Shared Producer and Consumer Responsibility — Theory and Practice

ECOLOGICAL ECONOMICS 61 (2007) 27– 42 available at www.sciencedirect.com www.elsevier.com/locate/ecolecon METHODS Shared producer and consumer responsibility — Theory and practice Manfred Lenzena,⁎, Joy Murraya,1, Fabian Sackb, Thomas Wiedmannc aISA, School of Physics A28, The University of Sydney NSW 2006, Australia bSydney Water Corporation, 115–123 Bathurst St, Sydney NSW 2000, Australia cStockholm Environment Institute - York, University of York, Heslington, York, YO10 5DD, UK ARTICLE INFO ABSTRACT Article history: Over the past decade, an increasing number of authors have been examining the nexus of Received 7 March 2006 producer versus consumer responsibility, often dealing with the question of how to assign Received in revised form responsibility for internationally traded greenhouse gas emissions. Recently, a similar 15 May 2006 problem has appeared in drafting the standards for the Ecological Footprint: While the Accepted 26 May 2006 method traditionally assumes a full life-cycle perspective with full consumer responsibility, Available online 10 July 2006 a large number of producers (businesses and industry sectors) have started to calculate their own footprints (see www.isa.org.usyd.edu.au). Adding any producer's footprint to other Keywords: producers' footprints, or to population footprints, which all already cover the full upstream Producer responsibility supply chain of their operating inputs, leads to double-counting: The sum of footprints of Consumer responsibility producers and consumers is larger than the total national footprint. The committee in Shared responsibility charge of the Footprint standardisation process was hence faced with the decades-old non- Supply chains additivity problem, posing the following dilemma for the accounting of footprints, or any Ecological footprint other production factor: if one disallows double-counting, but wishes to be able to account for producers and consumers, then one cannot impose the requirement of full life-cycle coverage; the supply chains of actors have to be curtailed somehow in order to avoid double- counting. This work demonstrates and discusses a non-arbitrary method of consistently delineating these supply chains, into mutually exclusive and collectively exhaustive portions of responsibility to be shared by all actors in an economy. © 2006 Elsevier B.V. All rights reserved. 1. Introduction: a brief history of producer and industrial production: In statistics on energy, emissions, water consumer responsibility etc., impacts are almost always presented as attributes of industries (‘on-site’ or ‘direct’ allocation) rather than as It is perhaps because of the tendency of economic policy in attributes of the supply chains of products for consumers. On market-driven economies not to interfere with consumers' a smaller scale, most existing schemes for corporate sustain- preferences that the producer-centric representation is the ability reporting include only impacts that arise out of opera- dominant form of viewing the environmental impacts of tions controlled by the reporting company, and not supply chain ⁎ Corresponding author. Tel.: +61 2 9351 5985; fax: +61 2 9351 7725. E-mail addresses: [email protected] (M. Lenzen), [email protected] ( J. Murray), [email protected] (F. Sack), [email protected] (T. Wiedmann). URL: http://www.isa.org.usyd.edu.au (M. Lenzen). 1 Tel.: +61 2 9351 2627; fax: +61 2 9351 7725. 0921-8009/$ - see front matter © 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2006.05.018 28 ECOLOGICAL ECONOMICS 61 (2007) 27– 42 impacts (World Business Council on Sustainable Development and manage the entire life-cycle of their products … Insisting and World Resources Institute, 2001). According to this world on high environmental standards from suppliers and ensuring view, “upstream and downstream [environmental] impacts are that raw materials are extracted or produced in an environ- […] allocated to their immediate producers. The institutional mentally conscious way provides a start” (Welford, 1996,as setting and the different actors' spheres of influence are not cited in Cerin, 2005, p. 34). A life-cycle perspective is also taken reflected” (Spangenberg and Lorek, 2002,p.131). in Extended Producer Responsibility (EPR) frameworks: “Pro- On the other hand, a number of studies have highlighted ducers of products should bear a significant degree of res- that final consumption and affluence, especially in the ponsibility (physical and/or financial) not only for the industrialised world, are the main drivers for the level and environmental impacts of their products downstream from growth of environmental pressure.2 Even though these studies the treatment and disposal of their product, but also for their provide