Industry as a partner for sustainable development
10 years after Rio: the UNEP assessment
A contribution to the World Summit on Sustainable Development This publication may be reproduced in whole or in part and in any form for educational or non- profit purposes without special permission from the copyright holder, provided acknowledgement of the source is made. United Nations Environment Programme would appreciate receiving a copy of any publication that uses this publication as a source. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from United Nations Environment Programme.
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First published in the United Kingdom in 2002.
Copyright (c) 2002 United Nations Environment Programme
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A report prepared by: United Nations Environment Programme Division of Technology, Industry and Economics 39-43 quai 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] Web site: http://www.uneptie.org/wssd/ 2 About the report
About the report
This report documents industry’s progress, The report builds on a multi-stakeholder unfinished business and future challenges in process facilitated by the Division of implementing Agenda 21. It contributes to the Technology, Industry and Economics (DTIE) of global preparatory activities for the World the United Nations Environment Programme Summit on Sustainable Development by (UNEP). This process has been possible providing recommendations for sustainable thanks to the generous financial contribution business practices. of the French Ministry of the Environment. Contents 3
Contents
5 Executive summary 11 Foreword
13 Part 1: Introduction 14 Background 14 Strengths and weaknesses of the UNEP process
19 Part 2: Industry achievements and gaps 20 2.1 Economic importance 26 2.2 Environmental performance 27 Energy efficiency and energy consumption 28 Ozone-depleting substances, greenhouse gases and air emissions 29 Waste reduction, recycling and material resource efficiency 29 Fresh water conservation 31 2.3 Social aspects 31 Workplace issues 32 Human rights 32 Other social issues 33 2.4 Tools for sustainability 34 Multi-stakeholder dialogue 35 Public-private partnerships 36 Voluntary codes and initiatives 37 Environmental management systems 38 Environmental and sustainability reporting 39 Environmentally sound technology and R&D 41 2.5 Integration for sustainability 41 Social, environment and economic integration/societal integration 42 Cross-sector integration for sustainability 43 Global integration
45 Part 3: Industry challenges, goals and commitments
57 Part 4: Conclusions and recommendations 58 Priority 1: Mainstream decision-making 59 Priority 2: Improve voluntary initiatives 60 Priority 3: Reporting 61 Priority 4: Integration of social, environmental and economic issues 62 Priority 5: Global responsibilities and opportunities
63 Part 5: What people have said about the reporting process 4 10 years after Rio: the UNEP assessment Executive summary 5
Executive summary
Through a multi-stakeholder process facilitated It is worth emphasising that: by the United Nations Environment Programme (UNEP), as a contribution to the • A company or industry has to be World Summit on Sustainable Development economically sustainable if it is to (WSSD) 22 industry-sectors, ranging from contribute to sustainable development. Its aluminium production to chemical role, however, is about more than providing manufacturing, from tourism to finance, have jobs and generating wealth. developed global sustainability reports. It is the • Sustainability depends on local conditions first time that business and industry have and context. A community may wish to formed a partnership with the United Nations give priority to one or other of the three (UN) in consultation with labour and non- pillars in order to meet specific governmental organisations (NGOs) to report development needs, but ultimately, on sector-specific progress in implementing economic sustainability will not be achieved Agenda 21 on a global scale, integrating if local environmental and social needs are economic, social and environmental continually put on the waiting list. dimensions of sustainable development. Like • In an increasingly interdependent world, any first time initiative, it has not been easy. But industry’s contribution to sustainable despite the difficulties, participating industry development has to consider global as well sectors and stakeholders have generally felt as local economic, environmental and social the process to have been positive, contributing aspects. to better mutual understanding needed in moving forward. It has helped in identifying Sector-specific environmental leadership initiatives and progress, but at the performance same time pointed out areas where Significant efforts have been made by improvements have to be made. participating industries in reducing their environmental footprint. Increased awareness This publication provides an overview of and improvements in the application of industry achievements and unfinished business management tools have resulted in reduced in implementing Agenda 21 and moving energy consumption, emissions and toxic towards sustainability, identifies key gaps and releases, and greater resource and water stakeholder concerns, summarises industry- efficiency. Consequently, performance in these specific challenges, goals and commitments, and areas have received more attention in the provides UNEP recommendations on the way sector reports than other more difficult to forward.The overview covers economic measure impacts, such as biodiversity or the aspects, environmental performance, social environmental impacts of product use, that will issues, tools for sustainability and integration require more attention in the future. for sustainability. New legislation and regulation requirements, Economic importance of business self-interest in reducing costs related industry sectors to raw materials and treatment of emissions Much attention has focused in the past on the and wastes, and growing public concerns are economic pillar of sustainable development, so frequently credited as the main drivers for only a brief overview of the economic these achievements. International conventions, importance of industry sectors is provided in such as the Montreal Protocol on Substances terms of sector global production, projected that Deplete the Ozone Layer, have also been growth, and worldwide employees. a key driving force in motivating industries to 6 Executive summary
invest in new technologies that have less their environmental impacts are still largely environmental impacts. Cleaner production unmet, despite years of identifying SMEs as (and associate, preventive concepts such as a priority. eco-efficiency) has moved from a few, - Developing countries. To some degree, multinational corporations to wide acceptance developing countries and countries as a first option of choice, promoted by undergoing economic transition have been industry associations as best practice. able to ‘leapfrog’ over the past environmental mistakes of industrialised Key gaps and stakeholder concerns countries, integrating cleaner production early into industrial development and - Lack or incomparability of data. It is taking a more integrated approach to difficult to measure real progress globally. sustainable development. However, much There are significant differences in what is remains to be done in recording and measured, how it is measured (relative or reporting progress in these countries to absolute reductions), and the time period get a better sense of areas of real progress used, making it difficult to determine and need. whether environmental progress is real or - Global shift of production. There is a simply a result of economic downturns or global shift of manufacturing production geographic shifts in production. towards poorer countries that often do - Impacts of product use and consumption. not have the resources or capacity to For many products, most serious manage the accompanying environmental, environmental impacts (energy health and safety impacts. consumption, air emission, water pollution, etc.) occur during the use of the products. Social aspects Industry needs to do much more in There is growing awareness among business adopting full life cycle, product stewardship and industry that the social side of global and eco-design practices, in partnership sustainable development needs to be taken with its stakeholders. into account alongside environmental and - Cleaner production or end-of-pipe? It is economic aspects. Leading edge companies also difficult to know whether pollutant and and industries are trying to better understand waste reductions are achieved through real the direct and indirect social implications and cleaner production techniques (at-source contributions of their activities. prevention) or merely shifted between air, water and soil through end-of-pipe Many are finding that companies that choose technologies. to adopt corporate social responsibility (CSR) - Growth overtaking gains/rebound effect. principles not only achieve benefits to society, Gains made in relative reductions or but find it helps them enhance their efficiencies (i.e. per unit of production) are reputation, improve competitiveness and in many cases being overtaken by strengthen their risk management. However, economic growth and may also be the concept of corporate social responsibility, mitigated by difficult to measure ‘rebound’ in the context of sustainability, is still very effects, in which gains in one area are offset much in its infancy, in much the same way that by new demands as a result of the gains. environmental responsibility was a decade ago. - SMEs. The particular needs of the majority Consequently, there is no general agreement of SMEs (particularly those outside the yet on what corporate social responsibility policy reach of multinational corporations means in practice; some even mistakenly or influence of competitive certification include environmental responsibility as a social schemes such as ISO 14000) in reducing one. Executive summary 7
Participating industry sectors have thus operating costs and to gain new market share. struggled on how to deal with, measure and The globalisation of information and report on their sector’s social contributions communication technologies has facilitated the and implications.To date, the focus has been transfer of best practices, while globalisation of primarily on workplace issues, human rights markets has, to some extent, enabled the and other social issues such as HIV/AIDs and transfer of environmentally sound child labour.This aspect of sustainability technologies, through global multinational reporting will likely improve in the future, as standards, joint ventures, and multilateral business and industry gain a better development assistance. understanding of emerging (and sometimes conflicting) societal expectations of corporate Key gaps and stakeholder concerns social responsibility, helped by various multi- stakeholder initiatives, such as the Global - Growing gap between the leading Compact and the Global Reporting Initiative, minority and the majority. In some that include social elements and performance industries, there is a growing gap between indicators. the few companies that have taken the lead, and the silent majority. Tools for sustainability - Implementation and verification. Most Over the last decade, many tools have been voluntary initiatives are still characterised used by industry to put sustainability into by problems of effective implementation, practice. Multi-stakeholder dialogue is monitoring, transparency, and free-riders. increasingly gaining acceptance as a tool for - Linkage with public policy framework. business understanding of societal Few voluntary initiatives are directly linked expectations, for avoiding problems and for with government policy and regulatory finding sustainability solutions.Voluntary framework in a way that would initiatives have become a more common tool complement the strengths and weaknesses to spread industry awareness of the need to of both.Voluntary initiatives cannot provide improve environmental performance over and a substitute for an effective regulatory beyond regulatory requirements. framework.The right balance of regulations, Environmental management systems (EMS) economic measures and voluntary have become synonymous with good business initiatives, appropriate to specific socio- practice, and a competitive market advantage economic and cultural contexts, needs to when coupled with third party certification be developed. such as ISO 14001 or the European Eco- - Stakeholder consultation. Many voluntary Audit. initiatives are still being developed with little, real consultation of those outside the Environmental and sustainability reporting by industry. companies and associations is becoming - Minority practice. Corporate increasingly valued as a tool for measuring and environmental and social reporting is still a communicating corporate and industry minority practice, and only a third of performance. A key achievement has been the multinational corporations are using development of broad-based stakeholder comparable frameworks such as the GRI in consensus on basic sustainability reporting reporting their performance. indicators as developed by the United - Reporting indicators. Most industry Nations-sponsored Global Reporting Initiative. sectors have not yet developed industry Industries in highly competitive markets are consensus on performance indicators for investing a portion of their research and reporting on their specific sector’s progress development (R&D) budgets into developing and gaps. environmentally sound technologies to reduce 8 Executive summary
- Unenvironmentally sound technology toxic releases, energy use, waste, etc; transfer. Although globalisation may • improving the quality of voluntary facilitate the transfer of environmentally initiatives; sound technology, it does not stop the • spreading best practices to countries that transfer or ‘dumping’ of polluting are not yet a part of a global industry technologies or products that have been association; banned in other countries. • developing and investing in promising technologies; Integration for sustainability • improving the social dimension of their Clearly, the sustainability agenda has evolved business; since the Earth Summit.There has been slowly • helping to build capacity in developing but steadily growing appreciation that, in the countries to improve health, safety and words of Nelson Mandela,‘ if globalisation is to environment standards; create real peace and stability across the • developing partnerships with stakeholders. world, it must be a process benefiting all.’ In 1999, at the World Economic Summit, United Stakeholders, including those that participated Nations Secretary-General Kofi Annan in the consultation process, will not always challenged business leaders ‘to help build the agree with industry’s analysis and views.The social and environmental pillars required to reports nonetheless move one step further in sustain the new global economy and make providing greater transparency needed for globalisation work for all the world’s people.’ more informed multi-stakeholder discussions This will require four types of integration: and better mutual understanding. Stakeholders are thus encouraged to consult specific sector - social, environmental and economic reports for more details and to encourage integration - moving from a fragmented industry, not only to meet future challenges, approach that deals with environmental, but to continually improve its environmental social and economic aspects separately to and social performance. a holistic approach (triple bottom line, or people-planet-profits) that unites them; It needs to be noted, however, that while many - integrating sustainability criteria into of the industry organisations, associations and mainstream business decision-making voluntary groups were able to report on rather than a separate, niche operation; progress, many are not currently constituted to - cross-sector integration for sustainability- make specific, all embracing global moving from a sector-specific approach to commitments on behalf of their industry.This sustainable development towards a represents a new kind of governance that cross-sector approach to better meet could evolve during the 21st century, with the sustainability needs; involvement of stakeholders. - global integration - helping to establish the global framework of rules and institutions Conclusions and recommendations needed to protect global commons, and to Each of the 22 sector reports in this series meet the particular needs of developing presents numerous efforts developed by countries. industry in reducing their environmental footprint and addressing other sustainability Industry challenges, goals and commitments challenges, despite the difficulties of reporting All the participating industries identify in their on a global level for the first time. However, reports future challenges and goals for their there is a widening gap between the efforts sector. Some make specific commitments, they have made and the worsening global such as: environmental situation. It is evident that we • further reductions in greenhouse gases, are still confronted with worrying, global Executive summary 9
trends related to biodiversity, air pollution, land financing schemes, technology co- degradation, chemical emissions and wastes, operation, education and capacity building. freshwater and the regional seas, as demonstrates the Global Environmental To move forward, UNEP has identified five Outlook 2002, published by UNEP. priority areas, and has provided recommendations for business and industry, The two main reasons for this widening governments, civil society groups and gap are: international organisations.The five priority areas are: • In most industry sectors, only a small number of companies are actively striving 1. Mainstream decision-making. Integrate for sustainability.The majority of companies environmental and sustainability criteria are still doing business as usual. It is in into mainstream business decision-making industry’s own self-interest to do more to at all levels in the company, building local spread best practice and raise the capacity worldwide to spread best practice performance levels of all its members from the leaders to the rest of industry, everywhere. But in reality, different socio- worldwide. political-cultural and economic contexts 2. Improve voluntary initiatives. Make across borders mean that what works in voluntary initiatives more effective and one country, may not be applicable in credible as a complement to government another. Also, there are limits to voluntary measures, and assess improvements in action and industry self-regulation. All environmental and social performance sector reports highlight the crucial role of through reporting. governments, combining regulatory, 3. Reporting. Help ensure transparency, assess economic and voluntary instruments, in performance improvements and spread spurring social and technological environmental and sustainability reporting innovation, and in ensuring that laggard or practices beyond the pioneering companies negligent companies do not benefit at the to the silent majority. expense of those investing in best 4. Integration of social, environmental and practices. Public and consumer pressure economic issues. Move from the current also play an important role in providing approach of dealing separately with market incentives that are needed to environmental, social and economic aspects motivate corporate change, and reward it. of sustainable development, to an Government and media should work more integrated approach to global challenges. to raise public awareness. 5. Global responsibilities and opportunities. • The improvements are being overtaken by Help build the global framework of rules, economic growth and increasing demand established practices and institutions for goods and services (rebound effect). needed to protect the global commons Future projected growth in most industry and to develop the new responsibilities sectors will only further widen this gap.The that lead to new global opportunities. reports also call for governments to develop long-term policies. It is in this context that private sector voluntary initiatives, in co-operation with non- governmental organisations and labour, will be able to develop. It is also in this context that the private sector needs to join the public sector and develop innovative 10 10 years after Rio: the UNEP assessment Foreword 11
Foreword
