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Prudent development - a shared responsibility

11 Industry, trade and services

To align sustainable development and consumption of goods and services with continued growth, we must lower resource consumption and reduce adverse environmental and health effects appreciably. We can achieve this reduction by incorporating environmental considerations not only into company business procedures, but also into every link of the chain from production to consumption and disposal. Companies are playing a key role in bolstering the development of environment-friendly technologies.

Authorities, trade and industry and consumers alike must cooperate in establishing green markets where environmental considerations are pivotal both to the mutual competition among companies and to our consumption of goods and services. Combined with new market-based instruments, voluntary initiatives and regulation, market forces should motivate the corporate sector and consumers to participate actively in this development.

One of the greatest challenges of the 21st century will be to decouple economic growth from environmental impact. To minimise the adverse environmental effects of production and consumption systematically, we must ensure that companies consider the environment in making their daytoday decisions. Production, recycling and disposal must develop through advances in green technology, innovation and competence building. We must also consider every aspect of the process from "cradle to grave". We must increase cooperation across industries and sectors and find new solutions that reduce environmental impact and use fewer resources. Another challenge lies in integrating the competitiveness of companies with environmental, social and ethnical considerations. We must maintain our efforts to persuade companies and consumers to give environmental issues higher priority when making decisions on the production and consumption of goods and services. At the same time, globalisation, growing trade and information technology are setting a new agenda for environmental policy and the global division of labour.

In this respect, agreements on trading conditions and market regulation under EU auspices are keys to producing, marketing and stimulating demand for cleaner products and services in an open Danish market, a single European market and a global marketplace. Since Danish companies form part of international supply chains, both EU and international regulations must incorporate environmental considerations. Chapter 8 describes Denmark's efforts in integrating environmental considerations into WTO activity.

Households can limit their adverse effects on the environment. Individual consumers can contribute to this process by choosing environmentally sound products and by using and disposing of products in an appropriate manner. Information from authorities and manufacturers must empower consumers to make the right choices on the basis of environmental and other considerations, thus making respect for the environment a natural part of everyday life.

First and foremost, companies can help by boosting initiatives to develop technologies capable of introducing processes and products that are environmentally sounder than today. Utilising resources efficiently, avoiding the use of harmful substances and minimising emissions and discharges into water, air and soil as well as recycling and reducing waste volumes must be attractive to companies. Equally important, companies should make more information available, allowing environmental information to follow products to consumers and to those who recycle or dispose of products. We must take advantage of the growing role information technology plays in today's service society to create and market environmentfriendly products. We must renew thinking and innovation through efficient, green and ethical markets that can improve the competitive situation of environmentally conscious front-runners in the light of the new economy.

The period following the Rio conference has seen the launch of many initiatives to reduce the environmental damage caused by companies. Marketoriented instruments have been introduced: green taxes, eco-labels and voluntary agreements aimed at reducing environmental impacts and encouraging the use of cleaner products and environmental competencies.

Danish environmental regulations have put Danish companies at the forefront of environmental management in Europe for some time now. All pollution intensive companies in the EU are now subject to general regulations based on "best available techniques". Danish companies must already comply with these requirements. This gives Danish companies excellent opportunities to benefit from maintaining a high environmental profile and thus gaining a competitive edge.

From 1995 onwards, a number of industrial companies have been under the obligation to prepare green accounts containing information about environmental impacts and describing environmental aspects. According to a survey, about 40 per cent of all companies have introduced environmental improvements while about 50 per cent have profited financially from saving resources. The advantages of green accounts can still be expanded to include the world outside of companies.

Companies and authorities can receive support to introduce environmental management and green procurement and to strengthen environmental competence building. This will facilitate environmental control and integrate environmental aspects into decision-making processes and daytoday activities. Today, more than 500 Danish companies have been certified under the international environmental standard, ISO 14001, while about 180 have been registered under the EU's environmental management system, EMAS.

Denmark has succeeded in decoupling economic growth from environmental impact in some areas. During the past ten years, industrial discharge of nutrient salts into aquatic environments has fallen by 60-75 per cent while output has risen by 20 per cent. Industrial consumption of energy has increased by 12 per cent whereas CO₂ emissions have only grown by 2 per cent. Although improvements have been made, pollution and contamination are mounting in step with economic growth and higher consumption. As a result, the past ten years have seen waste volumes increase as the economy grows, just as companies have been unable to reduce the use of environmentally hazardous and health-impairing chemicals to the extent technically feasible and desirable in relation to the environment and health.

The Government's action plan for cleaner technology has contributed to reducing waste volumes and the environmentally adverse effects associated with the production and consumption of goods. Denmark's "Product-Oriented Environmental Initiative" is based on the principle that environmental considerations must be incorporated into every decision involving goods and services from "cradle to-grave". This applies to any aspect from design and choice of materials to production, transportation, supply, marketing, demand, use and any subsequent handling of waste. Environmental considerations must figure in all links of the value chain, domestic and foreign. Product panels made up of stakeholders have been established as "think tanks" for new, general market initiatives.

During the summer and early autumn of 2001, the Government is working on a green industrial development strategy based on the interplay between industrial development policy and environmental policy aimed at making the environment a competitive parameter for many sectors of Danish trade and industry. This strategy suggests activities that focus on green industrial development until 2006. A key objective is to encourage corporate self-action in the environmental area.