a clear incentive for complementing producer-focused upstream activities inherent in the selection of materials and environmental policy with some consideration for consump- in the design of products” (Organisation for Economic Co- tion-related aspects, demand-side measures to environmen- operation and Development, 2001,p.21–22). “The major tal problems are rarely exploited (Princen, 1999, p. 348). impetus for EPR came from northern European countries The nexus created by the different views on impacts caused in the late 1980s and early 1990s, as they were facing severe by industrial production is exemplified by several contributions landfill shortages. [… As a result,] EPR is generally applied to the discussion about producer or consumer responsibility for to post-consumer wastes which place increasing physical greenhouse gas emissions.3 Emissions data are reported to the and financial demands on municipal waste management” IPCC as contributions of producing industries located in a (Environment Protection Authority New South Wales, 2003, particular country (Task Force on National Greenhouse Gas p. 2–4). Inventories, 1996) rather than as embodiments in products In trying to operationalise EPR, the Chartered Institute of consumed by a particular population, irrespective of productive Purchasing and Supply UK (1993) launched voluntary guide- origin. However, especially for open economies, taking into lines for environmental purchasing (Chartered Institute of account the greenhouse gases embodied in internationally Purchasing and Supply, 2000) and ethical business practices traded commodities can have a considerable influence on (Chartered Institute of Purchasing and Supply, 1999). Recent- national greenhouse gas balance sheets. Assuming consumer ly, a range of companies have implemented policies that responsibility, exports have to be subtracted from, and imports are aimed at reducing CO2 emissions and packaging waste added to national greenhouse gas inventories. In Denmark for from upstream suppliers and increasing recyclability, or example, Munksgaard and Pedersen (2000) report that a supplier environmental awards.5 At times, queries by users significant amount of power and other energy-intensive of products about the environmental performance of the commodities are traded across Danish borders, and that supplier have initiated knock-on effects that lead upstream between 1966 and 1994 the Danish foreign trade balance in organisations to begin conducting environmental audits and terms of CO2 developed from a 7 Mt deficit to a 7 Mt surplus, implementing environmental management systems (Barry, compared to total emissions of approximately 60 Mt. In 1996). particular, electricity traded between Norway, Sweden and On the down side, McKerlie et al. (2006) (p. 620) report that Denmark is subject to large annual fluctuations due to varying the concept of product stewardship “suggests that all parties rainfall in Norway and Sweden. In wet years Denmark imports with a role in designing, producing, selling or using a product hydro-electricity whereas electricity from coal-fired power are responsible for minimising the environmental impact of plants is exported in dry years. The official Danish emissions the product over its life. In practice, this “shared responsibil- inventory includes a correction for electricity trade and thus ity” extends beyond the producers and users of a product to applies the consumer responsibility principle (Danish Environ- include local governments and general taxpayers who incur mental Protection Agency, 1998). the expense of managing products at their end-of-life as part Similarly, at the company level, “when adopting the of the residential waste stream. This shared approach does concept of eco-efficiency and the scope of an environmental not clearly designate responsibility to any one party, diluting management system stated in for example ISO 14001, it is the impetus to advance waste prevention”. Indeed, at present, insufficient to merely report on the carbon dioxide emissions most of extended-responsibility initiatives proceed in a more limited to the judicial borders of the company” (Cerin, 2002, or less qualitative and ad-hoc, rather than quantitative and p. 59).4 “Companies must recognise their wider responsibility systematic way in selecting, screening, ranking or influencing other actors in their supply chain. We agree with Lloyd (1994), who states that “it will be impossible to produce a sufficiently 2 Hamilton and Turton (1999,2002), Lenzen and Smith (2000), ” Mélanie, Phillips, and Tormey (1994), Parikh (1996), Parikh and credible ranking of suppliers without quantitative rating . Painuly (1994), Wier, Lenzen, Munksgaard, and Smed (2001), Hence, the work described

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