Ten years after the Earth Summit and Agenda Industry is a key partner for sustainable 21, there is no longer a shortage of good development.We rely on industry not only for examples of how companies and industries are reducing the environmental impacts of the reducing waste and emissions, becoming more products and services it provides us with; we energy efficient, and helping poor communities also increasingly depend upon industry for the to meet their basic needs.This in itself is no innovative and entrepreneurial skills that are small achievement. Such efforts need to be needed to help meet sustainability challenges. acknowledged and applauded. As humans, we More then ever before, this will require more all need recognition of our achievements to integrated approaches and partnerships with develop the confidence and drive needed to governments and civil society. meet increasingly difficult and complex challenges. Good examples are then more This will also require, in a world increasingly likely to have a domino effect. interconnected economically, environmentally and socially, a more global approach than that The downside of good examples, however, is of the past. But above all, it will also mean that that they may obscure the broader picture. industry needs to be fully transparent about its Policy and decision-makers at the World level of progress to enable a better Summit on Sustainable Development (WSSD) understanding and dialogue with stakeholders need to know whether the good stories that is needed to achieve sustainable reflect the industry as a whole or are still development goals. limited to a leadership minority. Progress since the 1992 Earth Summit has clearly been This UNEP-facilitated initiative is a step uneven within and amongst industry sectors towards this process.The industry associations and countries. As UNEP’s third Global that embarked on this journey with UNEP,in Environment Outlook (GEO-3) report shows consultation with a wide range of stakeholders again and again, we are still confronted with from around the world, are to be applauded worrying, global trends related to biodiversity, for their first attempt at compiling a global air pollution, land degradation, chemical sustainability progress report for their sector. emissions and waste, freshwater and the regional seas. Klaus Töpfer Executive Director, UNEP It is time now to move beyond good examples to sector-specific, industry-wide assessment of progress and gaps in meeting sustainability challenges.This is why UNEP approached a number of industries to see whether they were willing to globally review their sector’s progress in implementing Agenda 21, in consultation with non-governmental and labour organisations from around the world. Twenty-two sectors responded favourably to UNEP’s request, knowing that this would not be an easy task for them. 12 10 years after Rio: the UNEP assessment Introduction 13
Part 1: Introduction
This is UNEP’s overview of 22 industry-driven For non-governmental and labour organisations and reports on sector-specific progress in reducing other societal stakeholders, there are some real industry’s environmental footprint and moving concerns that the reports represent more of a towards sustainability. It has been prepared for the ‘green-wash’ than an honest appraisal of industrial World Summit on Sustainable Development to: performance and will not lead to industry commitments. However, most participating • provide a synthesis of the achievements and stakeholders also recognised that while it is true that unfinished business, as reported by participating the industry can and should do more, there must industry sectors, and integrating perspectives and also be acknowledgement of what has been concerns of non-governmental and labour achieved since Rio, even if it is uneven within and organisations; among industry sectors.The overall message is that • identify key gaps and future challenges; industry must truly engage in all aspects of • suggest recommendations on the way forward. sustainability and be fully transparent about the level of progress and that industry, governments This is the first time that industry organisations have and civil society have to work together in a embarked on a multi stakeholder process catalysed constructive dialogue. by UNEP on such a wide scale. It is the first time that specific industry sectors have reported on their ‘In common, I suspect, with other reports in this global sustainability performance.Thus, it is the first series, the results are neither half as bad as we time that economic, environmental, and social feared, nor half as good as we had originally hoped. dimensions have been integrated together in one And even if we had done all we had been implored report. It is also the first time that a wide range of to do, we would still not be in a position to say stakeholders from around the world - governments, ‘that’s it, job’s done’ because sustainability doesn’t intergovernmental organisations, non-governmental work like that.’ and labour organisations, and research institutes - Accounting sector report have been consulted by industry on what should appear in the reports. For UNEP,it has not always been easy to moderate sometimes conflicting perspectives of industry’s role Like any first-time initiative, it has not been easy. as partner for sustainable development, and to navigate its way among different expectations of For industry, compiling industry-specific global governments, industry, non-governmental sustainability reports has been particularly organisations. challenging. Few industry sectors have a global association to collect data on, for example, air It needs to be recognised that this is the first time emissions reductions or corporate social that such a large number of industry sectors and contributions. In most cases, the data exists only in a related stakeholders have agreed to participate in few countries, often collected differently, or simply such a dialogue.What is important is to ensure that does not exist at all. Many sectors also felt unease at the momentum of improvement does not stop and having non-governmental and labour organisations that the partnerships formed will lead to continuing examine their reports, and then having to broaden synergies and results. None of the participating or deepen their scope to include issues they felt industry sectors see the reports as an end in inexperienced in handling. Despite these difficulties, themselves, but as a part of a long-term process of participating industry sectors have generally found stakeholder dialogue that neither begins nor ends the process positive. with the World Summit on Sustainable Development. 14 Introduction
Background organisations and 25 representatives from UNEP launched the sector-specific reporting international organisations and academic process at its 17th Annual Consultative institutions. Meeting with Industry Associations, held in Paris in September 2000. UNEP proposed that Stakeholder representatives commented on each industry sector prepare a self-evaluation early drafts of the reports by email and during report for the World Summit on Sustainable a series of consultative workshops convened in Development (WSSD), and offered to Paris during the period of October to organise a multi-stakeholder dialogue to December 2001. discuss those reports. Participants, including the United Nations Department of Economic The cement, detergents, mining (other than and Social Affairs (UNDESA) and some 50 coal and aluminium), postal services, pulp and representatives of national and international paper, tanning and industry sectors declined industry associations, welcomed the proposal. for various reasons including: their own preparatory process (mining and cement), Discussion on the framework of industry more time needed to make internal sector reports began with representatives of organisational preparations for compiling a 16 international industry associations and four report of this nature (postal services), lack of non-governmental and labour organisations an umbrella body to collect contributions during a workshop hosted by UNEP in globally (pulp and paper), or providing input to February 2001.The objective was to design a another sector report (detergents part of common format for industry to report on chemicals). progress made with regards to the implementation of Agenda 21, indicating Strengths and weaknesses of the environmental and sustainability challenges for UNEP process each sector, major changes and progress made since 1992, challenges remaining, as well as Strengths steps to be taken to address them. Invitations While UN agencies have been engaged in were sent to international business and discussions with industry in the annual and industry associations, inviting them to PrepCom meetings of the Commission of participate. Sustainable Development, this process can be credited for being the first in providing: Twenty-eight industry associations or organisations, from 22 industry sectors • reporting by industry sector; responded positively.The subsequent • reporting that is integrated and covers the preparation of reports was driven by the economic, social and environmental relevant industry associations and conducted dimensions of sustainable development; in liaison with the International Chamber of • reporting that is international or global in Commerce (ICC), the World Business Council scope; on Sustainable Development (WBCSD) and • reporting where industry takes the lead, their joint Business Action for Sustainable but in consultation with a diverse group of Development (BASD). stakeholders; • reporting that is not simply ‘rear-view’ Preparation of these 22 reports compiled for mirror reporting but forward looking. the WSSD involved more than 200 participants including some 130 In addition, the process has contributed to representatives of business and industry, 40 awareness-raising on WSSD throughout the representatives of non-governmental business and industry community. organisations, ten representatives of labour Introduction 15
Table 1: Reporting industry sectors and associations
Participating sectors agreed that working with UNEP and other stakeholders would enable them to compile a more balanced presentation of progress, difficulties and remaining issues in their industries than if they were to do reporting on their own.The following industry associations and organisations have joined the process of producing reports for WSSD:
1. Accounting: Association of Chartered Certified Accountants (ACCA) 2. Advertising: European Association of Communications Agencies (EACA),World Federation of Communications Agencies (WFA) 3. Aluminium: International Aluminium Institute (IAI) 4. Automotive: International Automobile Manufacturers 5. Aviation: Air Transport Action Group (ATAG) 6. Chemicals: International Council of Chemical Associations (ICCA) 7. Coal: World Coal Institute (WCI) 8. Construction: Confederation of International Contractors’ Associations (CICA) 9. Consulting engineering: International Federation of Consulting Engineers (FIDIC) 10. Electricity: E7 11. Fertilizer: International Fertilizer Industry Association (IFA) 12. Finance and insurance: UNEP’s Finance Industry Initiatives 13. Food and drink: Confederation of the Food and Drink Industries of the European Union (CIAA) 14. Information and communications technology: Global e-Sustainability Initiative (GeSI) 15. Iron and steel: International Iron and Steel Institute (IISI) 16. Oil and gas: International Petroleum Industry Environmental Association (IPIECA), International Association of Oil and Gas Producers (OGP) 17. Railways: International Union of Railways (UIC) 18. Refrigeration: International Institute of Refrigeration (IIR) 19. Road transport: International Road Transport Union (IRU) 20. Tourism: World Travel & Tourism Council (WTTC), International Hotel & Restaurant Association (IH-RA), International Federation of Tour Operators (IFTO), International Council of Cruise Lines (ICCL) 21. Waste management: International Solid Waste Association (ISWA) 22. Water management: International Water Association (IWA) 16 Introduction
Weaknesses to SMEs and business and industry especially A number of difficulties have been experienced: from the developing world.
• Industry representation: Another reality is that some industry An important shortcoming is limited associations or sectors do not yet fully involvement of (i) small and medium-sized appreciate the need for engaging in new enterprises (SMEs) from all parts of the world relationships with governments or societal and (ii) business and industry from the stakeholders. Some see stakeholder dialogue developing world. as simply bringing unwanted attention and criticism, rather than providing insight into One reason for the above is an organisational changing society needs and values.This one. In a number of cases a representative highlights the challenge for associations to body or umbrella international organisation is move beyond traditional activities such as lacking, be it at the regional or global level. lobbying and to become more pro-active in Associations come in many different forms, facilitating self-evaluation and providing advice, some specialist and some generalist.There are training and guidelines. associations - global, regional and national - that have been created specifically to deal with • Non-industry stakeholder capacity and particular sustainability issues. Some are broad- engagement: spectrum associations, others are sector- The experience has shown that non- specific. In addition, there are the traditional governmental organisations and labour often associations created primarily to look after the have limited resources to analyse and general interests of their members, be it global, comment on industry contributions with a regional or national. Networking with this global coverage. In this respect the diverse range of associations needs to be organisational structure of the international improved so as to reach out more effectively labour union movement made it easier for this stakeholder group to comment. Clearly, the international non-governmental movement is a ‘We all know that SMEs are the worst more diverse group, making the task of polluters, but it will be very difficult to, pooling resources all the more demanding. measure their performance and to help them improve it. Probably the majority of In one or two instances some environmental SMEs do not belong to business non-governmental organisations also preferred associations. So improving ‘networking with not to be associated with reports that they this diverse range of associations’ would not necessarily reach SMEs. Secondly, SMEs feared would not adequately address their usually do not have reliable and concerns. Fearing that business and industry transparent financial data even when it is in would simply use their involvement in the their interest in order to obtain credit or process to ‘green-wash’ its outcome, these non- equity.There is even less incentives to governmental organisations wanted guarantees collect environmental data. However, if that their positions would be annexed SMEs are to be competitive they must separately. In the chemical report, the industry minimise their materials wastes.Therefore, annexed the list of all stakeholder comments, capacity-building for technology upgrading indicating whether and how each comment and mastery might be a more effective had been addressed in the revised report. route to go with SMEs to reduce their environmental footprint.’ Lorraine Ruffing, United Nations Conference on Trade and Development (UNCTAD) Introduction 17
• Social issues: ‘The current trends in, and processes for the Corporate social responsibility (CSR).There’s a development of environmental need to better understand the social role of management standards for industry is industry and the means to improve current Euro-centric, and does not foster the participation of developing country practice industries, particularly those of Africa.These non-participating industries are then expected to adhere to standards in whose development they had no say. Future processes for developing and reporting on corporate environmental standards should consider the capacity needs of developing country industries.’ Dr C Olver, Department of Environmental Affairs and Tourism, South Africa
• Unavailability of data: In some instances the effort to collect information showed that aggregated data at the global level simply does not exist. Being a first of its kind, it was inevitable that the process would come across this problem. Those sectors which in the past often found themselves in the public or media limelight as a result of pollution incidents, have made more progress over the last ten years in taking stock and collecting sector-wide information.Yet in many sectors, global data on some issues hardly exists.This calls for more research as we strive to benchmark sustainability.
• Resource constraints: In the process facilitated by UNEP,limited resources constrained the preparation of background documents and attempts to ensure greater participation, both at the regional and global consultations. For example, this process is supported financially only by a contribution from the Government of France. Some participants also found their resources stretched as they were challenged to deal with tight deadlines set by UNEP.(The work schedule was designed so as to ensure that the sector reports were finalised in time for the final preparatory committee meeting (PrepCom IV) to be held in Indonesia in June 2002). 18 10 years after Rio: the UNEP assessment Industry achievements and gaps 19
Part 2: Industry achievements and gaps
This section provides an overview of industry- Concrete examples are drawn from the 22 specific achievements and gaps in sector reports to illustrate achievements made implementing Agenda 21, as reported by and gaps still to fill. No attempt has been industry, and integrating the perspectives and made to determine which industry has the concerns of non-governmental organisations, best examples to provide for a specific area labour and other societal stakeholders in (energy efficiency, environmental management moving towards sustainability. It is divided into systems etc.), or, more generally speaking, five parts: which industry is the best or poorest performer in any given area. Some industries • Global economic importance of each are inevitably more experienced or more industry sector, as reflected by world ‘proactive’ than others in addressing production, projected growth, and world sustainability issues and thus more employment figures. accomplished. However, it would be as • Environmental performance in key areas of irresponsible as counterproductive to even focus over the last decade, and for which attempt to compare 22 sectors that range at least some data is available, namely: from aluminium to tourism. energy consumption/efficiency, reductions in ozone depleting substances, greenhouse The purpose of this section is to provide an gas and toxic air emissions, waste overview, not an evaluation of industry reduction/recycling/ material resource progress in moving towards sustainable efficiency; and freshwater conservation. development. Based on this overview, Other issue areas, such as biodiversity and suggestions are made on the way forward so the impacts of product use, are beginning that industry can play a fuller role as partner to be addressed by some specific industry for sustainable development. sectors. But reporting on such issues, hampered by the lack of performance indicators, is still in its infancy, making any overview assessment of industry achievements and gaps premature at this stage. • Social issues and corporate social responsibility regarding workplace issues, human rights, and other social issues such as HIV/AIDS. • Tools for sustainability, focusing specifically on multi-stakeholder dialogue, partnerships, voluntary codes and initiatives, environmental management systems, environmental / sustainability reporting, environmentally sound technology and R&D. • Integration: social, environment and economic integration; cross sector integration for sustainability; and global integration. 20 Industry achievements and gaps
2.1 Economic importance
Much attention has focused in the past on the than providing jobs and generating wealth. economic pillar of sustainable development, so only a • Sustainability depends on local conditions and brief overview of industry sectors’ economic aspects context. A community may wish to give priority is provided in table 2 opposite which summarises the to one or other of the three pillars in order to economic importance of each industry in terms of meet specific development needs, but ultimately, global production, projected growth, and worldwide economic sustainability will not be achieved if employees. local environmental and social needs are continually put on the waiting list. It is worth emphasising that: • In an increasingly interdependent world, industry’s contribution to sustainable development has to • A company or industry has to be economically consider global as well as local economic, sustainable if it is to contribute to sustainable environmental and social aspects. development. Its role, however, is about more
‘Our businesses have been designed to generate ‘Corporations must recognise that there are three financial benefit to their shareholders.That dimensions to sustainability.Then, if they wish to obligation remains. At the same time, society must play the role of ‘chief advocates’ for the economic benefit as well. As public awareness grows, our dimension, corporations must admit that the other business success is linked to performance in the two dimensions must have their appropriate areas of environmental protection and community advocates, as well.’ affairs.’ John Evans,Trade Union Advisory Committee Oil and gas sector report (TUAC) to the OECD Industry achievements and gaps 21
Table 2: Global economic importance of reporting industry sectors Industry World production Projected growth Worldwide employees Primary/extractive industries Aluminium Production has Forecast annual growth Directly employs over a increased from one in consumption over million people thousand tonnes in the next ten years is worldwide and 1900 to 32 million approximately 3%. indirectly generates four tonnes in 2000. times as many jobs in downstream and service industries. Coal Coal supplies 23% of Global energy needs Employs an estimated world primary energy are predicted to grow seven million people and is the most at an average annual worldwide, 90% of important fuel for rate of 2% to 2020. which are in developing electricity generation Demand for coal is countries, five million in and for steel projected to increase China alone. production. around 1.7% per year. 70% of the increase in coal demand will come from non-OECD countries. Iron and steel The value of steel Production is at record Employment in the produced annually is levels, supply exceeds United States, the over USD200 billion. demand, exerting United Kingdom, Japan, 96% of world downward pressure on Brazil and South Africa production in 2000 prices. Price of steel has decreased 65% was produced in 36 has been diminishing between 1974 and countries.The three since the 1980s and is 2000. top producers, China, currently, in real terms, Japan and United at the same level as States, are also the the mid-1950s.The three top consumers industry as a whole is of steel. in a financially precarious position.
