Entec Bulletin
Interview with Michael Roberts -
CBI Director, Business Environment
How important is environmental performance to the CBI and how does it fit with its remit of promoting business excellence?
It is increasingly important and relevant to CBI work. Our mission is to help create and sustain the conditions in which business in the UK can compete and prosper. Those conditions must be seen within the wider context of growing expectations among customers, shareholders and the public for higher levels of environmental performance.
So our attention is focused on three areas. First, we seek to ensure that public policy is developed and implemented in ways which promote economic efficiency, through an emphasis on proper assessment of risks, good cost-benefit analysis and well-expressed outcomes. With the environment accounting for the single largest policy area of legislative activity in the EU, this is a key part of our work.
Second, we are keen to maximise the potential market opportunities for businesses to satisfy the demand for improved environmental performance, as shown by our work with the Government to promote a UK greenhouse gas emissions trading scheme. And last but not least, we are doing our bit to promote good practice. Our CONTOUR package, for example, enables organisations to enhance their internal management processes by benchmarking their environmental and health and safety performance. We are also currently working with the Design Council to develop our understanding of how to promote sustainability through the effective use of design in products and services.
Are UK businesses convinced of the economic benefits of improving their environmental performance?
The basic point is widely understood, but the real issue is whether it is always enough to stimulate action. The simple answer has to be that it varies between sectors and individual businesses - and that public policy must therefore be tailored accordingly.
In some sectors there has long been a direct link between
environmental improvement and the bottom line. Businesses for whom energy is
a major input clearly have a commercial interest in using energy efficiently:
for example, energy efficiency in the chemicals industry has improved by over
16% since 1990. For others, greater focus on effective environmental management
is core to better risk management generally and has yielded results - such as
a 66% fall in prosecutions arising from water pollution incidents between 1990
and 1998. It is also encouraging to see that 81% of firms in the FTSE350 in
1999 reported in some way
on their environmental performance.
More can be done. But some businesses will face diminishing
marginal returns from further improvement: others may lack awareness, capability
or sufficient economic incentive to act. Progress may well depend on improving
the incentives to act (for example, in energy efficiency investment by commercial
property owners), while for others the reputational benefits of improvement
may be more significant where the financial benefit, even if positive, is small.
Do you think the issue of sustainable development, with its consideration of economic, social and environmental factors, is an achievable balance for businesses to attain?
That rather depends on your definition of sustainable development. While business is committed to the concept, we are concerned that the debate often tends to stress heavily the need to secure environmental and social goals, while downplaying the merits of economic progress. But the concerns go deeper than that. Sometimes the language of debate gives the impression that sustainable development is an absolute, and that any business that has not yet attained that standard is somehow bad. Yet sustainability is not absolute. What is socially desirable in one country may be very different to that which is acceptable in another - a real challenge for multi-national enterprises. Our scientific understanding about what is environmentally good or bad changes with time. Sustainability is very much a journey, where the travelling will certainly be more practical, if not more important, than the arriving.
The concept of balancing the three different strands can also be unhelpful. It is misleading to talk of just three strands: each one comprises many elements (consider the range of environmental impacts relevant to any single business's activities). More significant is the connotation that equal progress can be achieved in each dimension of sustainability at any point in time. A greater emphasis on integration - enabling real progress to be made over time, but where the priority and rate of improvement in any single dimension can vary - is a more practical model for business behaviour.
Do you feel that the Government listens sufficiently to the views of business in formulating environmental policy?
There are well established forms of dialogue, be they through formal bodies such as ACBE or the CBI's regular programme of discussions with Ministers, officials & agencies. In some areas, the relationship works well - we are working with the Government on environmental reporting guidelines, and the Government has actively sought the views of key business sectors in preparing for next year's Rio+10 summit in Johannesburg.
Government, of course, has many interests to balance but inevitably there are instances where business feels that its interests are not being properly heard. There is real concern about the process of transposing EU initiatives (such as the Landfill and End of Life Vehicle Directives) into UK law; and while the original design of the Climate Change Levy has been improved, we do not think the Government has done enough to meet business concerns.
Will the Climate Change Levy achieve its desired outcome on CO2 emissions? Is there a better way to reduce emissions?
The Government estimates that the CCL package will deliver major carbon reductions, but we are particularly concerned about how those cuts will be achieved. Official figures, for example, have shown provisionally that the CCL is adding significant upward pressure to input prices for already beleaguered manufacturers. The IPPC basis for company eligibility to negotiate discounts of 80% in the Levy in return for commitments to improve energy efficiency is too narrow and should be widened, providing an incentive to more companies to deliver environmental benefit. The failure to exempt from the Levy exported energy from CHP plant is also perverse given the Government's targets to increase CHP generation.
Is there enough being done to stimulate UK plc to respond to the opportunity to develop a world-class environmental technology and services industry?
Various reports (eg by the Parliamentary Office for Science and Technology in April 2000) indicate that the UK is not doing enough to develop its potential in environmental industries. It is not all bad news: the UK has a good track record in the transfer of technologies in the water industry. But firms note how little support there is in the UK, compared with the USA or Japan, to develop the energy technologies of the future. There are some positive signs of change, with the establishment of the Carbon Trust and a desire by English Regional Development Agencies to promote clusters of environmental industries. But Government and business will need to do much more to promote both increased levels of R&D and the provision of new services such as energy management rather than simply energy supply.
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