Select Committee on Environmental Audit Minutes of Evidence

Memorandum submitted by the Institute of Directors

THE GREENING GOVERNMENT INITIATIVE

  The Institute of Directors (IoD) recognises that the environment is now firmly on the political agenda with potentially significant effects on business. Our members are without doubt concerned for the environment. A survey conducted in June 1997 showed that 75 per cent of businesses would like to do more to help the environment. That said, developing the right environmental policies can be difficult and complicated. Continual developments in science and technology and difficulties combining international obligations with varying local circumstances can make environmental objectives hard to achieve.

  From a business perspective, the worst-case scenario would be that policies are introduced that are excessively costly, unnecessarily complicated or ineffective. Also, we are aware that businesses are easier to regulate than domestic households, despite the fact that the domestic sector has such a considerable impact on the environment in terms of pollution, waste and climate change. Therefore it is very important that the Government makes every effort to keep business informed about any directions in policy that are being taken both at a national and international level.

  Below is the Institute of Directors' response to the specific points as requested.

1. THE ROLE OF ACBE, THE ROUND TABLE AND OTHER CONSULTATIVE GROUPS ON SUSTAINABLE DEVELOPMENT MATTERS AND THEIR VALUE TO GOVERNMENT AND INDUSTRY

  Over the last year the IoD has paid more attention to representing our members on policies on the environment. As part of this strategy the IoD has taken part in some of the enquiries by the consultative groups mentioned above.

  We have attended meetings of ACBE's environmental taxation sub-committee and the UK Roundtable on Sustainable Development group on SMEs and the environment. We also made representations to the Better Regulation Task Force on the Packaging Waste Regulations and took part in Industry Forum meetings on the environment.

  As the UK Roundtable and the Better Regulation Task Force represent all sectors of society it would be fair to say that their value to industry is limited. Also, we are concerned about the level of importance that is attached to them. Although the members of these groups and other taskforces that the Government has set up are undoubtedly of a very high calibre and do represent many different view points, they may not be wholly representative and should not therefore be relied on by ministers to give final opinions.

  For example, we have heard that DETR is currently reviewing the Producer Responsibility (Packaging Waste) Regulations but have received no consultation on this despite the fact that some of our members have to comply with the regulations. We were contacted by the Better Regulation Task Force but only, it transpired, to supply names of scrap metal merchants rather than to survey our members! There is a danger that consultative bodies encourage politicians to listen selectively to industries that support their own position. In fact, some businesses use these fora to propose or support policies that would harm their competitors. It is very important that the Government continues to attach a high priority to its formal consultations with industry in order to get the full picture.

2. THE APPROACH TAKEN BY GOVERNMENT TO CONSULT BUSINESS ON NEW ENVIRONMENTAL POLICIES AND POLICIES WITH A SIGNIFICANT IMPACT ON THE ENVIRONMENT (FOR EXAMPLE THE UK STRATEGY FOR SUSTAINABLE DEVELOPMENT (OPPORTUNITIES FOR CHANGE), THE INTEGRATED TRANSPORT STRATEGY, THE REVISED CLIMATE CHANGE PROGRAMME, ENVIRONMENTAL TAXES)

  The IoD has not been consulted yet on most of the issues that are mentioned above.

  The consultative document on sustainable development will be hard to respond to because it briefly touches on an enormous range of issues. Unlike the questions put to us by this select committee, the questions in the sustainable development paper are open ended and the document contains little evidence of how the Government itself may tackle them. For example, under the heading "Achieving sustainable development" the document says "We invite your views on what the objectives and targets should be, and the policies to achieve them. We ask you to suggest ways in which everyone can play their part in sustainable development. . .".

  This kind of approach makes it very hard for businesses to gain a clear picture about what the Government plans to do in areas that could significantly effect them. As yet we have had no clear indications about how precisely the Government may implement the targets set at Kyoto and its own targets for reducing CO₂ emissions. We responded to the invitation to contribute to "Developing Integrated Transport Policy" last November but we understand that the white paper has been delayed until June and we have not been consulted yet on the Government's revised climate change programme.

  As far as environmental taxation goes, there has been consultation on some issues but not others and again the IoD is unsure about what the future holds. There was no consultation by the Treasury on the announcements contained in March's Budget to increase road fuel duty and the taxation of fuel for company cars. We understand that the Government is planning to consult soon on a possible tax on oil (although this would not necessarily be an environmental tax) and on the use of economic instruments to help the environment that Sir Colin Marshall's task force is to report on. We look forward to receiving those consultations.