Oil and gas World demand for By 2010, even with hydrocarbons is modest economic increasing.Today, we growth, world use about 75 million consumption is barrels per day (mbd) expected to rise to 90 of oil and daily million barrels per day consumption of gas is of oil and 280 billion 220 billion cubic feet cubic feet of gas per (bcf). day. 22 Industry achievements and gaps
Table 2: Global economic importance of reporting industry sectors Industry World production Projected growth Worldwide employees Secondary/intermediary industries Chemicals World chemical Projected growth in The chemical sector production exceeds chemical demand operates in nearly USD1.7 trillion between 1996 and every country in the annually with almost 2010 expected to world, employing over 30% traded continue at 2.4% per ten million people internationally. annum in the although productivity developed world and improvements have at 5.9% per annum in meant that world the developing world employment levels have (exceeding GDP fallen by 7.5% over the growth by last ten years. approximately 2%) Construction Total annual output Considered as the worldwide of USD world’s largest industrial 3000 billion, roughly employer with an 10% of GNP. estimated 111 million Construction accounts employees.This for about half of all amounts to fixed capital approximately 28% of investment. all industrial employment, or 7% of all jobs. 97% of all firms are SMEs. 75% of construction workers are in developing countries. Electricity Average annual Due to economic growth rate of growth and electricity demand for electricity replacing the direct is about 3%. combustion of fossil fuels for many end uses, electric power generation will continue to be the fastest growing energy user in the industrialised countries (1.5% to 2% per year) and emerging economies (5%-10% per year) Industry achievements and gaps 23
Table 2: Global economic importance of reporting industry sectors Industry World production Projected growth Worldwide employees Food and drink An estimated USD One of the largest 4,000 billion is spent on employers worldwide. It food worldwide: 73% in represents 19.6% of all retail outlets and 27% in industry employment in food service Brazil and 11% in the establishments. Global European Union. exports of agri-food products have increased from USD250 billion in 1988 to USD442 billion in 2000.
Fertilizer In 1999/2000, the Assuming a slow-down The exact employment world fertilizer industry in the growth of world figures are difficult to produced 155 million population and crop compile as the fertilizer metric tonnes of production and industry cuts across primary plant nutrients. improved fertilizer use many sectors including The total trade of efficiency, world mining, raw materials fertilizers and fertilizer fertilizer use is forecast suppliers, manufacturing, raw materials in the to reach some 180 warehousing, packaging, bulk shipping market is million nutrient tonnes distributing, fourth in volume after by 2030, a compound transportation, retailing, iron ore, coal and increase of 0.8% etc. grains. annually. Production will continue to shift towards endowments of the necessary natural resources, many of which are found in developing countries.
Refrigeration Total worldwide annual In the US, the number In the US, heating, air- sales of refrigeration, air- of heating, air- conditioning and conditioning and heat- conditioning and refrigeration technicians pump equipment are refrigeration held about 286,000 estimated to be about technicians and jobs in 1998. Other USD200 billion with installers is expected developed countries annual production of 82 to increase at the rate have similar numbers of million domestic of 10% and 20% refrigeration technicians refrigerators, 15 million between now and with respect to their m3 of cold storage 2008. populations. facilities, 40 million air- conditioning units, 42 million passenger car and commercial vehicle air-conditioning systems. 24 Industry achievements and gaps
Table 2: Global economic importance of reporting industry sectors Industry World production Projected growth Worldwide employees Transport industries Automotive The automotive The total number of It accounts for 2% to sector contributes vehicles in OECD 4% of the labour force from 4% to 8% of the countries is expected in OECD countries. gross domestic to grow by 32% from One out of seven product in OECD 1997 to 2020. On a American jobs is in car countries. In 2000, 58 global scale, the OECD manufacturing or a million motor vehicles projects a 74% related industry. In the were produced increase in the total EU, 1.2 million people (excluding commercial number of cars in the are directly and 12 vehicles), representing same period.The total million are indirectly a 4% increase over number of motor employed by the 1999. Production was vehicle kilometres automotive industry. equally distributed travelled is expected One qualified job in the between North to increase by 40% in automotive industry and South America OECD regions and by indirectly creates seven (19.7 million), Europe 86% worldwide to ten qualified jobs in (20.2 million) and between 1997 and related industry sectors. Asia (17.9 million). 2020.
Aviation Transporting over A mid-range scenario More than 3.9 million 1,600 million forecasts an average people are directly passengers and 29 traffic growth rate of employed by the air million tonnes of 3.1% a year between transport industry freight, in 2000, the air 1990 and 2050 which worldwide. transport industry results in a doubling of generated a turnover traffic every 22 years. of USD307 billion. Railways Annual investment in Total global railways worldwide employment of over 8 reaching USD 70 million people at the billion of which end of 1997. USD45 billion in infrastructure and 25 billion in rail vehicles.
Road transport Trucks carry nearly Heavy vehicle 80% of all goods in transport will increase industrialised by more than 40% countries, and buses between 1995 and and coaches play an 2020. important role in public transport and tourism. Industry achievements and gaps 25
Table 2: Global economic importance of reporting industry sectors Industry World production Projected growth Worldwide employees Service industries Accounting The gross revenues of The International the five major Federation of accountancy firms Accountants represents amounted to two million accountants approximately in 114 countries. USD63.2 billion in 2000. Advertising Worldwide advertising expenditures increased from USD213 billion in 1990 to USD265 billion in 2000. Finance and The assets of the insurance world’s top-ten banks alone roughly amounted to the accumulated GDP for all 108 developing countries in 1999.The world private insurance market had a premium volume of USD2.4 trillion in 2000 with an annual average growth of 6% over the last ten years.
Information and Revenue from the In 1999, the industry communications provision of telecom employed a total of 5.8 technology services and million staff. equipment was estimated at USD1,160 billion in 2000, double that of 1990. Travel and tourism In 2001, directly or International tourist 207 million jobs indirectly contributed arrivals increased 7.3% worldwide, over 8% of USD3.3 trillion to in 2000 to 698 million. all jobs. global gross domestic In less than a decade, product (GDP), international tourist almost 11% to total arrivals are projected GDP. to reach one billion. 26 Industry achievements and gaps
2.2 Environmental performance
• Energy efficiency and energy consumption - Impacts of product use and consumption. For • Reductions in ODS, GHG and air emissions many products, most serious environmental • Waste reduction/recycling / material efficiency impacts (energy consumption, air emission, water • Water conservation pollution, etc.) occur during the use of the products. Industry needs to do much more in In brief adopting full life cycle, product stewardship and Significant efforts have been made by participating eco-design practices, in partnership with its industries in reducing their environmental footprint. stakeholders. Increased awareness and improvements in the - Cleaner production or end-of-pipe? It is also application of management tools have resulted in difficult to know whether pollutant and waste reduced energy consumption, emissions and toxic reductions are achieved through real cleaner releases, and greater resource and water efficiency. production techniques (at-source prevention) or Consequently, performance in these areas have merely shifted between air, water and soil through received more attention in the sector reports than end-of-pipe technologies. other more difficult to measure impacts, such as - Growth overtaking gains/rebound effect. Gains biodiversity or the environmental impacts of product made in relative reductions or efficiencies (i.e. per use, that will require more attention in the future. unit of production) are in many cases being overtaken by economic growth and may also be New legislation and regulation requirements, business mitigated by difficult to measure ‘rebound’ effects, self-interest in reducing costs related to raw materials in which gains in one area are offset by new and treatment of emissions and wastes, and growing demands as a result of the gains. public concerns are frequently credited as the main - SMEs. The particular needs of the majority of drivers for these achievements. International SMEs (particularly those outside the policy reach conventions, such as the Montreal Protocol on of multinational corporations or influence of Substances that Deplete the Ozone Layer, have also competitive certification schemes such as ISO been a key driving force in motivating industries to 14000) in reducing their environmental impacts invest in new technologies that have less are still largely unmet, despite years of identifying environmental impacts. Cleaner production (and SMEs as a priority. associate, preventive concepts such as eco-efficiency) - Developing countries. To some degree, has moved from a few, multinational corporations to developing countries and countries undergoing wide acceptance as a first option of choice, economic transition have been able to ‘leapfrog’ promoted by industry associations as best practice. over the past environmental mistakes of industrialised countries, integrating cleaner Key gaps and stakeholder concerns production early into industrial development and - Lack or incomparability of data. It is difficult to taking a more integrated approach to sustainable measure real progress globally.There are development. However, much remains to be significant differences in what is measured, how it done in recording and reporting progress in these is measured (relative or absolute reductions), and countries to get a better sense of areas of real the time period used, making it difficult to progress and need. determine whether environmental progress is real - Global shift of production. There is a global shift or simply a result of economic downturns or of manufacturing production towards poorer geographic shifts in production. countries that often do not have the resources or capacity to manage the accompanying environmental, health and safety impacts. Industry achievements and gaps 27
Energy efficiency and American refrigerator consumes 48% less energy consumption energy than it did in 1980. Rising energy costs, technological Achievements improvements and environmental management Many industries started to invest in energy systems have also led to significant energy efficiency in the 1970s, prompted by the two reductions in the transport industries.The energy crisises and rising costs.Thus, much automotive industry has greatly reduced progress in reducing energy consumption had energy consumption of both production already been made by 1992. Nevertheless, processes and products and the aviation many industries continue to steadily improve industry points out that new aircraft in their energy efficiency through better production today use three times less fuel per housekeeping and technology developments, seat-kilometre than aircraft in operation in the and voluntarily commit to more reductions in early 1960s. the future. Service industries, such as advertising, finance, In the extractive industries, the oil and gas and telecommunications have relatively limited sector reports that co-generation is reducing energy use relative to extractive and energy consumption in oil operations by up to manufacturing industries. Nevertheless, they 30%. In refining, an 8% improvement in energy too are starting to look into ways to reduce efficiency worldwide since 1992 is reported. In energy consumption by modifying office its annual Survey of Global Energy behaviour and choosing energy efficient Consumption at primary aluminium production equipment. facilities, the International Aluminium Institute (IAI) reports that smelters in the 1990s used a Chapter 30 0f Agenda 21 third less electricity per tonne than the Strengthening the Role of Business and equivalent plant in the 1950s.The steel Industry industry, a major user of energy, accounting for 5.7% of total energy consumption in Germany, ‘Production: Governments, business and for example, has reduced by 24% since 1989, industry, including trans-national the energy consumed in the manufacture of a corporations, should aim to increase the tonne of steel. efficiency of resource utilisation, including increasing the reuse and recycling of In the secondary, manufacturing industries, the residues, and to reduce the quantity of waste chemical industry has consistently improved its discharge per unit of economic output’. energy efficiency over the years and nationally sets goals for further improvements. In the United States, the chemical industry achieved Key gaps and stakeholder concerns an energy efficiency improvement of 13.5% from 1992 to 1998 and in Europe, the • Although gains in industrial energy industry has committed to voluntarily reduce efficiency have ensured that consumption specific energy consumption by 30% by 2010. has not grown more than it is predicted to, The electricity sector reports that new coal total energy consumption continues to plants are averaging 40% efficiency and new increase in both developed and developing gas combined cycle plants 55% efficiency.This countries. More needs to be done to contrasts with the average 28% thermal ensure that any energy be used as efficiency of existing fossil fuel power efficiently as possible. generation in the developing world. Similarly, in • In many countries, incorrect price signals, the refrigeration industry, a typical new due in part to energy subsidies and in part to externalities not being adequately 28 Industry achievements and gaps
accounted for, continue to act as an reduction in the United States since 1988 economic disincentive for improved energy even though chemical production increased by efficiency. 18%. Similarly, nitrogen fertilizer plants in the • Higher energy efficiency often leads to a United States are able to report that their rebound effect in which, for examples emissions have been cut by 75% since 1987. reduced energy costs lead to increased The refrigeration industry points to the energy demand. Montreal Protocol on Substances that Deplete the Ozone Layer as a key driving force in Ozone-depleting substances, reducing the proportion of fluorocarbons in greenhouse gases and air emissions total annual greenhouse gas emissions from its peak of 14.6% in 1988 to 6.5% in 1995. Achievements Energy efficiency leads to reduced greenhouse In the transport industry, the aviation sector gases and other air emissions and pollutants, reports that today’s aircraft engines roughly
such as CO2,NOX, SO and lead. More emit 15 times less volatile organic compounds, stringent legislation and market competition five times less carbon monoxide and 20% less has motivated industries to do better nitrogen oxides than engines certified before housekeeping and invest in new technologies 1976.The automotive industry points out that to further reduce emissions and toxic releases. 100 of today’s new cars produce the same In the effort to combat air pollution, success amount of emissions as a car built in the stories over the last fifteen years have 1970s, as a result of new engine technology
included: the reduction of SO2 emissions, and advanced exhaust gas treatment. Strict phasing out the production and consumption legislation in the European Union (EU) is seen, of the main ozone depleting substances, and by the automotive industry, to contribute to introducing the use of lead free petrol, which the continuing downward trend in road traffic in turn permitted the use of catalytic emissions, despite the increase in traffic
converters in vehicles. For example, the total volume, and NOX, HC and CO emissions are production globally of CFCs in 1999 was only predicted to be reduced by at least 85% by 4% of the peak production level of 1988. 2020 (as compared with 1990).
