underwa-ter meadows of seagrass that skirt the world’scoasts. Their estimate of 177,000 square kilome-tres is the equivalent of an area just two-thirds thesize of the UK. The editors also estimate that thisarea is 15% smaller than it was ten years ago. Man-atees, dugongs, green sea turtles and other species,many already threatened, are at increased risk fromthe destruction of these unique habitats.

Seagrasses are a mixed group of flowering plants– not seaweed – that grow submerged in largemeadows in tropical and temperate seas. Theirimportance as habitat has previously largely goneunrecognized.

The WCMC’s From Ocean to Aquarium: TheGlobal Trade in Marine Ornamentals, too, is un-precedented in its comprehensiveness. Over 20million tropical fish per year, belonging to 1471species, are harvested to supply the marine aquar-ium trade in Europe, the US and (to a lesserextent) Japan. A further 9-10 million animalsincluding molluscs, shrimps and anemones,belonging to some 500 species, and up to 12 mil-lion stony corals are also harvested for this pur-

pose. Trade in aquarium creatures amounts toUS$ 200-330 million a year, the report says.

From Ocean to Aquarium highlights the envi-ronmental risks involved and the economic andconservation opportunities that a well managedaquarium marine trade could represent. Data inthe report come from the Global Marine Aquari-um Database, a joint UNEP-WCMC effort, theMarine Aquarium Council (MAC), and membersof various aquarium trade associations. The data-base (www.unep-wcmc.org/marine/GMAD) con-tains over 100,000 records from global aquariumimport and export companies. MAC developedthe world’s first marine life certification system,which enables consumers to select retailers that sellorganisms that comply with internationallyapproved standards.

Databases such as GMAD will be reinforced bythe WCMC’s new Proteus Strategy, the purposeof which is to use the Internet to increase the avail-ability of high-quality conservation information.

GBP 1.2 million has been pledged by AngloAmerican, BP, Premier Oil, Rio Tinto and Voda-fone Group Foundation to get the Proteus Strate-gy off the ground. The Cooperative InsuranceSociety, HSBC and the Total Foundation are alsocollaborating.

For more information about The World Atlas ofSeagrasses, including maps and photographs, see:www.unep-wcmc.org/marine/seagrassatlas. Theatlas is available through www.ucpress.edu/books/pages/10168.html.

From Ocean to Aquarium is available throughwww.unep-wcmc.org/resources/publications/UNEP_WCMC_bio_series/17.htm.

For more information, contact: Robert Bisset,UNEP Spokesperson for Europe, Tel: +33 1 44 3776 13, Mobile: +33 6 22 72 58 42, E-mail:[email protected]; or Will Rogowski, Head ofMarketing and Communications, UNEP-WCMC,Tel: +44 1223 277 314, E-mail: [email protected]. �

State of the environmentreports on Bangladesh inlocal-language versions

UNEP has introduced a local-language version ofits state of the environment report on Bangladesh.A similar assessment of the capital, Dhaka, isbeing prepared. Since the state of the environmentreport was published in English two years ago, ithas been widely used by government agencies,NGOs and research institutes. It identifies landdegradation, water quality and quantity, air pol-lution, biodiversity loss and the threat of naturaldisasters as key environmental issues (English ver-sion available on www.rrcap.unep.org/reports/soe/bangladeshsoe.cfm).

UNEP Regional Director Surendra Shresthasays it is hoped that translating this report into theBangla language will increase its value as a tool forenvironmental action planning, policy-settingand resource allocation. He also says the Dhaka



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City state of the environment report, due for com-pletion in March 2004, will build capacity forintegrated environmental assessment methodolo-gies at local government level.

Both reports have been prepared with the Min-istry of Forest and Environment, the BangladeshCentre for Advanced Studies and Dhaka Munici-pality Corporation.

For further information, contact: Tim Higham(see above). �

Dams and DevelopmentForum to continue discussionsAt its second meeting, the UNEP-facilitatedforum that seeks to reconcile widely opposingviews on balancing the benefits of dams with theirrisks and drawbacks agreed to continue discus-sions with stakeholders. The Dams and Develop-ment Forum brings together approximately 100representatives from governments, civil societyand industry.

Commenting on the forum’s work, KlausToepfer (UNEP’s Executive Director) says, “It isvital that we learn how to strike a balance betweenbenefits and impacts. New dams will have to builtif we are to meet the Millennium DevelopmentGoals on access to water and sanitation – but thesemust be ‘good’ dams and not ‘bad’ ones, dams thatpromote development without damaging theenvironment. Dialogue amongst key stakeholdersis the best path to this goal.”

UNEP’s Dams and Development Project,which serves as secretariat to the forum, hassecured funding and pledges of over US$ 2.5 mil-lion from Germany, the Netherlands, Sweden,Switzerland and the United Kingdom.

For more information, contact: Michael Williams(see above). �

Further study on Karachi oilspill recommendedThe international team assessing environmentaldamage caused by the oil spill from the Greek-owned tanker Tasman Spirit has recommendedthat Pakistan negotiate with those responsible thefinancing of further scientific investigation intothe extent of damage to ecosystems in the Karachiarea, in line with advice from UNEP and theIUCN – World Conservation Union.

The preliminary assessment report estimatesthat the spill affected at least 40 square kilometres,despite intensive international efforts. Extensivehydrocarbon contamination, fish kills, cell dam-age in phytoplankton, reduced numbers of marineorganisms on Clifton Beach, and possible loss ofregeneration in mangroves are documented.

The report recommends that a long-term, three-phase Natural Resource Damage Assessment becoordinated by the Sindh Environmental Protec-tion Agency, with continuing technical advicefrom IUCN Pakistan and UNEP and the support

of local scientists. It also recommends that Pakistanstrengthen its capacity to respond to oil spills.

For more information, contact: Nick Nuttall (seeabove). �

Sustainable consumption andproduction forum in ChinaChina’s first International Forum on SustainableConsumption and Production Patterns took placeat Changsha, Hunan Province, in December. Themeeting was co-sponsored by the State Environ-mental Protection Administration, the govern-ment of Hunan Province, the China Science andTechnology Association and UNEP. It focused on:� the current global situation regarding sustain-able production and consumption;� environmentally sound technologies, productsand services, and the potential for a new kind ofindustrialization;� ways to promote more sustainable consump-tion.

