October, 2011

OPEN EU project recommends DGComp launch specialist unit

October 29th, 2011

The final report of the Open Planet Economy Network “OPEN EU Action Plan for EU and EU National Governments” in October 2011 included the recommendation that:

“In accordance with existing EU Court case law, DGComp should launch a specialist unit to assess the public benefit of voluntary agreements that enable organisations to take collaborative action to internalise external social & environmental costs.  When the benefits of such cooperation agreements that cross-European national boundaries outweigh the costs of reduced competition the agreements should be formally authorised by DG Comp.”

BACKGROUND

The Cooperatition Incubator has worked closely with the OPEN:EU project over the past two years.  We believe the EUREAPA tool  provides a useful evidence base to inform and underpin future environmental voluntary agreements.  It breaks down territorial emissions into 57 GTAP sectors and 9 less detailed industry grouping (for example, agriculture, food manufacture, services). It breaks down consumption emissions into impact from consumption from the 57 GTAP sectors and 6 less detailed consumption themes (for example, food, transport, services).   Note however that the GTAP sectors are not detailed enough to assess the impact of individual products – only of a sector.

When users create scenarios themselves in the tool, they can change the total expenditure, the proportion of this expenditure on each consumption themes (e.g. food, transport) and also the proportion of expenditure on the more detailed sectors within each theme (e.g. meat, dairy, vegetables).

The scenarios the project team created were  constructed in the same way, with changes in consumption from each sector being estimated and used to calculate the corresponding reduction in environmental impact.  The scenarios were developed via a back-casting exercise on the basis of stakeholder input provided during a two-day workshop in September 2010. The four scenarios created were:

  • Scenario 1 – Clever and caring – a future with a quality driven mindset towards development with dynamic technological innovation.
  • Scenario 2 – Fast forward – a future with a quantity driven mindset towards development with dynamic technological innovation.
  • Scenario 3 – Breaking point – a future with a quantity driven mindset towards development with technological stagnation.
  • Scenario 4 – Slow motion – a future with a quality driven mindset towards development with technological stagnation.

The majority of the scenarios include policy interventions to internalise the cost of environmental harm, but there is not detailed analysis of the impact of this on business competitiveness. OPEN:EU discuss the high level business strategy likely to prevail in the narratives, but do not quantitatively analyse the cost implications of the scenarios.  This was outside the scope of the current project.

The final OPEN:EU quantification report leads us to the plain fact that we are all in this together and that simply working on a domestic approach (e.g. national or European) is not enough. All of these options also need to be replicated outside of the EU.

OUR REFLECTIONS

The focus of the EUREAPA tool/project is strongly on consumption and production efficiency.  This seems to leave very little room for ‘substitution’ – where, for example, one chemical input is substituted for a slightly more expensive one that is much more environmentally friendly.

In terms of the EUREAPA tool (providing scenarios on different sectors) it is useful in terms of providing information around environmental cost ‘per unit’ of that sector’s output.

The trouble with EUREAPA is that it does not seem to give much by way of solutions. Specific mechanisms are needed beyond just cutting consumption.

It’s not a viable solution just to say that only a certain amount, say, of perfume can be produced/purchased.  It seems like an extreme example of non-free-market behaviour, akin to the prohibition?

What is needed are ways of internalising the externalities through regulation or self-/co-regulation. Doing it that way means policy makers are not telling people they can not produce something, only that if they do then they will have to meet certain standards.

EUREAPA data will help target the most important areas.  What EUREAPA will not do is help target the most important areas where there are also good fixes that ‘substitution’-type solutions (which are clearly going to be more popular) instead of reduction-in-consumption-type solutions (gloomier). That additional research is important, because if we can get close to One Planet Living that way then it would be good to avoid too many drops in consumption (though of course they will be needed).

Of course, the GTAP sectors are obviously far wider than the ‘markets’ that stakeholders will ultimately be interested developing new voluntary agreements to cover.

(To check: Do EUREAPA sectors overlap? (e.g. food will incorporate transport costs). Perhaps SEI have somehow made them independent?)

New EU Corporate Responsibility strategy recognises need to improve self- and co-regulation processes

October 29th, 2011

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN  PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS  – A renewed EU strategy 2011-14 for Corporate Social Responsibility, October 2011 (pg 9-10)
“Enterprises often participate in self- or co-regulation processes, for example sector-wide codes of conduct on societal issues relevant to the sector in question. When such processes are designed in an appropriate way they can earn stakeholder support and be an effective means of ensuring responsible business conduct. Self and co-regulation are acknowledged by the EU as a part of the better regulation agenda.*

“Experience suggests that self and co-regulation processes are most effective when they: are based on an initial open analysis of the issues with all concerned stakeholders, in the presence of and if necessary convened by public authorities such as the European Commission; result, in a subsequent phase, in clear commitments from all concerned stakeholders, with performance indicators; provide for objective monitoring mechanisms, performance review and the possibility of improving commitments as needed; and include an effective accountability mechanism for dealing with complaints regarding non-compliance.

“The Commission intends to:
5. Launch a process in 2012 with enterprises and other stakeholders to develop a code of good practice for self- and co-regulation exercises, which should improve the effectiveness of the CSR process. ”

See the Interinstitutional Agreement on better Law-making 2003/C 321/01, and

Commission Communication “Better Regulation for Growth and Jobs in the European

Union” COM(2005)97.