3. THE CO-ORDINATION OF DEPARTMENTS WHERE THEIR INTERESTS COINCIDE IN RELATION TO BUSINESS MATTERS, HOW FAR BUSINESS EXPERIENCES AN INTEGRATED "GOVERNMENT" APPROACH, AND ANY AREAS WHERE THE DIVISION OF RESPONSIBILITIES BETWEEN DEPARTMENTS IS UNHELPFUL (ONE EXAMPLE OF AN AREA OF INTEREST TO SEVERAL DEPARTMENTS IS BIOTECHNOLOGY WHICH INVOLVES DOH, DTI, DETR AND MAFF)

  Environmental policy, by its very nature, is complicated and needs to be dealt with by more than one Government department. At the moment the Treasury, the DTI, DETR, or the Department of Health, individual local authorities are all responsible for various aspects of environmental policy, not to mention of course the European Union. In the future business will also have to look to RDAs, the Greater London Authority, the Scottish Parliament and the Welsh Assembly depending on where they are located.

  The IoD supports division of responsibility and thinks that it is appropriate in most cases. For example, the DTI should keep energy policy, local authorities should manage waste collection and the Treasury taxes. However, it does create confusion for businesses that want to know what the Government's policy on the environment is, especially when we receive conflicting messages.

  An "inventory" of who is doing what and where, at a local, national and international level, would be most useful and could perhaps be co-ordinated and published by the Government's Green Ministers.

  We are also concerned about the enforcement of environmental regulations. The Environment Agency, the Health and Safety Executive and Environmental Health Officers all enforce different aspects of environment policies—a problem which will be highlighted when the UK introduces the IPPC directive. This adds to the difficulties that businesses have in complying with the law by creating more scope for inconsistent enforcement and confusing advice. The IoD would definitely support rationalisation and a "one-stop shop" approach where possible and, above all, it is essential that enforcers have the expertise to take a sensible and helpful approach towards business.

4. THE IMPACT ON BUSINESS IF GOVERNMENT ENVIRONMENTAL POLICIES SETS TARGETS FOR THE BUSINESS SECTOR, FOR EXAMPLE FOR EMISSION WITHIN A REVISED CLIMATE CHANGE PROGRAMME OR FOR FREIGHT ON RAIL WITHIN AN INTEGRATED TRANSPORT STRATEGY.

  The impact of environmental policies on business depends greatly on the nature of that business. Not only does it vary by sector but also by size and profit margin. It is important that small and micro businesses are consulted and listened to as well.

  Where the government can work with a sector or a company to agree on targets, such as the chemicals industry, these targets can be a useful and effective way of making recognisable achievements.

  On the other hand, general broad sweeping government targets applying to a broad range of businesses are far more problematic when enforced. For example, targets set by the EU for recycling and reducing packaging have led to the fiasco of the Packaging Waste Regulations. The targets set recently in the Landfill Directive could potentially cause huge problems for the UK. Furthermore, the Government's targets to reduce CO₂ emissions by 20 per cent are all very well, but the UK has no post-1995 figures upon which to base the reductions, and we have as yet no clear strategy about how the Government might take account of reductions by individual businesses. The IoD believes that, in the spirit of the Government's Better Regulation initiative, strategy should come before targets.

5. THE GOVERNMENT'S EFFORTS TO ENCOURAGE ACTION BY BUSINESS, FOR EXAMPLE THROUGH SUCH MEASURES AS "MAKING A CORPORATE COMMITMENT CAMPAIGN"

  Action by business in this area is certainly on the increase. However, as we said earlier, the approach taken by an individual business to take account of their effect on the environment varies widely depending on its size and its effects.

  The IoD itself has not been actively involved in Government efforts to encourage action by business to date and so unfortunately we are not in a position to comment on their effectiveness.

  However, in general, we very much support Government initiatives to promote best practise and share expertise amongst businesses.

6. THE IMPACT ON BUSINESS OF GOVERNMENT DEPARTMENTS SETTING ENVIRONMENTAL REQUIREMENTS IN THEIR SPECIFICATIONS FOR GOODS AND SERVICES

  The priority is that the Government awards contracts to companies on the basis of sound commercial and financial performance. If research shows that they are operating at great risk to the environment this would cast doubt on their financial viability. However, blanket environmental requirements would be hard to define and could discriminate unfairly against small businesses who cannot necessarily afford to invest in formal management systems. Also, why make just environmental requirements, why not include requirements for say proven commitment to employees, shareholders, ethical business policies. . .the list is potentially endless?

April 1998

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Prepared 1 July 1998