For more information, contact: Ms. Jiang Yan-ping, Chinese Society for Environmental Sciences, E-mail: [email protected]; or Mr. Xingji Xiao,UNEP DTIE, 39-43 quai André Citroën, 75739Paris Cedex 15, France, Fax: +33 1 44 37 14 74,E-mail: [email protected]. �

Progress on agricultural tradeassessment projectAs a follow-up to a February meeting that reviewedthe first draft of country projects on the integratedassessment of trade liberalization in the agriculturesector, UNEP convened a second review meeting inNovember. The meeting’s main objectives were toreview and comment on the results of country stud-

ies, and on the final draft of a reference manual.The reference manual on integrated assessment

of trade-related policies for the agriculture sectorwill be published soon. It is intended to be a prac-tical tool for policy-makers and practitioners.

For more information, contact: Economics andTrade Branch, UNEP DTIE, International Envi-ronment House, 15 Chemin des Anémones, CH-1219, Geneva, Switzerland, Tel: +41 22 917 8243,E-mail: [email protected], Internet: www.unep.ch/etu.�

More pesticides and asbestosadded to PIC listThe Intergovernmental Negotiating Committeefor the Rotterdam Convention on the PriorInformed Consent (PIC) Procedure for CertainHazardous Chemicals and Pesticides in Interna-tional Trade has added two pesticides and fourforms of asbestos to the PIC list.

The pesticides are DNOC and dustable pow-der formulations that contain a mixture of certainpesticides, including benomyl at or above 7%,carbofuran at or above 10% and thiram at orabove 15%. The four forms of asbestos areamosite, actinolite, anthophyllite and tremolite.Crocidolite, another form, is already on the list.

Delegates postponed a decision on chrysotileasbestos, which represents 94% of world asbestosconsumption, until a one-day meeting in Genevaon 18 September 2004. That meeting will be fol-lowed immediately by the first session of the Con-ference of the Parties to the Convention (20-24September).

The Rotterdam Convention Interim ChemicalReview Committee will meet in Geneva in Feb-ruary to consider whether to recommend addingadditional chemicals and pesticides to the list. Onthe committee’s agenda are tetraethyl and tetram-ethyl lead, which are petrol additives, andparathion, a widely used pesticide. The commit-tee’s recommendations will be forwarded to theConference of the Parties for a decision.

For further information, contact: MichaelWilliams (see UNEP Focus, above) or see www.pic.int. �

UNEP Division of Technology,Industry and Economics (DTIE)

HIGHLIGHTS

UNEP opens Beijing officeSpeaking at the opening of UNEP’s new officein China, Executive Director Klaus Toepferemphasized that the move was a response toprogress being made in meeting environmentalchallenges in China and to the challengesahead. “With 1.3 billion people and an officialgoal to quadruple economic growth by 2020,”he said, “China’s environmental performancewill not only determine the well-being of itsown people but will have consequences for thewhole planet.”

The new office, which is located alongsideother UN agencies in Beijing, will work close-ly with the State Environmental ProtectionAdministration of China, ministries, interna-

tional agencies and NGOs on programmesrelated to environmental assessment, law, edu-cation and training, management, technologytransfer, and innovation and natural disasterprevention. It will also develop and supportGlobal Environment Facility projects.

Earlier, Mr. Toepfer and Environment Min-ister Xie Zhenhua – a co-winner of UNEP’sSasakawa Environment Prize (see above) –chaired the first Asia-Pacific Sub-RegionalEnvironmental Policy Dialogue, a roundtabledesigned to provide feedback on critical emerg-ing issues and perspectives in the region.

For more information, contact: Tim Higham(see above).

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Energy initiative launched atTokyo RoundtableCiting last summer’s deadly European heat waveand recent power failures in North America andEurope, UNEP Executive Director Klaus Toepferhas launched the Sustainable Energy Finance Ini-tiative (SEFI). Its purpose is to engage the finan-cial sector to invest in renewable energy andenergy efficiency.

Mr. Toepfer told over 600 bankers, financiersand other members of the financial sector at theUNEP Finance Initiatives Global Roundtable inTokyo that energy security and climate change aretwo of the world’s most pressing issues and willnot be solved “by the mindset that created them.”

“Instead of climate change,” said Mr. Toepfer,“we need to create the climate for change.” Whilesustainable energy technologies such as solar cellsand wind generators have advanced rapidly, thetransaction costs and market uncertainty for manyrenewable energy projects has led most financiersto adopt a “wait and see” attitude, a situationwhich is compounded by general lack of informa-tion, experience and the tools needed to quantify,mitigate and hedge project and financial productrisks.

With support from the United Nations Foun-dation, SEFI will help mainstream financiers over-come these barriers and learn to considerrenewable energy and energy efficiency not just asniche investments, but as key components ofsecure energy systems based on truly sustainableforms of energy.

SEFI builds on efforts by UNEP and the BaselAgency for Sustainable Energy (BASE) to fosternew approaches to financing sustainable energy indeveloping countries. Through various pro-grammes (e.g. see page 24) UNEP has encouraged“financial catalysts” that include seed financingand enterprise development, financing subsidies,guarantee facilities and financier advisory supportservices.

A statement issued at the end of the Tokyoroundtable also call for development of a UNEPFI Task Force for the Asia Pacific region. Thestatement contains the “Tokyo Principles TowardsA Sustainable Society,” outlining actions thefinancial sector could take to promote sustainabledevelopment. The Tokyo Principles urge financialinstitutions to: � give appropriate consideration to the socialand/or environmental impacts of their activities; � endeavour to actively select businesses that con-tribute to environmental protection and sustain-able development, and support these businesses intheir investment, lending or insurance activities; � disseminate such activities in the developmentand sales of insurance, asset management andother financial products;� incorporate the most appropriate managementpolicy, reporting guidelines and other governancestructures, and be alert to their direct and indirectenvironmental impact;� endeavour to take part in dissemination of infor-mation on sustainable development.