In the extractive industries: the aluminium Key gaps and stakeholder concerns sector reports that despite an increase in worldwide aluminium production of about • Economic growth, increased demand for 24% since 1990, there has still been an overall products and services outweigh or reduction of about 40% in the total annual threaten to overtake many of the gains emissions of perfluorocarbons, which have up made. to 9,200 times the warming potential of • Effective implementation still remains a
carbon dioxide (CO2).The iron and steel challenge.The oil and gas industry reports industry provides case studies of cleaner that while 85% of gasoline sold worldwide production technologies dramatically reducing is lead free, leaded gasoline is still being emissions of hydrogen cyanide, benzene, sold in nearly one third of all countries in toluene, xylene and hydrogen sulphide spite of the Rio+5 discussions urging emissions. accelerated elimination of lead in gasoline. • It is difficult to assess how much of the In secondary/manufacturing industries, the emissions have been reduced at source mandatory Toxic Release Inventory in the (cleaner production) and how much has United States enables the chemical industry to simply transferred to other media (water, track releases of toxic chemicals to air, water land) through end-of-pipe technologies. and land, and to thereby report a 58% Industry achievements and gaps 29
• Air quality continues to deteriorate in most system to mark the different parts and urban centres; UNEP’s GEO 2000 report components of automobiles to ultimately be highlighted urban air quality in mega-cities able to comply with the recycling in the developing world as a critical issue. requirements made by some governments.
Waste reduction, recycling and Key gaps and stakeholder concerns material resource efficiency • Increased economic activity continues to Achievements lead to increased waste generation. In Waste reduction - through better developed countries and rapidly housekeeping, technology advances and design industrialising countries, waste generation or process changes - has seen significant rates per capita continue to increase. advances over the last ten years driven largely • New ‘throw-away’ products continue to be by business self-interest in reducing costs and introduced by industry to meet changing increasing competitiveness. Outside factory consumer needs and expectations, with gates, waste recycling has also increased little or no consideration of sustainable significantly as local authorities, responding to development beyond short term growing public awareness develop the economic gain. necessary infrastructure needed to collect and • The majority of countries are still struggling recycle materials. Some national governments to provide basic waste management are also experimenting with take-back services such as collection and control at legislation, placing the responsibility on disposal sites. companies for taking back used products they • The trend of urbanisation and the global produced.Waste reduction and waste shift of manufacturing to developing recycling improve resource and energy countries exacerbates an already critical conservation. waste management problem.
By recycling nearly 300 million tonnes of scrap Fresh water conservation each year, the iron and steel industry does not have to extract 475 million tonnes of natural Achievements iron bearing ore, and saves energy equivalent Industries that are located in countries where of 160 million tonnes of hard coal. Actual climatic or geographic conditions make water scrap steel recycling rates of over 80% are a scarce resource are making concerted achieved on a worldwide basis and over 40% efforts to maximise water efficiency. of all steel is manufactured using processes that consume scrap as the primary input Automobile manufacturers report that material. advanced wastewater treatment processes are constantly being improved and the Recycling of aluminium requires only 5% of the introduction of new paint shops has reduced energy and 5% of the CO2 emissions as waste water to a minimum, and in some cases compared with primary production. Recycled this is even a closed loop system.This is metal already satisfies about a third of world especially important for water distribution demand for aluminium.The role of consumers systems in developing countries or in countries is evident in, for example, beverage can like South Africa where climatic conditions call recycling.Today recycling of aluminium in the for conservative use of ground water.Water form of beverage cans show rates that range consumption in automobile production has from 79% in Japan and 78% in Brazil to 62% in effectively been reduced by up to 85%. the United States and 41% in Europe. Preventing and controlling industrial The automotive industry has developed a wastewater discharges is an element of the 30 Industry achievements and gaps
chemical industry’s Responsible Care Key gaps and stakeholder concerns programme. In Mexico, water consumption, tracked by ANIQ, decreased by 10% between • The water situation remains critical. 1997 and 2000.The chemical industry Although industry accounts for ‘only’ an contributes to water purification and water estimated 23% of fresh water use treatment technologies, recognising that competing uses for water is already intense unwanted side-effects (persistent nature of in many parts of the world. Industries that chlorine products) remain to be resolved.The consume a lot of water directly or industry also sees as part of its responsibilities indirectly contribute to potential sources of the need to encourage responsible use of its conflict within and between countries.Yet products (fertilizers, pesticides and herbicides) these are often the industries that are to avoid water pollution. being encouraged for economic development and foreign investment. Some companies in the food and drink • Pollution of freshwater resources industry have elaborated corporate water contributes to water shortages, yet in many policies that state their commitment to the countries, industrial waste water is responsible use of the world’s water discharged into the environment without resources. Cleaner production techniques are any treatment while fertilizers, pesticides increasingly being used for conserving or and other agrochemical products are reusing water. polluting surface or underground water sources. The tourism sector reports that, although tourists typically consume more water than local residents, many hotels have adopted systems to reduce consumption of water, and that hotel developments help cover the high costs of de-salination plants and waste water treatment facilities that are needed by the local community. Industry achievements and gaps 31
2.3 Social aspects
• Workplace issues that environmental responsibility was a decade ago. • Human rights Consequently, there is no general agreement yet on • Other social issues what corporate social responsibility means in practice; some even mistakenly include environmental In brief responsibility as a social one. There is growing awareness among business and industry that the social side of global sustainable Participating industry sectors have thus struggled on development needs to be taken into account how to deal with, measure and report on their alongside environmental and economic aspects. sector’s social contributions and implications.To date, Leading edge companies and industries are trying to the focus has been primarily on workplace issues, better understand the direct and indirect social human rights and other social issues such as implications and contributions of their activities. HIV/AIDs and child labour.This aspect of sustainability reporting will likely improve in the Many are finding that companies that choose to future, as business and industry gain a better adopt corporate social responsibility (CSR) principles understanding of emerging (and sometimes not only achieve benefits to society, but find it helps conflicting) societal expectations of corporate social them enhance their reputation, improve responsibility, helped by various multi-stakeholder competitiveness and strengthen their risk initiatives, such as the Global Compact and the management. However, the concept of corporate Global Reporting Initiative, that include social social responsibility, in the context of sustainability, is elements and performance indicators. still very much in its infancy, in much the same way
Workplace issues Care companies.The food and drink industry reports that most companies report publicly Occupational health and safety is one area in on progress towards health and safety which much progress has been made in indicators such as frequency of workplace measuring companies’ social responsibility to accidents, lost workdays due to illness or employees, particularly in industries or sickness, breaches of legislation, etc. In the countries where labour organisations have had automotive industry, workplace security has a strong influence and participation in been increased to a high standard (machines improving company health and safety practices. have infrared safety features, etc.). In some industries, improvements are not limited to developed countries. In the Other workplace issues, such as union rights, aluminium industry, the best performing mines, human resource policies, work life balance and refineries and smelters in safety performance diversity, and profit-sharing are also seen as in the year 2000 were in India and Brazil and elements of corporate social responsibility the best performing alumina refinery was also (CSR), although this varies widely among in India. countries, industries and companies.
The chemical industry commenced collection Key gaps and stakeholder concerns of health and safety data in 1999.Thirty two countries reported on the number of fatalities • Health and safety practices still leave much and the number of lost time injuries per to be desired in many industries, million working hours, in their Responsible particularly in developing countries.The 32 Industry achievements and gaps
fatality rate, the crudest performance stakeholders to address sexual exploitation of health and safety indicator, in the coal children that is a concern not just for hotels mining industry, for example, is over 300 that may be inadvertently implicated, but also times worse in China (prompting the for tour operators. government to close many of the small scale mines that are unable to meet health and safety standards) than in Australia ‘Given its key contribution to gross global where large scale operations dominate. output and employment, hotel industry leaders are being challenged to Human rights demonstrate greater levels of social responsibility and will be increasingly called The protection of human rights is a basic upon to address the gap between so-called ‘haves’ and ‘have-nots’.’ element of corporate social responsibility. Tourism sector report Some companies have adopted internationally accepted norms of human rights, guided by codes of ethical conduct such as the Global Sullivan Principles (1977), SA 8000 on labour conditions for companies and their suppliers (1997), AA1000 social and ethical accounting principles (1999), and by the Global Compact (2000). Some companies in some sectors, telecommunications for example, have now launched initiatives to put human right policies into practice, although it is too early to determine their success.
Key gaps and stakeholder concerns
• This area is still in its infancy, and only a handful of companies are really working to understand and improve their industry’s impact on human rights. Other social issues
Several industries report on various programmes they have established to address other social issues such as HIV/AIDS. In the tourism industry, for example, the International Hotels and Restaurants Association (IH&RA) published a manual in 1999 to address the issue of HIV/AIDS in the workplace, in collaboration with UNAIDS, designed to help hotels and restaurants of all sizes to develop their own HIV/AIDS policies and awareness programmes, illustrated by examples of industry best practice.The industry is also working with governments and other Industry achievements and gaps 33
2.4 Tools for sustainability
• Multi-stakeholder dialogue extent, enabled the transfer of environmentally sound • Partnerships technologies, through global multinational standards, • Voluntary codes and initiatives joint ventures, and multilateral development • Environmental management systems assistance. • Environmental/sustainability reporting • Environmentally sound technology and research Key gaps and stakeholder concerns and development (R&D) - Growing gap between the leading minority and the majority. In some industries, there is a In brief growing gap between the few companies that Over the last decade, many tools have been used by have taken the lead, and the silent majority. industry to put sustainability into practice. Multi- - Implementation and verification. Most voluntary stakeholder dialogue is increasingly gaining initiatives are still characterised by problems of acceptance as a tool for business understanding of effective implementation, monitoring, societal expectations, for avoiding problems and for transparency, and free-riders. finding sustainability solutions.Voluntary initiatives - Linkage with public policy framework. Few have become a more common tool to spread voluntary initiatives are directly linked with industry awareness of the need to improve government policy and regulatory framework in a environmental performance over and beyond way that would complement the strengths and regulatory requirements. Environmental management weaknesses of both.Voluntary initiatives cannot systems (EMS) have become synonymous with good provide a substitute for an effective regulatory business practice, and a competitive market framework.The right balance of regulations, advantage when coupled with third party economic measures and voluntary initiatives, certification such as ISO 14001 or the European appropriate to specific socio-economic and Eco-Audit. cultural contexts, needs to be developed. - Stakeholder consultation. Many voluntary Environmental and sustainability reporting by initiatives are still being developed with little, real companies and associations is becoming increasingly consultation of those outside the industry. valued as a tool for measuring and communicating - Minority practice. Corporate environmental and corporate and industry performance. A key social reporting is still a minority practice, and achievement has been the development of broad- only a third of multinational corporations are based stakeholder consensus on basic sustainability using comparable frameworks such as the GRI in reporting indicators as developed by the United reporting their performance. Nations-sponsored Global Reporting Initiative. - Reporting indicators. Most industry sectors have Industries in highly competitive markets are investing not yet developed industry consensus on a portion of their research and development (R&D) performance indicators for reporting on their budgets into developing environmentally sound specific sector’s progress and gaps. technologies to reduce operating costs and to gain - Unenvironmentally sound technology transfer. new market share. Although globalisation may facilitate the transfer of environmentally sound technology, it does not The globalisation of information and communication stop the transfer or ‘dumping’ of polluting technologies has facilitated the transfer of best technologies or products that have been banned practices, while globalisation of markets has, to some in other countries. 34 Industry achievements and gaps
Multi-stakeholder dialogue adjust mobility trends to environmental requirements? Will people in about 50 Successful companies and industries of the years have to make energy choices future will be those that gain an early between housing and travel? understanding of emerging societal needs and aspirations of sustainable development • Developing the appropriate public policy framework for sustainability. All sector reports highlight the crucial role of ‘In concentrating on securing future supplies governments in providing the appropriate of oil and gas, we have perhaps paid less framework in which industry operates, at attention to other, equally important aspects national and international levels. Basic of our business. As a result, we are sometimes perceived as arrogant, top-down, regulatory standards, effectively enforced, non-participative polluters, more interested are seen as important in providing a equal in providing cheap energy to developed playing field, particularly in industries nations than fostering long-term prosperity consisting of a large proportion of small elsewhere.. ...We readily acknowledge that and medium-sized enterprises (SMEs). Even as individual companies - and as an with the best regulatory framework industry - we do not always have the right possible, however, other approaches are answers. Sometimes, we do not even ask also needed. Appropriate and consistent the right questions.Therefore, probably the economic signals and market mechanisms biggest challenge we face is in working more (tax credits, pollution charges, emission closely and effectively with others; listening trading programmes, etc.), voluntary to and learning from diverse points of view.’ initiatives and other measures are Oil and gas sector report necessary to complement (not replace), an effective regulatory framework. As neither Gaining this understanding will mean moving government, industry or non-governmental from one-way stakeholder communication organisations can claim to have all the (public reporting) and ad hoc stakeholder knowledge needed in developing an consultation (what should be in a report or effective public policy framework for policy) to on-going multi-stakeholder dialogue orienting society towards more sustainable to exchange perspectives and perceptions, development, a multi-stakeholder approach build mutual understanding and trust, and is called for to help governments, and determine priorities and targets for the future. business, in taking decisions. Areas in which multi-stakeholder dialogue will be increasingly required at the local, national and international level include: ‘I appreciate the (chemical) industry’s effort in taking into consideration the views of stakeholders. I share with the industry the • Problem or issue management. Many, if not belief that there is much more to be done all sustainability issues apply not just to by all parties concerned with regards industry, but to human society as a whole. chemical safety, health and environmental Dialogue between nongovernmental issues.’ organisations, local communities and Dr Lynn R Panganiban, Pesticide Action industry is seen by the aviation industry as Network,The Philippines ‘more than ever necessary’ to address common NGO questions that apply to the human society as a whole, such as: how • Improving the effectiveness and credibility much travel is necessary to meet basic of voluntary initiatives by involving civil access needs? Isn’t it time for society to society in determining their objectives, Industry achievements and gaps 35
measuring their effectiveness, and verifying to phase-out leaded gasoline in those areas that all signatories are doing their best to where it still exists. implement them.The coal industry is among those that recognise the importance of involving civil society groups ‘Industrial pollution is from point sources, and therefore relatively easily corrected. However, in setting standards and verifying the most of the worst situations today come, in industry’s performance.The chemical fact, from diffuse sources of pollution, often industry now has considerable experience related to consumption rather than with different types of stakeholder production. In other words, industry alone can engagement in its Responsible Care only do so much. Industry should certainly be programme in different socio-economic ready to look at the life cycle of its products, and cultural contexts, and uses labour and but without co-operation from everyone other stakeholder concerns in defining its involved throughout the life cycle, only so priorities for improving Responsible Care. much can be accomplished.’ Kristen E Sukalac, International Fertilizer • Global stakeholder engagement. Most, if Industry Association not all of the reporting industry sectors found the UNEP-facilitated multi- stakeholder consultation extremely useful • Promoting sustainable use and in getting a better understanding of consumption of products. Companies and different global stakeholder perspectives industries are beginning to understand that and perceptions, and many have stated in society increasingly expects them to take their reports their intention to continue responsibility for their products after they such global stakeholder consultation. leave the factory gate. However, industry alone cannot ensure that their products Public-private partnerships are used in a sustainable way.This requires new forms of partnership between Multi-stakeholder dialogue may lead to new industry, governments and other public-private partnerships, an increasingly stakeholders.To promote the safe and important tool for sustainability. Public-private efficient use of pesticides, for example, partnerships may be partnerships between CropLife International, representing the one or more companies and plant science industry, established in 1991 intergovernmental organisations, national or the Safe Use Initiative, providing education local governments, non-governmental and training in developing countries and organisations and/or community groups. involving the industry, national and local Public-private partnerships will increasingly be government authorities, international donor needed in diverse areas, such as: organisations, NGOs and farmers co- operatives.The fertilizer industry also • Discouraging the use and transfer of older recognises that farmers must receive better and less efficient, polluting technologies in training in the use of fertilizers, asking the developing countries will require more questions of how this is best done and by than the efforts of industry, although whom. industry could take more of a leadership role.The International Petroleum Industry Environmental Conservation Association ‘Solutions will come from a combination of (IPIECA), for example, is working with the new technologies, changes in human auto industry and several behaviour and institutional capacity.’ intergovernmental organisations to Automotive sector report encourage governments around the world 36 Industry achievements and gaps
Voluntary codes and initiatives ‘One of the most promising initiatives today to link social development and private Achievements enterprise is the proposed Clean Development Mechanism under the Kyoto Voluntary industry initiatives have multiplied Protocol. Given the longevity of power since 1992, when only the International generation investments, emission reduction Chamber of Commerce’s Business Charter for targets set by the Kyoto Protocol will most Sustainable Development, the chemical likely not be achieved by the electric power industry’s Responsible Care programme and a industry without flexible mechanisms.’ handful of national initiatives were being Electricity sector report developed.These have taken various forms, for example, codes of conduct, voluntary commitments, quantified targets. • Meeting infrastructure needs.The Air Transport Action Group bases its ‘Strategy By the end of the 1990s, the OECD reported for Aviation in a Sustainable World’ on the existence of over 30,000 local initiatives in three partnership principles - partnerships Japan, more than 300 in the EU and 42 in the to develop infrastructure and links with United States.The Global Compact, a personal other transport modes; partnerships to initiative of United Nations Secretary General improve the industry’s efficiency and Kofi Annan, providing a value-based set of environmental performance; and business operating principles on the partnerships with local communities and environment, labour and human rights, has other interest groups around airports. In effectively contributed to raising awareness of the automotive industry, new public-private the broader business community. and/or private-private partnerships will be needed to develop the infrastructure that will be needed to distribute hydrogen for Chapter 30 of Agenda 21 fuel cell or other hydrogen-driven vehicles, Strengthening the Role of Business and and/or for other alternative fuels. Industry
• Expanding access to electricity to the two ‘Business and industry, including transnational billion people currently without and de- corporations, should be encouraged to coupling rising electricity production from adopt and report on the implementayion of greenhouse gas emissions. Public policies codes of conduct promoting best and governance systems, and private environmental practice.’ technical expertise and entrepreneurial skills are needed in developing and The chemical industry’s Responsible Care propagating low- and zero-carbon emitting programme, for example, has grown from 13 systems including off-grid renewable power countries in 1992 to 46 today, accounting for systems for the rural poor. 85% of global chemical production. Nevertheless, the industry is the first to • Combating the digital divide:The recognise that the programme suffers from information and communication technology some inconsistent implementation, industry points to a regional action plan performance and verification around the world that is being developed by the Association due to variations in the understanding or lack of South-East Asian Nations (ASEAN) to of resources and places a priority on working combat the digital divide. Private investment with stakeholders to improve the quality of will be focused on creating infrastructure Responsible Care in all countries. while public policy will aim to create the best legal and regulatory environment. Industry achievements and gaps 37
Included in the Responsible Care initiative, are Council of Cruise Lines (ICCL) in June 2001. A three other voluntary programmes on product growing number of hotels have also been stewardship, high production volume involved in the creation of codes of conduct. chemicals, and long-range research all of which Tour operators have joined UNEP,the WTO aim to broaden knowledge and safe and UNESCO in the development of a management of chemicals.The fertilizer voluntary initiative. Other sectors that have industry was also an early pioneer, developing since been involved in the development of a voluntary initiative with the assistance of international voluntary initiatives with UNEP international organisations to promote Best are the advertising, information and Agricultural Practices to Optimise Fertilizer communications technology, mining, metals and Use for different regions of the world. automotive industries.
