Opinion: Make it easier to comply with green regulations, than not
Transparency and trust key as regulators encourage companies to improve compliance
The evidence consistently shows that strong traditional sanction-based enforcement is critical to environmental protection. File photograph: Getty
This gradual move has meant several environmental bodies dispense with coercive “command and control” policies and adopt flexible co-operative approaches that aim to create a culture in which organisations embrace sustainable behaviours that independently drive environmental standards.
It also represents a substantial cultural and regulatory shift, where environmental authorities are expected to play a part in developing a circular economy by partnering with businesses to find the best solutions to reduce their environmental impact.
There has also been an ongoing adoption of sector-specific approaches, where companies in similar fields share ideas by engaging in peer-to-peer learning.
International research now suggests that these new models of environmental enforcement can help establish an atmosphere in which regulators can nurture a culture of compliance within specific sectors, that can, in turn, encourage businesses to go beyond simply fulfilling regulations.
This is not to say there is a willingness to abandon traditional regulation. After all, the evidence consistently shows that strong traditional sanction-based enforcement is critical to environmental protection.
However, with individual sectors beginning to be monitored as a whole, there has been a global trend toward adopting sector-specific regulations, in which solutions can be developed to reduce the environmental impact of a particular industry.
These measures can be reviewed over time to allow for the evolution of regulations as priorities change. Although alterations require careful review, agile systems allow regulators to proactively develop specific targets for individual sectors.
Globally, it has also been found that sector specific KPIs [key performance indicators] can be used to compare the performance of individual organisations within a defined industry or region to highlight progressive actions and positive practices.
At a time when companies are trying to emphasise their green credentials, this seems a novel way of generating an element of friendly competition between rival brands.
Such an approach was adopted by the Scottish Environmental Protection Agency (Sepa) in 2016 after the Global Footprint Network found that, if everyone on the planet lived like people of Scotland, we would need the equivalent of three earths to meet resource demand.
As part of a strategy to reduce the ecological footprint of Scotland to the point where one planet would sustain living, Sepa set itself the task of helping businesses to improve their environmental performance beyond the compliance standards.
The agency also created an easy to understand compliance assessment matrix that categorises businesses based their non-compliance with regulations.
The results of these annual assessments are published on its website and usually gain media attention. This, in turn, puts public pressure on organisations that need to improve their performance.
If necessary, Sepa also possess a wide range of enforcement measures, especially in the space before court proceedings. This allows the regulator to work with organisations that offer to undertake remedial action and to prevent recurrence.
Consequently, while the agency retains the ability to impose financial penalties, it also acts as an adviser and facilitator to improve environmental performance.
It does this by helping organisations to collaborate with experts, innovators and stakeholders on different approaches that could improve environmental and commercial performance.
Canada is another country which looks to work with businesses to drive environmental standards beyond basic compliance. Each year, Environment and Climate Change Canada (ECCC) develops sector-specific enforcement plans based on the level of compliance within that industry, new or amended regulations that will affect it, and the fulfilment of requirements unique to an individual activity.
To help companies adapt or comply with regulations, ECCC reaches out to businesses to conduct a series of sector specific workshops and information sessions. The Canadian regulator also puts a great deal of effort into producing presentations, and publishing information packages via email, media release and social media platforms.
It is believed these compliance promotion activities have proven to be particularly useful for the many SMEs and indigenous groups across the vast country.
Although research into the merits of the co-operative remains more theoretical than empirical, what is evident is that clear and simple rules to make compliance easier reduces the administrative burden for companies.
This was a lesson learned in England and Wales, where the Environment Agency introduced the compliance classification scheme in 2014 to aggregate and weigh a set of compliance-related parameters to arrive at a measure that places businesses in one of six bands.
The intention of the regulator was to link licence fees with a band rating, whereby fees for organisations in the worst band would be increased by 300 per cent. However, the scheme was deemed to be too complex and is under review.
Despite the ongoing debate surrounding the merits of these different models of environmental enforcement, research does suggest the most effective way to achieve compliance with the law is to make it easier to comply with regulations rather than to violate them.
In this sense, transparency and trust is key if both the regulator and regulated are to work together.
Dr Bernadette Power is an Economics Lecturer at Cork University Business School, University College Cork