For more information, contact: Eric Usher,UNEP DTIE (see address above), E-mail: [email protected], Internet: http://sefi.unep.org. �

Summary of African bankingreport availableThe Executive Summary of the forthcoming Sus-tainability Banking in Africa is available on theUNEP Finance Initiatives Web site. The report isbeing produced by the UNEP FI African TaskForce (created in January 2002) and the Centrefor Sustainability Investing of the African Insti-tute of Corporate Citizenship. It is intended toserve as a benchmark discussion document out-lining challenges and opportunities for develop-ing sustainable banking practices in Africa, as wellas to help promote the work of the task force.

For more information, contact: Niamh O’Sulli-van, Economics and Trade Branch, UNEP DTIE(see above), E-mail: [email protected],Internet: http:// unepfi.net. �

Ecoinnovation Week atMexican universityUNEP, in collaboration with UniversidadIberoamericana of Mexico, organized an “Ecoin-novation Week” as part of recent celebrations ofthe university’s 60th anniversary. The designschool of the university worked with UNEP todemonstrate the relevance of eco-design to every-day life.

“Ecoinnovation Week” included conferenceson the importance of sustainable developmentand on how eco-design can be a vehicle for achiev-ing it; eco-design as a lifestyle; Mexican and inter-national eco-design experience; and trends inindustry in Latin America and the Caribbean.

There were three workshops and an exhibitionwhere organizations (e.g. Grupo BIO, Bio Designand UNEP) displayed products and referencematerials. About 175 people from universities,NGOs and industry attended the event.

For more information, contact: Diego Masera,Industry Officer, UNEP Regional Office for LatinAmerica and the Caribbean, E-mail: [email protected]. �

New Life Cycle InitiativeNetwork newsletterUNEP has launched a quarterly e-mail and Web-based newsletter called the Life Cycle InitiativeNetwork (LC.net) to keep the interested publicinformed about the UNEP/SETAC Life CycleInitiative and related topics.

The first issue contains articles on activities dur-ing the year since the Life Cycle Initiative began,including the SETAC-Europe annual meeting inHamburg last spring, UNEP representatives’ par-

ticipation in the UN Expert Meeting at Mar-rakech, Morocco and LCA tools for SMEs indeveloping countries. There are several other arti-cles and tutorials.

For more information, or to be put on the mailinglist, contact: UNEP Production and ConsumptionBranch, E-mail: [email protected], Internet: www.uneptie.org/pc/sustain/lcinitiative/LC_net.htm. �

Ozone Day 2003

UNEP, the World Health Organization, theWorld Meteorological Organization and theInternational Commission for Non-IonizingRadiation Protection are partners in the IntersunProject. These organizations marked the Interna-tional Day for the Preservation of the Ozone Layer(16 September) by introducing a set of educa-tional materials for children, families and educa-tors concerned with protecting children from therisks of overexposure to ultraviolet radiation.

There are three booklets in the School Sun Pro-tection Package: a guide for schools and teacherson why and how to develop effective sun educa-tion programmes, practical teaching materials forprimary school students, and evaluation materi-als for use in assessing the effectiveness of primaryschool sun education programmes.

The 2003 International Ozone Day theme was“Save O3ur Sky: There is a Hole Lot More to Dofor Our Children.” On UNEP’s OzonActionWeb site are additional resources for raising aware-ness among children.

International Ozone Day commemorates sign-ing of the Montreal Protocol on Substances thatDeplete the Ozone Layer in 1987. Other 2003activities to mark the signing included awards toNational Ozone Units in China, Fiji, Jamaica andSenegal and distribution of a special video fornational television broadcasts in 134 countries.

In two related developments:� UNEP Executive Director Klaus Toepferannounced the appointment of Maria Nolan asChief Officer of the Multilateral Fund for Imple-mentation of the Montreal Protocol, which assistsdeveloping countries to comply with the controlmeasures of the Protocol. Previously, Ms. Nolanwas head of Stratospheric Ozone Policy in theUK, policy adviser to UNEP’s Methyl BromideTechnical Options Committee, president of theMontreal Protocol’s Implementation Committeeand co-chair of the Protocol’s Open Ended Work-ing Group. She was instrumental in developingUK policy on reducing emissions of hydrofluoro-carbons, which is now used as a basis for EU-widemeasures.� A decision on whether to grant “critical useexemptions” in the developed world for the ozone-depleting substance methyl bromide was deferreduntil a special meeting in Montreal in March2004. Delegates at a meeting in Nairobi decidedmore time was needed to discuss how large suchexemptions should be. Under the Montreal Proto-col developed countries have agreed to phase outtheir methyl bromide use by 1 January 2005, but


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some farmers in North America and Europe sayavailable alternatives are not technically or eco-nomically feasible.

For more information, contact: Rajendra Shende,Energy and OzonAction Programme Unit, UNEPDTIE (see address above), Tel: +33 1 44 37 14 59,E-mail: [email protected], Internet: www.uneptie.org/ozonaction. �

SolarChillvaccine coolersto be fieldtestedField testing of proto-type SolarChill vaccinecoolers will begin inSenegal, Indonesia and

Cuba in January 2004, under protocols agreed inParis at the SolarChill project’s fourth planningmeeting. The purpose of the project is to delivervaccines and refrigeration to the rural poor, espe-cially children. This will be accomplished by devel-oping environmentally sound, technologicallyreliable, affordable devices powered using renew-able sources, diesel fuel or grid energy.

The SolarChill technology, which is publiclyowned, will be available free to any company inter-ested in producing SolarChill units. It was devel-oped through an unusual partnership involvingUN agencies (WHO, UNICEF, UNEP), a Ger-man government agency (Deutsche Gesellschaftfür Technische Zusammenarbeit, GTZ), NGOs(Greenpeace and the US-based Program forAppropriate Technologies in Health, PATH), aresearch establishment (the Danish TechnologicalInstitute) and private companies (Vestfrost, Dan-foss and Vibocold, all Danish).

Participants in the planning meeting alsoagreed on an outreach and technology transferstrategy and finalized the project partners’ coop-eration agreement.

For more information, contact: Rajendra Shende,UNEP DTIE (see above). �

“youthXchange” projectlaunched in KoreaThe Korean Consumer Association, in partner-ship with UNEP, recently sponsored an interna-tional seminar to launch the “youthXchange”project in the Republic of Korea. The Asia-Pacif-ic Regional Youth Environment Camp and Con-ference, held in Seoul, was aimed at making youngpeople aware of environmental problems in theircountry associated with emerging mass consump-tion lifestyles.