The electricity sector has developed Key gaps and stakeholder concerns ‘Guidelines for Best Practices’, based on the E7’s 1994 Sustainable Energy Charter, to • Few voluntary initiatives are directly linked provide support in developing countries and with government policy and regulatory economies in transition on sustainable energy- framework in a way that would related issues. It has also developed a set of complement the strengths and weaknesses ‘social trust’ principles, in consultation with of both. stakeholders, on essential aspects of the • Many sectors still have not developed such corporation-stakeholder relationship. codes of best practice to guide their Automotive associations have signed a members. voluntary agreement with the European Union • Many often remain just good intentions,
(EU) to reduce average CO2 per-kilometre with little effective implementation, emissions for new car fleets by 2008/9 that monitoring and verification programmes to represents a 25% reduction compared with ensure their effectiveness and credibility. 1995 figures. • No effective sanctions can be applied to those not adhering to the voluntary Only a handful of bankers had joined UNEP to initiative. Even the best voluntary initiatives launch the Finance Institutions Initiative in can be publicly harmed by ‘free-riders’, 1992; today, the initiative includes over 180 companies which do not effectively apply participants from forty countries. Similarly the industry’s voluntary standards. more than 80 insurance companies are • Many voluntary initiatives focus on the involved in the initiative. Consulting engineers, environmental aspects of sustainable building on a 1990 policy paper, recently development only. published their Business Guidelines for Sustainable Development in Consultancy Environmental management systems Services. Achievements Public awareness, combined with the threat of Since 1992, the number of companies that liability, has also made impact in the tourism have established corporate environmental sector. One example is the cruise industry. policies and environmental management Recently, for the first time an association of systems to put such policies into practice has international vessel operators has adopted dramatically increased. International mandatory waste management practices and certification of environmental management procedures.The Cruise Industry Waste systems have provided companies with a Management Practices and Procedures were certified environmental management system a adopted by members of the International competitive edge and public recognition. 38 Industry achievements and gaps
Environmental management systems have also automatically mean good environmental driven ‘supply chain management’ where larger performance or that a company is in companies work more closely with their compliance with a country’s regulations; suppliers - often small and medium-sized • environmental management tools - such as enterprises (SMEs) - to reach common environmental accounting - still need to be environmental objectives. further developed.
The automotive industry reports that most Environmental and international car manufacturers now have ISO sustainability reporting 14000 and/or the European Union Eco- Management and Audit Scheme (EMAS) Achievements certification. Environmental management Since Agenda 21, more than 2,000 companies systems are an integral component of the worldwide now issue reports on their chemical industry’s responsible Care environmental performance. Among the 250 programme, and many member companies largest companies in the world, more than a have the European Eco-Audit and/ or ISO third now produce environmental reports in a 14000 certification. ISO certification in food wide diversity of industries such as chemicals, and drink industry has increased from under telecommunications, mining, minerals and 300 certification in 1998 to over 800 in 2000. metals, tourism, food and beverage, aviation, railways and automotive industries, and Most companies in the telecommunications consumer products. industry have also developed environmental management systems based on ISO 14000 More recently, some companies have standards; the first company to ever receive expanded their reporting efforts to cover all worldwide ISO 14001 certification for its three facets of the sustainable development worldwide manufacturing and non- triangle: environmental, social, and economic manufacturing operations was a major impacts. Building upon other reporting telecommunications company. initiatives worldwide, the Global Reporting Initiative has achieved broad based stakeholder Key gaps and stakeholder concerns consensus on emerging generally accepted practices of sustainability reporting. • in many parts of the world, environmental The aluminium industry reports on global management systems remain to be greenhouse gas emission data, energy implemented, in particular by small and consumption and global safety data, and sends medium-sized enterprises (which, in most out benchmarking reports so that individual countries, account for a large proportion of plants can compare their performance with environmental impacts) but also by large, other plants using the same technology. national companies, especially those that do not compete in international markets; In the chemical industry, most, if not all, the • although multinational corporations may multinational corporations publish strive to apply the same high environmental or sustainability reports, with environmental standards wherever they some leading the way in applying the Global operate, actual practice of subsidiaries, Reporting Initiative framework.The suppliers and contractors still raises many International Council of Chemical Associations questions, particularly in different socio- (ICCA) has set itself the goal of developing economic and cultural contexts; indicators to compile worldwide chemical • environmental management certification industry performance reports and to publish schemes, such as ISO 14000, do not data showing the impact of the industry on all Industry achievements and gaps 39
areas of society and the environment. are addressed, they are often limited to Although environmental reporting is not yet a charitable contributions to the community wide-spread practice in the food and drink (corporate philanthropy) rather than industry, environmental performance indicators addressing broader social issues and to measure water consumption, energy impacts of a company’s role and activities. consumption, waste water generation, air emissions and waste generation are being used ‘While there are some drivers for by some companies and associations. sustainable reporting, they are not sufficient. Once standardised formats have been Virtually all the members of the information developed and tested, only government and communications technology sector’s regulation will increase their use The fact Global e-Sustainability Initiative (GeSI) publish that only 65 out of 60,000 transnational environment, health and safety reports, and corporations have signed the Global the European Telecommunications Network Compact is indicative of how far we have Operators Association (ETNO) uses both to go. Hopefully, at least those 65 will begin qualitative and quantitative indicator s to (or continue) to use the GRI reporting biannually report on the performance of its format.’ Charter signatories. In the financial industry, a Lorraine Ruffing, working group of the UNEP Finance Initiative United Nations Conference on Trade and Development (UNCTAD) is currently developing internationally accepted environmental management and reporting guidelines under the GRI framework. Similarly, in the tourism industry, reporting indicators Environmentally sound technology are being developed by tour operators under and R&D the aegis of the UNEP Tour Operators Initiative.The automotive industry is doing Achievements the same. Environmentally sound technology is increasingly seen as an element of good Key gaps and stakeholder concerns business, enabling companies to avoid or reduce costs, and gain new market share.The • Corporate environmental or sustainability globalisation of information and reporting is still a minority practice in communication technologies has facilitated the many industries and countries, particularly transfer of best practices and technologies, where legal frameworks or public pressure catalysed by industry networks and is weak. international organisations such as UNEP’s • Where environmental reporting has gained International Cleaner Production Programme ground, what is measured and reported and OzonAction. still varies widely from company to company, making it difficult to distinguish Globalisation of markets has also helped in between good and poor performers, and transferring environmentally sound to aggregate industry-wide data. technologies to rapidly industrialising countries • Reports often illustrate only the positive through joint ventures and the practices of news, failing to mention shortcomings or multinational corporations that apply the same give negative case studies from which one standards of performance wherever they can learn a lot about the companies’ operate. Leadership companies, anticipating approach and capability to change. new global markets to meet emerging global • Reports focus predominately on needs and requirements (e.g. greenhouse gas environmental issues.Where social aspects reductions and the Kyoto Protocol) are 40 Industry achievements and gaps
investing a portion of their research and The automotive industry is heavily investing in development (R&D) budgets in developing the new alternative engine systems such as cleaner and alternative technologies needed hydrogen driven vehicles, in the aim of
for sustainable development. reducing CO2 emissions.
In the coal industry, cleaner coal technologies Key gaps and stakeholder concerns have been developed to reduce the volume of coal consumed and emissions produced per • Environmentally sound R&D accounts for unit of energy generated and minimise waste only a fraction of most industry sector’s residuals. R&D of cleaner coal technologies is R&D budget, often more geared to shared through international bodies such as developing new products that sideline the International Committee on Coal sustainable development needs. Research.This has helped lead to growing • More R&D is imperative in order to momentum for greater adoption of cleaner achieve sustainable development goals. coal technologies in developing countries. In • Most R&D is still carried out in the China, for example, the development and developed countries. More R&D needs to application of cleaner coal technologies is a be invested in providing technologies that national priority, and integrated into law under meet the particular needs of developing the 1996 Coal Law. countries. • More needs to be done to assist small The electricity sector reports on R&D and medium-sized enterprises to do accomplishments in improving the efficiency technology audits, to select appropriate and reducing emissions of combined cycle gas technology, to acquire it and develop the turbine, new and existing coal-fired skills to master it. technologies, wind turbine, hydroelectric installations and small-scale and existing nuclear reactors. Industry achievements and gaps 41
2.5 Integration for sustainability
• Social, environment and economic integration - social, environmental and economic integration - • Integrating sustainability criteria into mainstream moving from a fragmented approach that deals decision-making with environmental, social and economic aspects • Cross-sector integration for sustainability separately to a holistic approach (triple bottom • Global integration line, or people-planet-profits) that unites them; - integrating sustainability criteria into mainstream In brief business decision-making rather than a separate, Clearly, the sustainability agenda has evolved since niche operation; the Earth Summit.There has been slowly but steadily - cross-sector integration for sustainability- growing appreciation that, in the words of Nelson moving from a sector-specific approach to Mandela,‘ if globalisation is to create real peace and sustainable development towards a cross-sector stability across the world, it must be a process approach to better meet sustainability needs; benefiting all.’ In 1999, at the World Economic - global integration- helping to establish the global Summit, United Nations Secretary-General Kofi framework of rules and institutions needed to Annan challenged business leaders ‘to help build the protect global commons, and to meet the social and environmental pillars required to sustain particular needs of developing countries. the new global economy and make globalisation work for all the world’s people.’This will require four types of integration:
Social, environment and economic ‘To my mind the rightly promoted integration integration/societal integration within industry can only happen if it is fundamentally linked to wider societal Up until now, economic, environment and integration. But if a company’s stakeholders social impacts of a company’s or industry’s are pulling it in multiple directions it’s not impacts on society have largely been dealt surprising that the company finds an with individually. Even leadership companies integrated approach difficult.’ that have produced sustainability reports have Dr Chris Tuppen, GeSI generally dealt with economic, environment and social performance separately. Industry is not alone on this; policy makers and to meet global challenges.The tourism stakeholders have also approached sustainable industry, for example, one of the fastest development in a fragmented way. growing industries, is beginning to take an integrated approach in identifying ways it can Companies and industry associations need to help solve sustainability challenges ranging be able to take a more holistic approach from employment of unskilled labour and (triple bottom line), integrating the social, AIDS education to environment and cultural environment and economic dimensions of preservation. their business and use this to help society meet its sustainable development challenges. Social, environment and economic integration Some industries have begun to use a more within companies is directly linked to broader integrated approach to better understand the societal integration. Many of the sustainability life cycle impact on society of its products and challenges facing industry are complex, services, and to envision solutions it can offer extending beyond a company’s sphere of 42 Industry achievements and gaps
influence, and can not be resolved by industry global society to meet social objectives, such alone. All the sector reports explicitly or reducing the digital divide and improving implicitly refer to the need for better education in developing countries through integration with society, calling for closer co- long distance learning. operation or partnerships with societal actors.