This was the first time most of the 60 partici-pants had considered their consumption patternsand related issues. The camp included practicalexperience, such as making tofu or cooking in aforest in the rain with a fire started using no morethan three matches. It is intended that this eventwill be the first in a series of annual workshopsorganized for and by youth.

For further information, contact: Isabella Mar-ras, UNEP DTIE (see address above), E-mail:[email protected]. �

GRI sector guidelines fortelecomsThe Global Reporting Initiative (GRI) hasreleased the pilot version of the Telecommunica-tions Sector Supplement, to be used in conjunc-

tion with the GRI 2002 Sustainability ReportingGuidelines. It was developed in cooperation withthe Global e-Sustainability Initiative (GeSI), aUNEP-supported information and communica-tions technology industry initiative. The Supple-ment comprises three sets of documents: the GRISustainability Report Guidelines, sector supple-ments and technical protocols.

The GRI recently reported that the number ofcompanies releasing reports on sustainability hasreached 300 and could double by 2005.

For more information, contact: Cornis Van derLugt, UNEP DTIE (address above), E-mail: [email protected], Internet: www.globalreporting.org. �

Industry association holds20th annual meeting

UNEP Executive Director Klaus Toepfer andrepresentatives of industry associations fromaround the world gathered in Paris at DTIEheadquarters in October for the 20th annualConsultative Meeting with Industry Associ-ations. UNEP invited industry associationrepresentatives who participated in the two-day meeting to follow up on the self-assess-ment process they began in preparation forthe World Summit on Sustainable Develop-ment. To this end it was proposed that indus-try representatives take part in an activity,beginning next year, that will focus on build-ing capacity at regional level, strengtheningreporting capabilities, and fostering stake-holder engagement.

For more information, contact: Daniel Puig,UNEP DTIE (see address above), Tel: +33 144 37 76 29, E-mail: [email protected],Internet: www.uneptie.org/outreach/home.htm.

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General

Intellectual Property Rightsand the Environment

Subtitled “The Role of Intellectual PropertyRights in Preserving the Spirit of Innovation,Experimentation and the Conservation Ethic atthe Grassroots Level,” this monograph was pro-duced by UNEP DTIE’s Economics and TradeBranch. Intellectual property rights are examinedwith respect to the need to recognize and rewardinnovation by small-scale innovators in develop-ing countries.

A.K. Gupta (2003). UNEP. Available from theEconomics and Trade Branch, International Envi-ronment House, 15 Chemin des Anémones, CH-1219, Geneva, Switzerland, Tel: +41 22 917 8243,E-mail: [email protected], Internet: www.unep.ch/etu.Pbk., 48p. ISBN 92-807-2338-3.

Voluntary Approaches forEnvironmental Policy:Effectiveness, Efficiency and Usage in Policy MixesIn members of the Organisation for EconomicCo-operation and Development (OECD) as wellas in other countries, voluntary approaches toachieving environmental targets increasingly sup-plement or replace other environmental policyinstruments. Opinions differ on the extent towhich policy-makers can – or should – rely on vol-untary approaches. This OECD report assessesthe use of such approaches through case studiesand an extensive search of the literature. Casestudies in Canada, Denmark, Japan and the Unit-ed States were carried out especially for the report.

(2003). OECD Publications, 2 rue André Pascal,75775 Paris Cedex 16, France, Tel: +33 1 45 24 8167, Fax: +33 1 45 24 19 50, E-mail: [email protected], Internet: www.oecd.org/bookshop. Pbk., 143p.ISBN 92-64-10177-2.

Changing LandscapesChanging Landscapes tells the history of the Inter-national Tropical Timber Organization andreviews the evolution of policies for sustainableuse of tropical forests. It introduces ecological, his-torical and socio-economic trends that have influ-enced forest management approaches, exploresthe political forces that shape the timber trade andits regulation, and shows how forests are affectedby climate, agriculture, demographics and war.The author closes by arguing that future planningcannot treat forests in isolation but must consider

them as part of an integrated approach.D. Poore (2003). Earthscan Publications Ltd., 120

Pentonville Road, London, N1 9JN, UK, Tel: +4420 7278 0433, Fax: +44 20 7278 1142, E-mail:[email protected], Internet: www.earth-scan.co.uk. Pbk., 290p. ISBN 1-85383-991-4.

Environmental Impact Assessment:Practical Solutions to RecurrentProblemsThe author identifies eight problems encounteredin carrying out environmental impact assessments(EIAs) and proposes practical solutions. Mainlyaimed at EIA practitioners, Environmental ImpactAssessment has chapters on how to make EIAsmore rigorous, rational, substantive, practical,democratic, collaborative, ethical and adaptive;each “how to” is divided into sections such ashighlights, insights, defining the problem, assess-ing process effectiveness, and summing up. Thefinal chapter is devoted to connecting and com-bining the processes discussed in the “how to”chapters.

D.P. Lawrence (2003). John Wiley & Sons, 1Oldlands Way, Bognor Regis, West Sussex PO229SA, UK, Tel: +44 1243 843291, Fax: +44 1243843302, E-mail: [email protected], Internet:www.wileyeurope.com. Hbk., 562p. ISBN 0-471-45722-1.

Eco-industrial Strategies:Unleashing Synergy BetweenEconomic Development and theEnvironmentThis collaborative work, with its vision of “eco-industrial parks,” introduces a concept still large-ly in its infancy: linking manufacturers in anindustrial ecosystem where economic and envi-ronmental excellence can flourish. Inspired in partby eco-parks such as that at Kalundborg, Den-

mark, as well as by the development ofvirtual business networks, Eco-industrial

Strategies addresses the main issues eco-indus-trial development issues, identifies stakeholdersand their roles, and provides a compendium ofcase studies. Co-editor Edward Cohen-Rosenthal,who died as this volume was being prepared, wasfounding director of the Work and EnvironmentInitiative at the Cornell Center for the Environ-ment in Ithaca, New York. Mr. Cohen-Rosenthalwas a pioneer in the field of industrial ecology.