The electricity sector, for example, ‘It is important that each industry looks differentiates the roles of its key stakeholders: beyond its own boundaries to examine its ‘Governments have the authority to establish impact on society as a whole. Industries policy priorities, legal structures and must look beyond their direct contribution to governance systems necessary for employees, shareholders and other stakeholders and understand their electrification....The financial world plays a key contribution to economic and social role in leveraging the capital resources development as a whole.’ necessary for large-scale investments typically Information and communications associated with electrification....Technology technology sector report developers have access to options for energy conversion that can provide fuel flexibility and pollution control, and lead to efficient use of In the ten years since the Earth Summit, resources.... Non-governmental organisations sustainable finance has shifted from being a can provide knowledge of local needs related niche, activist concern to a mainstream issue. to electrification and sustainable development.’ The UNEP Financial and Insurance Initiatives and the socially responsible investment (SRI) Cross-sector integration for movement have helped broaden awareness sustainability among the finance and insurance sectors. Evidence that sustainability has reached the Clearly, industry sectors are inter-linked mainstream financial community was provided economically, socially and environmentally. by the launch of the Dow Jones Sustainability Consequently, the scale of social and Group Index in 1999 and of others since. technological innovation that will be needed for sustainability will not be achieved solely by improvements made inside any one specific ‘Financiers are the pump primers of the sector alone. Sustainability will require global economy - they can withdraw funds integration within and between diverse or give their full support to any enterprise. industry sectors. Examples of the types of They can therefore uniquely and powerfully influence the course of industrial cross-sector integration that will be needed for development so that it is compatible with sustainability are provided in the reports of the sustainable development agenda.’ the information and communication The Rio Resolution submitted to the 1992 technology industry and the finance and Earth Summit by the international social insurance sector. investment community. Finance and insurance sector report The information and communications technology industry, while acknowledging the need to continue improving its own internal In developing countries, public sector financial performance, sees itself as an ‘enabler’ of institutions have also helped lead the way sustainability. It enables other industries, for towards sustainable finance.The World Bank example, to reduce their carbon dioxide (IADB) and the International Finance emissions (through video conferencing, tele- Corporation (IFC), the European Bank for working, smart energy efficiency) and enables Reconstruction and Development (EBRD), the Industry achievements and gaps 43
Inter American Development Bank and others • broader adoption of voluntary standards are all implementing environmental criteria in for environmental performance; their loans or investment projects. • developing new and creative financial solutions and tools to address new societal Some multilateral development banks are also challenges stemming from resource beginning to move from traditional depletion, pollution of global commons, government and subsidy-centred approaches excessive inequality, etc.; to more creative, consumer financing or fee- • transferring knowledge to asset based services to help meet sustainable energy management, insurance and lending needs in developing countries and economies industries in developing countries; in transition, providing bank financing to help • taking into account expectations of a cover start-up costs of renewable energy, growing family set of stakeholders, which water management, and mass transit systems. have up to now mainly focused on stock markets and socially responsible investing, National governments are also beginning to to link sustainable development take creative steps to further the sustainable performance in other areas such as foreign finance agenda. Public and private pension direct investment and export risk funds in the United Kingdom and Germany are guarantees. now required to state their policy on socially responsible investment while the Swedish Global integration government applies environmental criteria to government-controlled funds. Business and industry will see their activities and ‘social license to operate’ increasingly Also Export Credit Agencies, providing contested if they fail to recognise that the services from export credits to guarantees, new, global opportunities of globalisation carry have started to set up special screening new, global responsibilities, including helping to systems when assessing requests from meet social needs that cannot be met by the exporters in order to limit environmental and market alone. Establishing a global framework social impacts of their operations. of rules, institutions and established practices to protect the global commons, such as However, although sustainable finance has atmosphere, international waters, bio-diversity, reached the mainstream over the last ten and forests, requires not just the diplomatic years, it is still a long way from being a and legislative roles of government and mainstream practice. Only an estimated 2% to intergovernmental organisations, but also the 3% of investments are made taking into expertise, insight and perspectives of business account environmentally and socially and civil society representatives. responsible criteria. Key priorities for the sector include: The chemical industry has been working with governments and United Nations organisations • the development of standardised, towards sound chemical management internationally recognised sustainability worldwide.The chemical industry supported metrics, accounting and reporting protocols the development of the Rotterdam (linked to the Global Reporting Initiative); Convention on the Trade in Hazardous • the inclusion of sustainability objectives into Chemicals (PIC Convention) and the mainstream asset management policies and Stockholm Convention on Persistent Organic practices; Pollutants.The industry also supports the role of UNEP in chemicals management, and the work of the Intergovernmental Forum on 44 Industry achievements and gaps
Chemical Safety (IFCS) and the Inter- countries in the safe management of Organisation Programme on the Sound chemicals, and is looking at how the industry Management of Chemicals (IOMC). can help build the capacity of developing countries in providing safety information, educating and training governments and users ‘While ICCA members are in favour of free of chemicals, and raising resources for capacity and fair trade, they fully acknowledge the building projects. need for trade and production controls for certain chemical that pose severe health or environmental hazards, or chemicals that Nearly 60% of the USD1.3 billion spent by the can be misused for illicit purposes.’ Multilateral Fund of the Montreal Protocol is Chemicals sector report used in the refrigeration sector, to transfer ozone-friendly technologies to developing countries. Refrigerant Management Plans Global sustainability now depends upon the (RMPs) have been set up in many developing world’s ability to reduce the gap between countries through collaborative efforts like developed and developing countries that has UNEP’s OzonAction Programme and the widened rather than narrowed since Agenda International Institute of Refrigeration’s World 21. In a world in which the private sector has Wide Networks of Experts. Each RMP increasing influence, business and industry involves an initial diagnosis phase that is an should expect to have an increasing role to essential prerequisite to actions and training play in helping meet the particular needs initiatives designed to achieve sustainable of developing countries such as human and development; implementation of training institutional capacity building, technological programmes addressing refrigeration development and assistance, and financial technicians’ and custom officers’ needs. resources. Since 1992, the electricity sector’s E7’s Network of Expertise has completed more ‘Issues relating to developing countries than 30 human capacity building and technical require urgent action because of the magnitude of the problems and because assistance projects in developing countries. In they do not have the capacity to address 1998, the industry established the E7 Fund for these problems unilaterally.’ Sustainable Energy Development that has since Coal sector report initiated sustainable energy projects in Bolivia, Ecuador, Zimbabwe and Western Africa.
The World Coal Institute (WCI) sees bridging the health, safety and environment gap between developed and developing countries as one of its key challenges in moving forward. It combines the need for a global mining code with a suggested ‘mentor system’ in which mining companies with relatively sound performance on environmental, health and safety issues provide expertise and experience to poor performing mines in the same region.
The International Council of Chemical Associations has been an active partner of UNEP’s APELL programme, helping developing Industry challenges, goals and commitments 45
Part 3: Industry challenges, goals and commitments
All the participating industries identify in their The reports nonetheless move one step further in reports future challenges and goals for their sector. providing greater transparency needed for more Some make specific commitments, such as: informed multi-stakeholder discussions and better mutual understanding. Stakeholders are thus • further reductions in greenhouse gases, toxic encouraged to consult specific sector reports for releases, energy use, waste, etc; more details and to encourage industry, not only to • improving the quality of voluntary initiatives; meet future challenges, but to continually improve its • spreading best practices to countries that are not environmental and social performance. yet a part of a global industry association; • developing and investing in promising It needs to be noted, however, that while many of technologies; the industry organisations, associations and voluntary • improving the social dimension of their business; groups were able to report on progress, many are • helping to build capacity in developing countries not currently constituted to make specific, all to improve health, safety and environment embracing global commitments on behalf of their standards; industry.This represents a new kind of governance • developing partnerships with stakeholders. that could evolve during the 21st century, with the involvement of stakeholders. Table 3 summarises each industry’s view of its sector’s future sustainable development challenges and goals, as well as its past achievements and ‘The structure of our industry’s representation unfinished business. Stakeholders, including those that created some real challenges for gathering data. participated in the consultation process, will not Where data exists, it is in the form needed for always agree with industry’s analysis and views. national or regional requirements and is not necessarily comparable with information from another country. Additionally, some good data exists, but has not yet been cleared by internal political ‘We are agreed on the aspiration (sustainable processes.’ development), but we also know that achieving this Kristen E Sukalac, is certainly not easy and there are no automatic International Fertilizer Industry Association answers. Like everything else in business, objectives have to be clearly defined, targets must be set, and activities have to be managed in the midst of surprises.’ Finance and insurance sector report 46 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Primary/extractive industries Aluminium - Through the International - IAI’s Life Cycle Committee - IAI is involving Chinese and Aluminium Institute (IAI), is working to complete a Russian producers in its activities, the industry has adopted a full, four-year analysis of the which will increase the Institute’s global approach to effects of aluminium coverage from 60% to around sustainable development. production and its key 90% of the world’s primary - Smelters in the 1990s applications on the aluminium production. used a third less electricity environmental and - The introduction of inert per tonne of aluminium economic well-being of the anodes and the replacement of produced than the world’s population. carbon anodes over time could equivalent plan in the 1950s - The preliminary results of eventually eliminate PFC and that trend of energy the IAI Perfluorocarbon emissions. efficiency continues today. (PFC) emissions surveys - More than almost any other - The replacement of 2kg of indicate a declining trend, material, aluminium satisfies the conventional heavier with PFC greenhouse gas requirement for a fair distribution
materials by 1kg of emissions, as CO2 of resource utilisation between aluminium, in the equivalents, reduced by 60% generations and the industry is construction of an per tonne of production committed to increasing global automobile, saves the since 1990. recycling rates.
equivalent of 20kg of CO2 - Since 1997 IAI has per kg aluminium, over the collected comprehensive vehicle’s lifetime. benchmarking data on safety performance in the industry, which shows a fall in average accident rates in the area of mining, refining and smelting.
Coal - The development and - The coal industry is striving - Furthering the development deployment of higher to reduce its environmental and deployment of cleaner coal combustion efficiency footprint from the and carbon capture and technologies that reduce production and use of coal sequestration technologies emissions of polluting gases. and minimising coal worldwide. - Full Life Cycle Analysis production impacts on the - Improving the standards of (LCA) shows that electricity biosphere (land, water) and health, safety and environmental generation from other on local communities. reporting and increasing the rate fuels such as gas may have - Continuing reductions in of reporting. similar or even higher GHG emissions through - Increasing the understanding of Industry challenges, goals and commitments 47
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Primary/extractive industries Coal emissions than coal-based accelerated technology health, safety and environmental (continued) generation. improvement and transfer reporting and increasing the rate - Transnational mining are the key to effective, least of reporting. companies have made great cost solutions to - Increasing the understanding of advances in improving their sustainability and climate the principles of sustainable transparency and public change issues, and is the development within the industry accountability, building industry’s major priority for and among local communities. relationships with local the future. communities and becoming - The World Coal Institute engaged in local community (WCI) has developed a set programmes and bringing of sustainability principles to environmental impacts into provide a framework for the forefront of mine industry initiatives and guide management. individual action by member companies.WCI will be conducting a series of regional stakeholder workshops to help to give effect to the principles.
Iron and steel - Dramatically reduced - Continued improvement - Operation of the world steel releases to the environment in steel production industry in an increasingly from steel manufacturing technologies and globalised economy, particularly operations, including a development of new the economic success of reduction of air emissions products and services to companies. by up to 80% over the last meet evolving societal - Social change, including 20 years. needs. employment and community - Introduced new - Continued integration of development, as the world steel production technologies and economic, environmental, industry transforms. steel products to meet and social sustainability demanding applications, throughout the world steel including advanced industry. lightweight steel automobiles that contribute to a more sustainable society. 48 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Primary/extractive industries Oil and gas - Increased supplies of safer, - Developing and investing - To ensure the continuous cleaner, economically viable in advanced technology to availability of affordable, secure, and more reliable fuels for meet growing demand for environmentally sound and transport, light, power, and affordable energy products socially acceptable energy heat. while improving security of products and services for a - Implemented management supply and reducing growing world population. systems that have environmental impacts. - To improve the social dimension significantly improved safety, - Enhancing our of our business in order to health and environmental contribution to sustainable broaden the benefits of wealth performance and provide an development through a creation and thereby contribute ongoing pathway to greater integration of to the alleviation of poverty. continuous improvement. economic, environmental - To demonstrate a balance in - Innovated and deployed and social dimensions. consideration of security of advanced technologies that - Conducting our supply, environmental, economic increased the size of viable operations with better and social issues in meeting recoverable resources, understanding (by all) of our growing energy demand. improved product quality roles and responsibilities and enhanced both and finding ways to work environmental and end-use efficiently, in consultation performance. with others, to improve - Contributed to countries’ decision-making processes efforts to develop their that relate to our industry. natural resources and improve their own communications, transport, health and education systems through technology co-operation and capacity building.
Secondary/intermediary industries Chemicals - Responsible Care has - Extend Responsible Care - Improve the quality of spread from six countries in along the supply chain. Responsible Care initiatives 1992 to 46 countries today, - Develop improved worldwide. representing 85% of global implementation assurance - Build capacity in developing chemical production. process for Responsible countries (in partnership with - The chemical industry has Care. intergovernmental organisations, contributed to achieving - Provide more governments and societal actors). many of the Agenda 21 understanding and - Enhance internal and external goals, particularly Chapter information of chemicals communication with 19 dealing with the and their potential effects. stakeholders.- Develop and environmentally sound Two recent voluntary implement a core set of management of chemicals. initiatives, the Long-Range quantitative indicators of - Technological innovation Research Initiative (LRI) and performance towards Industry challenges, goals and commitments 49
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Secondary/intermediary industries Chemicals and capacity building have the High Production Volume achievement of sustainable (continued) contributed to continuous programme (HPV), will help development. improvement in chemical meet these needs in the safety, health and future. environmental - Extend Responsible Care protection. to all countries that manufacture chemicals (Russian Federation, China, Saudi Arabia, and some emerging European economies).
Construction - Developing countries’ - Reducing CO2 emissions - Further reducing CO2 share of total construction through raising the energy emissions in the built output worldwide has performance of existing environment through the increased from about 10% buildings. development and integration of in 1965 to about 29% in - Improving health and renewable energy technologies. 1998. safety on construction sites. - Promoting the integration of - Mature economies have - Promoting increased environmental technologies in uncoupled the growth in training. construction.
the production of CO2 - Agreeing a realistic set of emissions in the built performance indicators against environment, as well as in which the construction sector construction and demolition can benchmark its progress. waste through increased recycling, from GDP growth. - Third industrial sector holding ISO 9000 and fifth holding ISO 14000 certificates. Electricity - Contributions to -Electricity is not available, - Electric power companies environmental protection accessible and affordable to should implement Guidelines for include displacing primary everyone; this constrains Best Practices to improve their fuel combustion in factories environmental protection, operations and reduce their and households, powering social progress and environmental impacts. water sanitation systems, economic development. - Governments and non- developing, demonstrating - Regulatory frameworks to governmental organisations, and applying air pollution create markets and reduce financial and development reduction technologies, costs of distributed and institutions, technology providers actively minimising wastes, centralised generation do and the sector should focus their recycling by-products and not exist in all countries. partnerships on expanding access wastes, remediating impacts - Efficient transmission to electricity for two billion and improving the efficiency networks to pool demand people living without electricity of generation, transmission and supply do not exist in today. and distribution. all regions of the world. 50 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Secondary/intermediary industries Electricity - Contributions to social - Nations should have the right (continued) progress include improving to use their indigenous energy quality of life by supporting resources, including fossil fuels. infrastructures such as - Efficient technologies should be telecommunications, health employed to convert primary care, agriculture and fuels into usable electricity. education. - Contributions to economic growth include powering industry and commerce and enabling revolutionary improvements in productivity and efficiency. Food and drink- The food and drink (F&D) - The availability, quality and - Better global co-ordination industry has experienced a safety of the food supply needs to be developed within steady and robust economic will continue to the F&D industry in order to growth and has become a remain a high priority for share best practices and to major contributor to local, the F&D industry. facilitate progress on national and regional - As part of its focus on the sustainability. economies and is one of continuous improvement - The F&D industry should take the world’s largest process, the F&D industry an active role in identifying, employers. will ensure progress in developing and facilitating - The F&D industry has resource management, acceptance of emerging introduced eco-efficiency particularly for water and technologies that will benefit improvements throughout energy. consumers and the environment. the food supply chain. - Increased dialogue with all - Sustainable agricultural practices - Significant contributions partners in the food supply need to be fully supported so have been made to society chain will be pursued to that they become increasingly at large by helping to identify concerns and to systematic and globally provide more and more respond to them in an widespread. people with safe, high- open, effective manner. quality food products. Fertilizer - The industry has made - Internal knowledge and - As commodity products, most significant efforts to develop technology transfer will help fertilizers currently have little in- and adopt new technologies all fertilizer production built technology to enhance the that have significantly facilities come up to the efficiency of nutrient uptake. reduced emissions from levels set by industry - More research is needed on fertilizer production. leaders. removing naturally occurring - The industry has been - The fertilizer industry’s impurities from fertilizer raw instrumental in getting safety record is among the materials. distributor and adviser best of the - The fertilizer industry faces the certification schemes off the chemical-related sectors, but challenge of more fully engaging ground in some countries. continual improvement is an its traders and retailers in efforts absolute imperative. to address sustainability issues. Industry challenges, goals and commitments 51
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Secondary/intermediary industries Fertilizer - Leading fertilizer - The industry’s community (continued) associations and research and stakeholder relations organisations are involved in have developed significantly research and training to in recent years, but more improve the efficient use of can be done globally. plant nutrients.