E. Cohen-Rosenthal and J. Munikow, eds.(2003). Greenleaf Publishing Ltd., Aizlewood Busi-ness Centre, Aislewood’s Mill, Nursery Street,Sheffield S3 8GG, UK, Tel: +44 114 282 4375,Fax: +44 114 282 3476, E-mail: [email protected], Internet: www.greenleaf-publish-ing.com. Hbk., 384p. ISBN 1-874719-62-4.

Finance and Natural Environment:Experience of Poland against thebackground of developed marketeconomiesa

Eco-offers of Banks and InvestmentFunds: Poland and InternationalTrendsb

Two new books by Professor Leszek Dziawgo ofPoland’s Nicolaus Copernicus University are con-cerned with the relationship between finance andthe environment in that country. Finance andNatural Environment is a collection of essays byEuropean and Japanese specialists addressing theadaptation of financial institutions to a society inwhich environmental protection is given high pri-ority. It is edited by Professor Dziawgo and Danu-ta Dziawgo, both associated with the university’sEconomic Sciences and Management Faculty.Eco-offers of Banks and Investment Funds, to whichProfessor Dziawgo brings his experience as aregional director of Raiffeisen Bank Poland, focus-es on “pro-ecological behaviour” in banks andinvestment funds in Poland and elsewhere.

a L. and D. Dziawgo, eds. (2003). Scientific Societyfor Organization and Management, Dom Organizato-ra, Al. 500-lecia 31, 87-100 Torún, Poland, Tel: +4856 622 3807/2898/3342, Fax: +48 56 622 3123, E-mail: [email protected], Internet: www.tnoik.torun.pl. Hbk., 701p. ISBN 83-7285-134-4.

Books & Reports

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b L. Dziawgo (2003). Nicholas Copernicus Uni-versity, Ul. Gagarina 39, 87-100 Torún, Poland, Tel:+48 56 611 4295, Fax: +48 56 611 4705, E-mail:[email protected], Internet: www.wydawnictwo.uni.torun.pl. Hbk., 190p. ISBN 83-231-1534-6.

Finance, Environment andSustainable Development:

Corporate Responsibility andCapital Markets, ManagingQualitative Risk IssuesThis document presents the proceedings of a con-ference organized in Paris on 10 January 2003 bythe Société Générale, the Caisse des dépôts etconsignations, Dexia, ORSE (Observatoire de laresponsabilité sociétale des entreprises) andUNEP. Presentations focused on four mainthemes: responsibility and capital markets, finan-cial institution case studies on project and portfo-lio risk management, integration of sustainabilitycriteria into fund management, and climatechange, fiduciary responsibility and disclosure.Also available in French (see Editions françaises,below).

(2003). UNEP Finance Initiatives. Availablefrom Economics and Trade Branch (see above) ordownload at http://unepfi.net/socgen/European_Seminar%20Report_Eng_29_09_03.pdf. Pbk.,50p.

Environmentally Harmful Subsidies: Policy Issues andChallengesThis publication contains the proceedings of a2002 OECD workshop that brought togetherexperts from a variety of backgrounds to evaluateand share their knowledge of subsidies and theirenvironmental impacts. While reforming envi-ronmentally harmful subsidies is a high priorityin OECD countries, stakeholders are still seekingagreement on a common definition of subsides,methods for measuring them, and ways to collectand analyze related data. Experts at the workshopaddressed these and other issues in the context ofsectors including agriculture, fisheries, energy,industry, transport, forestry and water.

(2003) OECD (see above). Pbk., 212. ISBN 92-64-10447-X.

Leading Change TowardSustainability: A Change-Management Guide for Business,Government and Civil SocietyStarting from a seldom-discussed reality – thatsome sustainability initiatives simply fail – theauthor has published the results of three years ofresearch on how leaders of organizations that havemaintained successful sustainability programmesdesigned and approached them. His findings arepresented in the form of a theoretical frameworkand methodology that can be used by managersto help their organizations embrace sustainabledevelopment. Leading Change Toward Sustain-ability is designed to be used by organizations

thinking about starting a sustainability initiative,and by those that have already begun this type ofinitiative but are running into possible problems.

B. Doppelt (2003). Greenleaf (see above). Pbk.,272p. ISBN 1-874719-64-0.

Implementing SustainableDevelopment: Integrated

Assessment and ParticipatoryDecision-Making ProcessesHussein Abaza, head of UNEP DTIE’s Econom-ics and Trade Branch, joins Swiss lecturer andresearcher Andrea Baranzini in exploring how tointegrate the environmental and social sciences tosupport participatory policy design and the imple-mentation and assessment of sustainable develop-ment policies. In this collection, aimed atproviding practical tools and clear methods, bothanalytical and empirical aspects of decision-mak-ing are discussed. The chapters, written by aninternational group of authors, include geograph-ical and sector-specific case studies.

H. Abaza and A. Baranzini, eds. (2003).Edward Elgar Publishing, Glensanda House, Mont-pellier Parade, Cheltenham, Glos, GL50 1UA, UK,Tel: +44 1242 226934, Fax: +44 1242 262111,E-mail: [email protected], Internet: www.e-elgar.com. Hbk., 303p. ISBN 1-84064-913-5.

Business and Human Rights:Dilemmas and SolutionsHuman rights is an essential element of sustain-ability’s social pillar. The editor has drawn togeth-er essays from leading thinkers and actors in thedebate on business, globalization and humanrights in an effort to establish how far the debatehas evolved and to explore the many complexquestions still to be addressed concerning roles,responsibilities and solutions. Business andHuman Rights discusses how and why humanrights has become a business issue. It looks at howselected companies have addressed specific humanrights questions with respect to their own opera-tions and those of firms in their supply chains.

R. Sullivan, ed. (2003). Greenleaf (see above).Hbk., 335. 1-874719-70-5.

The Environmental Performance of Public Procurement: Issues ofPolicy CoherencePurchases by governments are a key opportunityto promote environmental responsibility. ManyOECD countries have introduced initiatives toreduce environmental damage resulting from pub-lic procurement. Since public sector purchases ofgoods and services account for as much as 18% ofGDP in some OECD countries, “green publicpurchasing” (GPP) can also stimulate new mar-kets. This report reviews the relationships betweenGPP programmes and other areas of public policy(e.g. environmental policy, public expendituremanagement and the legal framework).

(2003). OECD (see above). Pbk., 235p. ISBN92-64-10155-1.