Refrigeration- A marked reduction in the - The refrigeration sector’s - To develop more production and energy efficiency and environmentally-friendly, energy- consumption of CFC and alternative refrigerant efficient vapour compression then HCFC refrigerants, a development initiatives must systems with ambitious process involving all continue: they are objectives: reduction of energy refrigeration stakeholders, protecting the environment consumption by 30% to 50 %, has since 2000 been and preventing global and reduction of refrigerant reversing the previously warming. leakage by 50%. ever-rising stratospheric - Actions designed to - To further develop promising chlorine concentration, reduce refrigerant emissions non-vapour compression responsible for ozone leakage throughout the refrigeration technologies and depletion. plant life cycle must be applications including absorption - Major developments in the expanded. and adsorption, solar cold chain - equipment - Heat pump technology, refrigeration, desiccant design optimisation, which is an efficient tool technology, trigeneration, traceability of foods, enabling reductions in cryogenics and many others. consumer information are energy consumption, must - To make refrigeration widely enabling sustainable be more widely diffused. available in developing countries preservation of foods in to set up viable cold chains, industrialised countries. reduce food losses, and - In the health field, encourage environmentally refrigeration is making a friendly technology through major contribution to technology transfer and increased sustainable health policy, training provided by developed notably in the immunisation countries. of populations against infectious diseases thanks to refrigerated vaccine storage in the developing countries. 52 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Transport industries Automotive- The automobile - The development of - Further enhance the ecological manufacturers have made vehicles using alternative efficiency of vehicles throughout substantial progress in fuels in order to further the entire life cycle.This includes minimising adverse effects minimise greenhouse gas efforts to further streamline the of vehicle use on and other emissions has production process, refine and environment and society. come close to maturity. disseminate new propulsion This includes enhanced fuel - However, the broad technologies using alternative efficiency, reduction of introduction of clean fuels fuels and develop and apply new exhaust emissions, reduction has yet to overcome concepts for providing of noise, and improved difficulties concerning issues sustainable mobility. safety. of fuel distribution and legal - Proactive initiatives have framework. moved the automobile manufacturer’s technological, environmental, and social standards towards best practice. Engagement in global initiatives for sustainable development clearly shows the automobile manufacturer’s commitment to assume global responsibility. Aviation- Highest demand rate of all - Infrastructure - Aviation and global warming. transport modes. development to meet - Safety and security. - Access to world markets market growth. - Air/rail intermodality. for developed and - Communication and developing nations. participation. - Leadership in eco- - Promotion of air transport efficiency. in the developing world. Railways- Rail systems - whether - Collection of appropriate - The challenge of the railway passenger or freight - environmental data on a sector is to accommodate the contribute to sustainable global level is lacking.Thus influx of transport due to the development by having a the sector needs to future modal shift in favour of high efficiency concerning strengthen its work related rail.This implies conquering capacity, energy, space, to data gathering, technical and organisational and time. processing, and obstacles as well as a level - The railway sector communication. playing field among the transport worldwide has undergone a - The railway sector should modes. significant ‘greening’ during reach the breaking point - The railway sector will maintain the last decade showing where new technical and develop its environmental commitment and actions solutions in rolling stock, and social advantages by towards the needs of infrastructure, and continued research and proper sustainable development. procedures will give Industry challenges, goals and commitments 53
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Transport industries Railways - The high standard of rail significant environmental exploitation of the results in the (continued) safety sparing life and many improvements. sector. accidents is still - This calls for better - Robust rail systems for the improving, while the railway education and training, developing countries will be sector’s contribution to visible management, and crucial due to the current public health problems focused campaigns. It also dramatic growth of their is declining. requires more incentives for populations and urban areas.This the sector, for example, requires sustainable urban through sensible and planning with rail as a backbone coherent policy frameworks for the infrastructure. or economic rewards. Road transport - IRU, representing the road The road transport sector - Although the road transport transport sector, made will continue to follow its industry has improved its striving for sustainable three ‘i’ strategy environmental performance, the development a - Innovation - ‘at the source increase in energy consumption
constitutional obligation. measures’ are the most and CO2 emissions remains a - The road transport sector efficient and cost effective great challenge. has a comprehensive means for improving - A great challenge remaining in strategy, a standardised environmental performance. satisfying the objective of assessment and a - Incentives - road sustainable development is to knowledge transfer system transport needs real persuade governments to to promote sustainable business incentives by provide incentives to accelerate development. governments to reward penetration of best industry - The road transport implementation of Best practices and technology. industry was able to Industry Practices. decouple growth in road - Infrastructure - improved transport from its traffic flow is a sine qua non environmental impact. condition for sustainable development and that requires more investment in road infrastructure. Service industries
Accounting - Drawing on the same - To date there are no - The accounting profession conceptual framework that international financial should commit to introducing underpins financial reporting or auditing social, environmental and reporting, the accounting standards dealing directly sustainable development issues profession has contributed with social, environmental or into the standard significantly to all key social, sustainability accounting, educational curriculum. environmental and reporting or auditing issues. - International accounting and sustainability reporting - Small and medium-sized auditing standard setters should initiatives. accounting firms seldom acknowledge the importance of - The leading accountancy work with corporate clients social, environmental and bodies have established on social, environmental and sustainable development issues national and regional sustainable development 54 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Service industries Accounting sustainability reporting issues - to date, only the by putting them on their core (continued) award schemes, which have major transnational work agendas. contributed to both accounting firms are - The accounting profession improved reporting and the involved with this type of should work with the establishment of consistent activity. international academic reporting benchmarks. - The accounting profession community to develop - The major trans-national could play a more standardised techniques of full- accounting firms have prominent role in cost accounting and to explore contributed significantly promoting sustainable the increasingly wide variety of to the development and development as a major environmental finance application of the strategic issue for the opportunities that are being verification methodologies financial community. developed. needed to add credibility to social, environmental and sustainability reporting initiatives.
Advertising- Much broader - Creation of wider - Find brand champions for implementation of effective awareness of sustainability sustainability. self-regulation systems. opportunities within the - Increase funding for large-scale - Trend from global to business. campaigns on sustainability topics. consumer-sensitive ‘glocal’ - Greater understanding of - Develop more sustainable advertising campaigns. the benefits of corporate products to advertise. - Funding of greatly social responsibility in increased media diversity, communications. availability and - Encouragement of independence worldwide. consumers to turn interest in sustainability into lifestyle changes. Consulting - The industry responsible - An assessment of the - The industry’s skills will be able engineering for planning the industry’s Agenda 21 to make significant contributions infrastructure needed to outcome indicates that the to the priority programme areas meet the ever-increasing further development of and sectors that have been demand for services has means to implement identified by the United Nations successfully mainstreamed sustainability requires Secretary-General. sustainability into business greater attention to - However, delivering sustainable practice. stakeholder participation in infrastructure in developing - Efforts to date have project delivery. countries requires new methods focused on management - Meeting infrastructure for procurement and project tools that integrate the needs in developing delivery. social and environmental countries also requires - They must be supported by dimensions into project harnessing the resources of ongoing initiatives that generate delivery. smaller firms that will have confidence and trust from all - The industry has also to expand their capabilities. stakeholders, both public and recognised the importance - Finally, the industry’s private. Industry challenges, goals and commitments 55
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Service industries Consulting of the enabling environment performance needs to be engineering by promoting initiatives that continually assessed with (continued) enhance business integrity, respect to international quality of construction and commitments, and local and capacity building. regional sustainability agendas. Finance and insurance- The finance and insurance - Sustainable development - Challenges facing the finance industry has made steps principles must be and insurance industry include: toward sustainability incorporated into all asset constraints on the investment through the development management decisions universe as SRI screening is more and adoption of internal throughout the finance and widely applied; gaps between the codes of conduct and insurance industry, not just interests of developed and environmental regulations, for niche SRI products. developing countries; culture and by becoming signatories - The industry should clashes if attempts are made to to voluntary initiatives (such continue to adopt voluntary apply western standards globally. as ISO 14000) and industry standards and - The industry must face new organisations (such as environmental management risks including climate change, UNEPFI). systems (EMS), and to depletion of resources, excessive - Socially responsible transfer knowledge to inequality and technological risks investment (SRI) has developing countries. created through biotechnology experienced strong growth - Efforts to attain a and sub-molecular chemistry. in funds under management universally accepted - Issues surrounding human over the last decade, and reporting standard through resources, risk information, capital there has been a steady the Global Reporting formation, internal processes, increase in both the number Initiative (GRI) - including public policy formation and and types of SRI products the Environmental expectations of society will all offered. Performance Indicators (EPI) play important roles in the future - Asset managers, insurance and Social Performance of the industry. companies and banks have Indicators (SPI) should responded to the challenges continue. of sustainable development by introducing innovative products like micro-finance unit trusts, mileage tariffs in motor insurance, and environmental loans. Information and - Telecommunications are at - Getting the commitment Covered under unfinished communications the heart of the global of more ICT companies to business. technology knowledge economy and actively engage in and will continue to play a promote sustainable critical role in economic development. development in the 21st - Extending access to ICT century. services. through extensive - In the last ten years there partnership between private has been growing and public sectors. 56 Industry challenges, goals and commitments
Table 3: Industry perspective of key achievements, unfinished business, future challenges and possible commitments Industry Achievements Unfinished business Future challenges and possible commitments
Service industries Information and awareness of environmental - Better integration of ICT communications and social issues by the solutions into company and technology sector. During this period public policies on climate (continued) there have been significant change and economic reductions in resource development. consumption per bit of data - Measuring and publicly transmitted. reporting environmental - Telecommunications has and social impacts on a made a significant regular basis. contribution to raising - Extensive promotion of standards in health, the use of ICT as a key to education, employment and environmental and social empowerment of local improvements. communities. TourismTravel and tourism, one of Travel and tourism’s As one of the major the world’s foremost enormous potential to stakeholders, the industry will do industries, recognises its vital benefit host communities in its part to ensure that travel and link to the environmental, developing regions through tourism works for everyone and social and cultural assets of economic growth and job is environmentally, socially and the planet and has taken a creation can only be fulfilled economically sustainable, now lead in awareness raising, if all stakeholders work and in the future. standards setting, together. certification, accreditation and voluntary initiatives.
Environmental industries Waste management- Improved environmental - Integrated research on - Decouple the link of economic and technical performance. effects of waste growth and waste generation. - Awareness among management on soil, air, - Improve communication, decision-makers and water and climate. education and training. consumers. - Waste management in developing countries. Water management- During the last decade - Serving the unserved. - Developing practical water became firmly - Converting the concepts procedures and strategies for established on the of integrated water sustainable water management. international political agenda. resources management into - Meeting the water-related - Significant progress has practice. needs of mushrooming urban been made in providing - Turning the tide of water- environments in developing water supply and sanitation related diseases and countries. services to developing environmental degradation. - Dealing effectively with the communities in many regions. problems of internationally - Wide-ranging innovative shared water resources. technologies and strategies were developed in the water field. Conclusions and recommendations 57
Part 4: Conclusions and recommendations
Each of the 22 sector reports in this series presents for governments to develop long-term policies. It numerous efforts developed by industry in reducing is in this context that private sector voluntary their environmental footprint and addressing other initiatives, in co-operation with non-governmental sustainability challenges, despite the difficulties of organisations and labour, will be able to develop. reporting on a global level for the first time. It is also in this context that the private sector However, there is a widening gap between the needs to join the public sector and develop efforts they have made and the worsening global innovative financing schemes, technology co- environmental situation. It is evident that we are still operation, education and capacity building. confronted with worrying, global trends related to biodiversity, air pollution, land degradation, chemical To move forward, UNEP has identified five priority emissions and wastes, freshwater and the regional areas, and has provided recommendations for seas, as demonstrates the Global Environmental business and industry, governments, civil society Outlook 2002, published by UNEP. groups and international organisations.The five priority areas are: The two main reasons for this widening gap are: 1. Mainstream decision-making. Integrate • In most industry sectors, only a small number of environmental and sustainability criteria into companies are actively striving for sustainability. mainstream business decision-making at all levels The majority of companies are still doing business in the company, building local capacity worldwide as usual. It is in industry’s own self-interest to do to spread best practice from the leaders to the more to spread best practice and raise the rest of industry, worldwide. performance levels of all its members 2. Improve voluntary initiatives. Make voluntary everywhere. But in reality, different socio-political- initiatives more effective and credible as a cultural and economic contexts across borders complement to government measures, and assess mean that what works in one country, may not improvements in environmental and social be applicable in another. Also, there are limits to performance through reporting. voluntary action and industry self-regulation. All 3. Reporting. Help ensure transparency, assess sector reports highlight the crucial role of performance improvements and spread governments, combining regulatory, economic and environmental and sustainability reporting voluntary instruments, in spurring social and practices beyond the pioneering companies to technological innovation, and in ensuring that the silent majority. laggard or negligent companies do not benefit at 4. Integration of social, environmental and the expense of those investing in best practices. economic issues. Move from the current Public and consumer pressure also play an approach of dealing separately with important role in providing market incentives that environmental, social and economic aspects of are needed to motivate corporate change, and sustainable development, to an integrated reward it. Government and media should work approach to global challenges. more to raise public awareness. 5. Global responsibilities and opportunities. Help • The improvements are being overtaken by build the global framework of rules, established economic growth and increasing demand for practices and institutions needed to protect the goods and services (rebound effect). Future global commons and to develop the new projected growth in most industry sectors will responsibilities that lead to new global only further widen this gap.The reports also call opportunities. 58 Conclusions and recommendations
Priority 1: Mainstream decision-making
Goal:To integrate environmental and social more energy or resource efficient. An criteria into mainstream business decision- integrated, cleaner production approach making, building local capacity worldwide to should be the preferred option over spread best practice from the leaders to the single-pollutant or single-medium rest of industry, worldwide. approaches. • Work on mainstreaming all UNEP recommends: environmental management tools (EIAs, life cycle assessments, management and Business and industry to: thinking, environmental technology • strengthen the mandate, resources and assessments) into assessment of capacity of their associations to address environmental impacts of economic and sustainable development issues and to fiscal measures, and into university and spread best practices throughout the college criteria. industry, especially among small and • Provide financial and human resources to medium-sized companies; establish or strengthen cleaner • provide more leadership and effort in production centres in their own or in raising performance standards of all developing countries. member companies, particularly those which are still a long way behind; Civil society groups to: • consider establishing industry-sector • do more to publicly recognise companies funds not just for cleaning up industry that have done the most in adopting best spills and accidents - such as maritime oil practices and to help local and national spills - but also for helping members in government authorities in identifying poorer countries to invest in cleaner those that are doing the least. production; • ensure that sustainability criteria are considered in all decisions taken at International organisations to: board level. • make sure that environmental best practices are an integral component of all Governments to: industrial development assistance. • Focus more on integrating environmental issues into economic development UNEP is committed to: policies and programmes to ensure that major environmental damages are Submit to its Governing Council proposals avoided at the new development and for developing a sustainable production and investments stage (reinforcing and consumption programme which, among applying environmental impact and life other things: (i) promotes environmentally cycle assessment tools in decision-making sound practices at the industry sector level; processes of all levels). and (ii) provides assistance to developing • Review government policies, regulatory countries and economies in transition in and market mechanisms that act as building their own local capacity for providing disincentives to industry in becoming cleaner, safer production patterns. Conclusions and recommendations 59
Priority 2: Improve voluntary initiatives
Goal:To make voluntary initiatives more • ask company signatories for reports on effective and credible as a complement to how they are meeting the goals of the government measures. voluntary initiative, using common criteria that enables comparison among UNEP encourages: companies and over time; • publicly recognise those companies that Business and industry to: are making real progress and • adopt, effectively implement and monitor implementing codes and those not sector-wide voluntary initiatives and making any effort; codes of conducts that will improve the • work with public authorities to integrate industry’s overall environmental voluntary initiatives into their policy and management and performance, in regulatory framework so that they are support of and beyond regulatory mutually complementary; requirements; • insist on stakeholder participation in the • more pro-actively and systematically negotiation of negotiated agreements involve stakeholders in all stages of between government and industry. voluntary initiatives, including design, monitoring and review; International organisations to: • include revision and some form of • determine and disseminate the lessons sanctioning provisions in all voluntary learnt (positive and negative) from the initiatives, with a view to continuously use of voluntary initiatives with a view of improve their performance and the integrating them into policy advice and credibility of the initiatives. industrial development projects.
Governments to: UNEP will: • seek ways to integrate voluntary initiatives into their policy and regulatory • catalyse the development of global framework, or develop agreements with voluntary initiatives and partnerships(1) industry sectors to set emission that bring together industry, public performance targets; authorities and civil society for improving • encourage use of certification schemes industry sector performance worldwide; by industry, in co-operation with non- • continue encouraging industry to report governmental organisations; annually on their sustainability progress at • monitor implementation of voluntary UNEP’s annual industry/trade initiatives and focus regulatory inspections consultation; on non-signatories. • continue to actively contribute to the UN (1) Such as: UNEP Financial Secretary-General’s Global Compact. and Insurance Institutions Initiatives,Tour Operators’ Civil society groups to: Initiatives for Sustainable • encourage and assist industry associations Tourism Development, Global in developing voluntary codes; e-Sustainability Initiatives (GeSI), Mobility Forum ( automotive industry), Advertising and Communication Forum, International Code for the Safe Management of Cyanide in Gold Mining, Sustainable Agrifood Production & Consumption Forum. 60 Conclusions and recommendations
Priority 3: Reporting
Goal:To help transparency, and assess Registers - PRTRs - for example, like the improvement in environmental and social NAFTA Commission for Environmental performance by spreading environmental and Co-operations Taking Stock Report, or by social reporting practices beyond the listing the names of companies not pioneering companies. reporting).
UNEP encourages: Civil society groups to: • ask local or multinational corporations Business and industry to: whether they follow the GRI framework • develop industry consensus on the and if not, why not. indicators and parameters to be used for measuring and reporting progress, The finance sector and, in particular, rating involving stakeholders for a better agencies to: understanding of societal expectations; • develop sector-specific reporting • score companies’ financial, environmental guidelines based on the Global Reporting and/or social performance and Initiative (GRI), as the tourism, finance, incorporate into their rating system automotive, and information and whether the enterprises produce a GRI communications technology sectors are report. doing or planning to do. UNEP is: Governments to: • require public companies to use the • supporting the establishment of the Global Reporting Initiative (GRI) to Global Reporting Initiative (GRI), an annually report on their sustainability independent, multi-stakeholder initiative performance; which is being adopted by numerous • look for ways to integrate GRI indicators multinational corporations; and reporting frameworks into their • encouraging more publicly available industry enforcement and compliance corporate and industry environmental programmes; and sustainability reporting; • encourage greater transparency in public • supporting the publication of regular reporting (for example, by publishing benchmark surveys to follow-up the use annual Pollutant Release and Transfer of reporting. Conclusions and recommendations 61
Priority 4: Integration of social, environmental and economic issues
Goal:To move from the current approach of mainstream economic and social policy dealing separately with environmental, social measures and decision-making (for and economic issues to a more integrated, example, finance and tax policies, holistic sustainability approach to global social housing development, challenges. education, transport, trade and export promotion, etc.), so as to better orient UNEP encourages: industry decision-making towards sustainability. Business and industry to: • recognise that it does not always have UNEP is : the right answers, or is always asking the right questions to sustainable • Committed to continue the global, multi- development challenges, and to improve stakeholder dialogue of this WSSD global dialogue with its internal and external sector reporting process.This provides a stakeholders; neutral platform in which industry and • understand that industry-led stakeholder global stakeholders can address complex consultations, however well intentioned, issues emerging from the reports - for cannot provide the neutrality and example, expectations of corporate social credibility needed in building mutual responsibility (CSR) in different socio- understanding, trust and responsibility; political and cultural contexts. • design internal processes and procedures • Work with governments, industry and to make sure that sustainability criteria stakeholders in moving from the current are embedded at all levels of decision- approach of dealing separately with making. environmental, social and economic aspects of sustainable development, to a Governments to: more holistic, integrated approach to • take steps to progressively integrate sustainability. environmental considerations into 62 Conclusions and recommendations
Priority 5: Global responsibilities and opportunities
Goal:To help build the global framework of • allocate the resources needed to help rules, established practices and institutions build the global framework of rules, needed to protect the global commons and established practices and institutions to to develop the new responsibilities that lead meet the sustainability challenges that to new global opportunities. cannot be met unilaterally; • help countries with less resources to ‘Let us choose to unite the power of markets participate in international meetings on with the authority of universal ideals. Let us global governance needs. choose to recognise the creative forces of private entrepreneurship with the needs of the Civil society groups to: disadvantaged and the requirements of future • broaden public understanding of the generations’ need to take national and local measures Kofi Annan, to meet global environmental needs and United Nations Secretary-General sustainability goals; • be engaged constructively in the dialogue UNEP encourages: with business and industry and with governments. Business and industry to: • follow the examples of proactive UNEP is committed to : companies and associations in shifting from reactive, obstructionist modes to • continue working with governments, more co-operative partnership industry and stakeholders for more approaches to meet global, national, effective international environmental regional and local environmental governance and implementation of governance needs and sustainability goals; multilateral environmental agreements; • understand and identify the opportunity • encouraging more business leadership that proactive changes will bring. and responsibility in meeting global goals through voluntary initiatives and Governments to: partnerships such as the Global • make ratification of international Compact. conventions or protocols to which the country has become a signatory a leadership priority; What people have said about the reporting process 63
Part 5: What people have said about the reporting process
Industry:
‘This exercise has been a very valuable ‘Thank you for the opportunity to comment learning experience for everyone involved. on the UNEP overview report. I found it While not without its challenges, it has extremely thought-provoking and quite easy provided a new focus on and a feasible to read, which is no mean feat when framework for tackling the multi-faceted and compiling a lot of data. I also found your complex issues of sustainable development.’ treatment of the process quite open and International Aluminium Institute fair, and I hope that the critiques you receive will have the same constructive tone.’ Kristen E Sukalac, International Fertilizer Industry Association ‘I think this was a very valuable exercise which has provided GeSI with a useful initial benchmark analysis, albeit incomplete in both data and geographic coverage. As ‘UNEP has become a respected broker always there was never enough time - between various stakeholders. But the especially for such a young organisation as process is fragile and UNEP’s own GeSI... I would particularly like to thank leadership must be built on trust.’ UNEP for facilitating the very helpful Dr Philippe Rochat, stakeholder consultation session in Paris ... Air Transport Action Group We must find ways of continuing those relationships and the dialogue. On the summary report I would say it presents a very helpful, balanced and constructive overview. Congratulations on masterminding such a massive undertaking.’ Dr Chris Tuppen, GeSI
‘The UNEP process provided a unique opportunity for sectors to review and report on their achievements towards sustainable development.The report now provides a sound basis for considering specific commitments to meet the challenges, which were identified through the process.’ International Council of Chemical Associations 64 What people have said about the reporting process
Stakeholders: ‘Over the past few years, the UNEP and the Division for Sustainable Development had ‘The initiative of bringing together the industry worked closely on the issue of promoting action sector reports is an important step which has by industry on sustainable development and multiple benefits. It gives the opportunity to taking the feedback we have received into the have a comprehensive view on progress and to policy-making process.This close partnership compare different industrial sectors even though has contributed to progress on implementation they may be very different with respect to of Agenda 21 by industry. It is clear from the organisation and products.The comparison UNEP paper that considerable progress has shows, where substantial progress is made and been made in some areas ... we must not dwell where there are only relatively modest steps too much on the pace of change and the towards sustainability.’ failure to address the problems on the scale Dr Thomas Schauer, Research Institute for required. Rather, we should focus on the lessons Applied Knowledge Processing, Germany and the challenges ahead.’ Ms Joanne DiSano, Director, Division for Sustainable Development, United Nations Department of Economic and Social Affairs ‘UNEP has taken an important project initiating industry partnership in sustainable development.’ Asian Development Bank ‘I give my praise for the ability to digest so much material in such an even-handed way. It is a considerable achievement and so to make ‘HELIO has reviewed the (draft) UNEP any kind of criticism would be churlish at best. Overview and Recommendations paper... It is an However, I must record my doubts and concerns excellent paper. It is not easy to prepare such a by focusing on one comment which seems to paper that reviews the findings of a wide range me to reflect a generic problem with letting of reports from different industrial sectors.The industry speak about itself. ...Businesses under writers should be commended for this effort.’ capitalism will continue to produce larger Rod Janssen, HELIO International footprints - that is what they are good at - until such time as either the rules are significantly changed or a new form of (as yet unimagined) capitalism is created. For me, this is the starting point of addressing sustainability and I am ‘Greenpeace International welcomes UNEP’s afraid it is very much a minority view.’ initiative in conducting this review. As a general Rob Gray, Centre for Social and proposition, Greenpeace agrees that the Environmental Accounting Research, business community has crucial role and University of Glasgow, United Kingdom responsibility in helping move the planet towards sustainability, both in ecological and other senses. As the UNEP overview clearly reveals, however, ten years after the 1992 Earth Summit, business remains more of a problem ‘This is a voluntary initiative, whose credibility than the solution. In most respects, the planet relies only on the co-operation of those seems further away from sustainability than companies that are willing to report on their ever.Why ‘business as usual’ remains the environmental performance. Experience has dominant paradigm requires closer study. Many shown that only those companies that are doing observers, including Greenpeace, believe that well in environmental performance have the the overarching issue has been the failure by capacity and interest to go public.The ‘free- governments to provide more effective riders’ are therefore left out of this initiative, and legislative framework to ensure ‘profit, planet in most cases these industries are the ones that and people’ remain in balance. ... Industry has a pollute most. How then does UNEP hope to record of ‘leading from behind’.The question for rope these ‘non-volunteers’ into future reporting it in the 21st century will be to prove that it initiatives?’ can learn from history. Greenpeace encourages Dr C Olver, Director General, Department UNEP to continue this process.’ of Environmental Affairs and Tourism, Rémi Parmentier, Political Director, South Africa Greenpeace International UNEP contribution to the World Summit on Sustainable Development
The mission of the United Nations Environment Programme (UNEP) is to provide leadership and encourage partnerships in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations. The UNEP Division of Technology, Industry and Economics (DTIE) contributes to the UNEP mission by encouraging decision-makers in government, business, and industry develop and adopt policies, strategies and practices that are cleaner and safer, make efficient use of natural resources, ensure adequate management of chemicals, incorporate environmental costs, and reduce pollution and risks for humans and the environment.
This report is part of a series facilitated by UNEP DTIE as a contribution to the World Summit on Sustainable Development. It provides recommendations for sustainable business practices, building on a multi-stakeholder process facilitated by UNEP. This process resulted in 22 industry-driven reports on performance towards sustainable development at the sectoral level.
The full set of reports is available from UNEP DTIE’s web site (http://www.uneptie.org/wssd/), which gives further details on the process and the organisations that made it possible.The following is a list of related outputs from this process, all of which are available from UNEP both in electronic version and hardcopy:
- industry sectoral reports, including • accounting • consulting engineering • oil and gas • advertising • electricity • railways • aluminium • fertilizer • refrigeration • automotive • finance and insurance • road transport • aviation • food and drink • tourism • chemicals • information and • waste management • coal communications technology • water management • construction • iron and steel - a compilation of executive summaries of the industry sectoral reports above; - this overview report by UNEP DTIE; - a CD-ROM including all of the above documents.
UNEP DTIE is also contributing the following additional products: - a joint WBCSD/WRI/UNEP publication entitled Tomorrow’s Markets: Global Trends and Their Implications for Business, presenting the imperative for sustainable business practices; - a joint WB/UNEP report on innovative finance for sustainability, which highlights new and effective financial mechanisms to address pressing environmental, social and developmental issues; - two extraordinary issues of UNEP DTIE’s quarterly Industry and Environment review, addressing key regional industry issues and the broader sustainable development agenda.
More generally, UNEP will be contributing to the World Summit on Sustainable Development with various other products, including: - the Global Environmental Outlook 3 (GEO 3), UNEP’s third state of the environment assessment report; - a special issue of UNEP’s Our Planet magazine for World Environment Day, with a focus on the International Year of Mountains; - the UNEP photobook Focus on Your World, with the best images from the Third International Photographic Competition on the Environment. For further information contact:
United Nations Environment Programme Division of Technology, Industry and Economics 39-43 Quai André Citroën WWW.unep.org 75739 Paris Cedex 15 France United Nations Environment Programme P.O. Box 30552 Nairobi, Kenya Tel: +33 1 44 37 14 50 Tel: (254 2) 621234 Fax: +33 1 44 37 14 74 Fax: (254 2) 623927 E-mail: [email protected] E-mail: [email protected] web: www.unep.org Web site: http://www.uneptie.org/wssd/