Energy

Energy Savings in Cities: Issues,Strategies and Options for

Local GovernmentsThe first report in the new Urban ManagementSeries from UNEP DTIE’s International Envi-ronmental Technology Centre, Energy Savings inCities is intended to give information to city man-agers in developing countries about how to reduce

greenhouse gas emissions and reduce budgetexpenditures. It presents background on energyuse patterns and energy savings strategies, thenbreaks down the various approaches according tosector. The residential, commercial, transport,industry and public sectors are covered. Other sec-tions are devoted to local energy resources, financ-ing energy efficiency, and urban energy planning.

(2003). UNEP. Available from EarthPrint Ltd.,PO Box 119, Stevenage, SG14TP, UK, Tel: +441438 748 111, Fax: +44 1438 748 844, E-mail:[email protected], Internet: www.earth-print.com. Pbk., 206p. ISBN 92-807-2238-7.

Climate change/air pollution

Building a Climate for ChangeThis report on innovation in the Netherlands, theUnited Kingdom, Spain and Finland is subtitled“Reducing CO2 emissions through materials inno-vation in the European building industry.” Itdemonstrates that technological development inthe building sector has a national character. This


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results from the dynamics of the building industryand its traditions, along with the development ofknowledge and industry structures. Other factorsare natural conditions such as climate, the avail-ability of resources, waterways and other geophys-ical factors. Finland, for example, has developedexpertise in building quickly in a cold climate. Italso has a rich tradition of building in wood.

In Spain, where the innovation climate is par-ticularly suitable for concrete development, thereis virtually no infrastructure for constructionusing wood. The delta area in which the Nether-lands is situated is mainly characterized by stonybuilding materials. In the UK, by contrast, a steepincrease in demand for office space has mainlyencouraged steel construction.

In all four countries greater innovation withinthe industry together with action by governmentscould significantly reduce materials-related CO2emissions.

T. Goverse (2003).Vrije Universiteit Amsterdam,De Boelelaan 1105, 1081 HV Amsterdam, TheNetherlands, Tel: +31 20 444 5030, Fax: +31 20444 5059, Internet: www.vu.nl.

Note: Managing Technological Change,published by UNEP in 2001 and reviewed

in Industry and Environment, Vol. 24, No. 3-4, hasbeen translated into Arabic, French, Japanese,Russian and Spanish. These versions can bedownloaded in PDF form at www.uneptie.org/energy/publ/mantechange1.htm.

Industry sectors

A Manual for Water and WasteManagement: What the

Tourism Industry Can Do toImprove Its PerformanceThe main focus of this UNEP Tourism Pro-gramme publication is on SMEs in developingcountries, including small island states, and incountries that are just beginning to develop astourism destinations. It was published with thesupport of Deutsche Gesellschaft für TechnischeZusammenarbeit. The manual looks at solid wasteand water management. Guidelines and examplesshow how tourism operations can achieve positiveresults and minimize harm to a community’s eco-logical and physical systems. Case studies highlightselected hotel chains that are already using envi-ronmental management systems.

(2003). UNEP. Available from EarthPrint (seeabove) or download at www.uneptie.org/pc/tourism/library/waste_manual.htm. Pbk., 50p. ISBN 92-807-2343-X.

Sustainable Tourism: The TourOperators’ ContributionThe Tour Operators’ Initiative for SustainableTourism Development, a diverse group of 25companies ranging from small, specialized opera-

tors to some of the biggest names in the business,has compiled this collection of case studies thatshow how holiday packages can be developed onsustainability principles. Sustainable Tourismoffers practical ways for tour operators to con-tribute to sustainable development (throughworking with suppliers, customers, stakeholdersat destinations, and their own staff ), using mea-sures such as a green checklist for hotels, a cus-tomer education programme on coral reefprotection, and financial support to local com-munities.

Over 30 case studies are grouped according tothe key business areas of supply chain manage-ment, internal management, product manage-ment and development, customer relations, andcooperation with destinations. Each provides anoverview of development and implementation, aswell as an analysis of benefits for the company, thelocal community and the environment.

(2003). Tour Operators’ Initiative. Availablefrom EarthPrint (see above) or download individ-ual case studies at www.toinitiative.org/good_prac-tices/introduction.htm. Pbk., 95p.

Implementation of PolicyResponse Packages to Promote

Sustainable Management ofNatural Resources“Confronting Sustainability in the Mining Sec-tor: Role for a Sustainability Fund” is the subtitleof this study, which was produced under the aus-pices of UNEP DTIE’s Economics and TradeBranch. There is a detailed analysis of proposalsto establish a “sustainability fund” in Chile withrevenue from a special tax on mine exploitation.Economic, social and environmental sustainabil-ity issues associated with mining at national and,especially, local level in Chile are addressed.

(2003). UNEP. Available from Economics andTrade Branch (see above). Pbk., 120p. ISBN 92-807-2299-9.

Opportunity SpacePrepared by SustainAbility for the European Asso-ciation of Communications Agencies (EACA), incooperation with UNEP, this report was initiatedunder the umbrella of the UNEP Advertising andCommunication Forum. It constitutes a secondstep following the UNEP/McCann-Erickson jointpublication Can Sustainability Sell, which was

aimed primarily at companies. Opportunity Space issubtitled “How communications agencies can turncorporate responsibility, industry’s newest chal-lenge, into business.” Ten steps for success,inspired by rules developed by the consultancyFuterra, are presented as ways to promote efficientcommunication on sustainable development.

A detachable “green office guide for communi-cations agencies” provides guidelines related tosupply chain management, good housekeepingand reporting. This publication is being distrib-uted to EACA members (national associations ofadvertising and communication agencies), as wellas to sister associations around the world and toadvertising agencies and consulting firms special-izing in communication issues.

(2003). Available from the EACA, 152 BlvdBrand Whitlock, B-1200 Brussels, Belgium, Tel:+32 2 740 0710, Fax: +32 2 740 0717, Internet:www.eaca.be, or can be downloaded at www.unep-tie.org/pc/sustain. Pbk., 32p.

Chemicals, pollution and accidents

IPCS Environmental HealthCriteria: Selected Nitro- and Nitro-oxy-polycyclic AromaticHydrocarbonsThis is the latest volume in a series produced bythe UNEP-WHO-ILO International Programmeon Chemical Safety (IPCS) in the framework ofthe Inter-Organization Programme for the SoundManagement of Chemicals, a cooperative agree-ment involving the three above-mentioned orga-nizations as well as the FAO, UNIDO, UNITARand the OECD.

(2003). IPCS/WHO, CH-1211 Geneva 27,Switzerland, Tel: +41 22 791 3592, Fax: +41 22791 4848, E-mail: [email protected], Internet:www.who.int/pcs. Pbk., 480p. ISBN 92-4-157229-9.

Water

Proceedings of the Workshopon Lake Management

and Eutrophication Control forDonghu Lake

Published with supportfrom the Wuhan Environ-mental Protection Bureauin Wuhan, China, this CD-ROM contains the pro-ceedings of a May 2002workshop held in Wuhan.

Donghu Lake is located in the mountainous, 88square kilometre Donghu scenic area in easternWuhan, the capital of Hubei Province. The work-shop was organized by UNEP DTIE’s Internation-al Environmental Technology Centre (IETC).

(2003). UNEP. Available from IETC, 2-110

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Ryokuchi koen, Tsurumi-ku, Osaka 538-0036,Japan, Tel: +81 6 6915 4581, Fax: +81 6 69150304, E-mail: [email protected], Internet: www.unep.or.jp. ISBN 92-807-2275-1.

National/regional

Desk Study on theEnvironment in the

Occupied Palestinian TerritoriesLong-term environmental degradation has oc-curred in recent decades in the area known as theOccupied Palestinian Territories. Following aunanimous request by UNEP’s Governing Coun-cil in February 2002, a team of UNEP experts car-ried out a comprehensive desk study on the state

Tradable renewable energycertificateswww.trecnet.orgThe International Energy Agency (IEA), incooperation with the European networkTRECKIN, has created a new site that willserve as a forum for developing knowledge ontradable renewable energy certificates, orTRECs. The Renewable Energy CertificationExpert Network (TRECNET) contains abroad base of information on trading systemsin place and under development. There is alsoan online expert discussion group for sharingexperience. TRECNET is expected to be a cat-alyst for certificate trading and the develop-ment of trade schemes. It will supportseminars and conferences addressing TRECissues and establish links among partners inter-nationally. TRECNET is operated by a world-wide network of participants. Membership isopen to organizations anywhere.

The triple bottom line on linewww.conversations-with-disbelievers.netThis new site provides news and informationfrom the UK and other countries concerningthe commercial rationale for corporate respon-sibility. It is operated by AccountAbility, an

international corporate responsibility and sus-tainable development organization, and theCenter for Corporate Citizenship at BostonCollege in the US, in partnership with tenother groups around the world. There are casestudies on corporate responsibility best prac-tice from businesses including IBM, Marks &Spencer, National Grid Transco, Suez, Tesco,Timberland, Vauxhall Motors and Unilever.Simon Zadek, chief executive of Account-Ability, says the site “will assist people alreadyworking in the corporate responsibility arenaand those people who are addressing, for thefirst time, corporate responsibility issues with-in their workplace thrown up by the increasedexpectations of their customers, pressuregroups, business partners, government andshareholders.”

UNEP site now in French/Site UNEP en français

www.unep.org/frenchKlaus Toepfer, le Directeur exécutif du PNUE,a présenté la version française du site internet duProgramme des Nations Unies pour l’environ-nement à Nairobi, Kenya, devant les Ambassa-deurs francophones situés à Nairobi. Le PNUEa son siège à Nairobi et des bureaux dans lemonde entier, y compris la division parisienneTechnologie, Industrie et Economie.

DTIE Web news:LC.net (see DTIE Highlights,

page 46)www.uneptie.org/pc/sustain/lcinitia-tive/LC_net.htm

The more user-friendlyOzonAction site:http://www.uneptie.org/ozonaction

Web SiteHighlights

of the environment in this area. The study coversfreshwater quality and quantity, wastewater, solidand hazardous waste, and conservation and biodi-versity. It includes over 130 recommendationsendorsed by the Governing Council after thereport was reviewed in 2003.

(2003). UNEP. Available from EarthPrint (seeabove). Pbk., 188p. ISBN 92-1-158618-6.

Radiological Conditions in Areas ofKuwait with Residues of DepletedUranium: Report by anInternational Group of ExpertsThis is the latest in the International EnergyAgency’s Radiological Assessment Report series.A study was carried out following a request thegovernment of Kuwait. The report includes adetailed description of the IAEA investigation,

the results of the radiological assessment, find-ings, conclusions and recommendations. Therewere concerns about possible lingering effects ofthe depleted uranium (DU) armaments usedduring the 1991 Gulf War. Not unlike similarUNEP reports (e.g. on the Balkans), this studyconcludes that DU does not pose a radiologicalhazard to the population though it urges contin-ued monitoring and restrictions on access to cer-tain areas.

(2003). IAEA, Wagramer Strasse 5, A-1400Vienna, Austria, Tel: +43 1 2600 22529/22530,Fax: +43 1 2600 29302, E-mail: [email protected], Internet: www.iaea.org/worldatom.books. Pbk., 73p. ISBN 92-0-106603-1/ISSN1020-6566.

Editions françaises

Les arbres ne poussent pas jusqu’auciel… donc il faudra beaucoup deforêts – Faut-il réinventer le progrès ?« Les hommes sont tenus de poursuivre le déve-loppement en le faisant évoluer, sauf à condamnerla moitié au moins de l’humanité à la misère et àfaire courir à l’autre le risque d’un effondrement »,tel est l’un des constats de l’auteur dans l’avant-propos. C’est donc de développement, de progrèset de comportements qu’il s’agit. L’ouvrage s’inté-resse tout d’abord à l’histoire du développement,des premiers marchands faisant connaître produitset techniques aux révolutions industrielles desXVI, XIX et XXe siècles. Un chapître est consacréà la montée de la mondialisation et à l’avénementdu concept du développement durable. Suit unexamen des approaches proposées pour répondreà la pression des besoins. L’auteur conclut parl’énumération des conditions inhérentes à undéveloppement que l’on veut durable.

M. Drancourt (2003). Editions VillageMondia/Pearson Education, 13 rue de La GrandeChaumière, 75006 Paris, France, Tél. : +33 1 4432 08 00, Fax : +33 1 43 25 43 37. 248p. ISBN2-7440-6045-3.


N e w s


Finance, Environnement etDéveloppement Durable

Ce document est le compte-rendu de la manifes-tation organisée à Paris le 10 janvier 2003, con-jointement par la Société Générale, la Caisse desdépôts et consignations, Dexia, ORSE (Observa-toire de la responsabilité sociétale des entreprises)et le Programme des Nations Unies pour l’envi-ronnement. Les débats ont porté sur quatre grandsthèmes : Responsabilité sociale et marchés de cap-itaux ; Etudes de cas d’institutions financières dansla gestion de projet et de portefeuille ; Commentintégrer des critères de développement durable àla gestionsde fonds ? ; Changements climatiques,responsabilité fiduciaire et transparence. Lecompte-rendu peut être consulté en ligne àl’adresse suivante : http://unepfi.net/socgen/

ActesVF-29_09_2003.pdf .(2003). PNUE, Initiatives financières,

International Environment House, 11-13 Chemindes Anémones, CH-1219 Châtelaine, Genève 10 ,Suisse, Tél. : +41 22 917 82 98, Fax : +41 22917 80 76, Courriel : [email protected]. Internet:http://unepfi.net. 58p.

Développement durable enEurope, Amerique du Nord et Asiecentrale : Progrès depuis RioRépondant à une résolution de l’Assembléegénérale des Nations Unies recomandant l’exam-en décennal des progrès accomplis dans la mise enœuvre des textes issus de la Conférence desNations Unies sur l’environnement et ledéveloppement (CNUCED) en 2002, le rapport

examine certaines des grandes tendances socialeset économiques qui ont des répercussions sur ledéveloppment durable dans les régions en ques-tion. Il décrit plusieurs des secteurs de productionmoteurs de développement, analyse les transfor-mations récentes intervenues dans l’état de l’envi-ronnement et évalue un certain nombre deréponses nationales, sous-régionales et régionalespour essayer de faire progresser le développementdurable. Le rapport souligne les problèmes quepose le financement du développement durable,en mettant l’accent sur la gestion de l’environ-nement.

(2002). Nations Unies, Commission écono-mique pour l’Europe, Palais des Nations, 1211Genève 10, Suisse, Tél. : +41 22 917 12 34, Fax :+41 22 917 01 23 76. 198p.

THE UNEP DIVISION OF TECHNOLOGY, INDUSTRY AND ECONOMICS

Current uses and development of natural resources, technolo-gies and production processes, as well as urbanization patterns,have negative effects on human health and the environment.This is illustrated by unsustainable use of water, land and ener-gy, air and water pollution, persistent and toxic bio-accumu-lative chemicals in the food chain, and other industry-relatedproblems.

To have a healthy environment, we need to change how weproduce and consume goods and services. This changeinvolves revising and developing economic policies and tradepractices, so as to integrate environmental issues in the plan-ning and assessment processes.

UNEP’s Division of Technology, Industry and Economics (UNEPDTIE) was created in 1998 to help decision-makers in govern-ments, local authorities and industry develop and adopt poli-cies and practices that:

• are cleaner and safer; • use natural resources efficiently; • ensure adequate management of chemicals; • incorporate environmental costs; • reduce pollution and risks for humans and the environment.

UNEP DTIE, whose main office is in Paris, is composed of:

� The International Environmental Technology Centre(Osaka), which promotes the adoption and use of environ-mentally sound technologies, with a focus on the environ-mental management of cities and freshwater basins, indeveloping countries and countries in transition.

� The Production and Consumption Unit (Paris), which fos-ters the development of cleaner and safer production and con-sumption patterns that lead to increased efficiency in the use ofnatural resources and reductions in pollution.

� The Chemicals Unit (Geneva), which promotes sustainabledevelopment by catalyzing global actions and building nation-al capacities for the sound management of chemicals and theimprovement of chemical safety world-wide, with a priority onPersistent Organic Pollutants (POPs) and Prior Informed Con-sent (PIC, jointly with FAO).

� The Energy and OzonAction Unit (Paris), which supportsthe phase-out of ozone depleting substances in developingcountries and countries with economies in transition, and pro-motes good management practices and use of energy, with afocus on atmospheric impacts. The UNEP/RISØ CollaboratingCentre on Energy and Environment supports the work of thisUnit.

� The Economics and Trade Unit (Geneva), which promotesthe use and application of assessment and incentive tools forenvironmental policy, and helps improve the understandingof linkages between trade and environment and the role offinancial institutions in promoting sustainable development.

FEEDBACKIf you would like to respond to something you’ve read here – to agree or disagree with a point of view, clarify a fact, or provide additional information – write to us. If you would like to air your views on any other subject relevant to Industry andEnvironment, we also hope to hear from you. As space is limited, we cannot guarantee to publish all letters, or to publish longones in full.


UNITED NATIONS ENVIRONMENT PROGRAMME

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39-43, QUAI ANDRE-CITROËN75739 PARIS CEDEX 15, FRANCETEL: (33) 1 44 37 14 50FAX: (33) 1 44 37 14 74E-MAIL: [email protected]://www.uneptie.org

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For over 20 years, the quarterly Industry and Environment has provided a forum for exchanginginformation and experience. Articles are contributed by industry managers, government offi-cials, researchers and others active in the field of sustainable industrial development. Besidesreporting on developments of broad international interest, each issue focuses on a particulartheme. The themes of recent issues have included the agri-food industry, consumption pat-terns, urban environmental management, sustainable energy, and mining and sustainable devel-opment. Recent issues and archives are available on-line at www.uneptie.org/media/review/ie_home.htm.

The next issue of Industry and Environment will focus on water and industry.

Industry and Environment is an English language publication, but it often includes articles inFrench and Spanish. All contributed articles are accompanied by summaries in English,French and Spanish.

The review is also published in Chinese. For further details, please contact: Professor Liu Xiaogwang Research Center for Eco-Environmental Sciences Chinese Academy of Sciences, P.O. Box 2871, Beijing 100085, China

Documents

industry and environment · 2004-01-27 · Contents 2 UNEP Industry and Environment October - December 2003 3 Editorial - The spotlight is turning towards smaller enterprises 4 Small