The idea is to enable Danish trade and industry to supply goods and services that satisfy the needs of society while increasing welfare and individual quality of life. The Government's industrial development strategy, ". dk21", outlines this objective. Green markets with environmental considerations as an important competitive parameter will represent a pivotal concept in future. The intention is to stimulate efficient competition built on environmental parameters. Increased use of market forces to the benefit of the environment will be cost-effective for both companies and for society.

The challenge is to create incentives for companies as well as society as a whole, to consider the environment, for example through environmental strategies and green innovation. Environmentally conscious companies must stand to gain strategic as well as competitive advantages.

Green industrial development requires clear market information, achieved with eco-labels, environmental product declarations and consumer information. Denmark has joined the EU ecolabel scheme (the Flower) and the Nordic ecolabel scheme (the Swan). This environmental information supports consumers in choosing green products. The primary objective is for about 70 per cent of consumers to be able to recognise at least one of these two eco-labels. At the end of 2002, fifty per cent of consumers must have a qualified awareness of the Nordic eco-label while 30 per cent must have qualified knowledge of the EU label. Furthermore, consumer confidence in ecolabels must be maintained at the currently high level.

For several years central, regional and local governments have striven to make procurement greener. This work must be reinforced, enabling the public sector to lead the way in boosting green demand. Sustainable development can only be achieved if companies are willing to take responsibility. Their motivation will be greater if framework conditions make that responsibility attractive.

Objectives and activities 2001-2006

The Government intends to cooperate with market players to establish an efficient, green market. This requires the introduction of framework conditions ensuring that companies make environmental efforts on a voluntary basis while also boosting their competitiveness. Economic and administrative instruments will, however, remain relevant tools for achieving the objectives. One example is to have prices reflect the actual environmental costs.

The polluter-pays principle is one means of promoting cleaner production and products on reasonable, competitive terms. Another significant instrument is to strengthen public green procurement, which will subsequently generate noticeable demand as well as helping to reduce any additional price of environment-friendly products. In this process, more eco-labelled products on the market and adequate information will motivate consumers to change their habits.

Manufacturing businesses must continue to reduce their adverse environmental impacts. Legislation and instruments must be adapted to and possibly developed in line with technological advances and market trends, persuading companies to increase environmental protection voluntarily. The Government believes that it will still be necessary to set minimum requirements for a number of health and environmental issues. The manufacturing industry will be responsible for ensuring that the chemicals used are assessed in relation to their environmental and health impacts. Substances that may be detrimental to the environment or to health must be eliminated from products and production processes. Substances particularly dangerous to the environment or to health must be phased out completely or partially, while threshold values should be raised to reduce adverse discharges into air, water or soil. This applies to substances such as dioxin and solvents. It will also be necessary to map and reduce volumes of soot particles suspended in the air.

Efforts must be targeted at defining a lifecyclebased product liability where companies, separately as well as jointly, assume liability for a product "from cradle to grave". International (EU and global) guidelines for environmental information about products and companies should exist to strengthen these efforts across national borders.

Apart from eco-labels, initiatives may include environmental product declarations, environmental reports, green accounts and information systems about the environmental conditions of the industrial sectors. Consumers must receive better information about environmental and ethical aspects of goods and services.

One important action area is the development and use of operational know-how, product and process data as well as tools to assess the environmental impacts of products and production processes. This will make it easier for companies to integrate environmental considerations into strategies, development activities and day-to-day decisions. Building company and staff competence and incorporating environmental know-how into training and education should fuel this development and lay the groundwork for a market for environmentally sustainable products.

We must develop and advocate the use of cleaner technology and products and provide room for new solutions, radical innovations and technological advancement. In addition, products must be made more durable and easier to repair, upgrade or recycle than is currently the case. The Government will work to include environmental considerations in public tenders and for their incorporation into international standardisation work.

Efforts must be made to boost corporate selfaction. Use and development of environmental considerations in corporate decision-making must be strengthened to increase the number of Danish companies introducing environmental management and implementing recognised environmental management systems. Initiatives should be aimed at ensuring that companies use, develop and spread "best available techniques" to a high degree. Individual companies must integrate environmental management into their strategic considerations and involve staff in a process that also addresses health and safety issues. Companies must also develop methods for consulting staff on environmental and ethical issues more regularly than is  presently the case. These methods will apply to companies, their relations with suppliers and the consumption and disposal of products.

As all market players have an important role in sustainable development, it is vital that they become part of this development. The financial services sector must develop programmes designed to give general credit ratings and loans more environmental weight. Efficient green markets as well as adherence to the polluter-pays principle will also boost this development. At the same time, the more widespread use of green and ethical accounts will also facilitate the process. Green industrial development also depends, however, on distributors and other companies in the product chain that do not in themselves affect the environment to any noticeable degree. Retailers play a vital role in that they convey environmental requirements from consumers to suppliers and manufacturers.

We must strengthen green industrial development internationally. We must encourage the EU and international organisations to support recognised guidelines for corporate communication of environmental, ethical, social and economic aspects. Internationally, environmental regulation should be improved through EU provisions such as the directive on pollution-intensive companies (IPPC) and through EU requirements pertaining to "best available techniques". The concept of life cycles and products and a market-oriented approach must be disseminated on an international scale. Denmark will expressly work to publish a White Paper on a common EU product-oriented strategy during the Danish EU presidency in 2002. But setting up an EU strategy to promote green industrial development in Europe will also be important. International Danish environmental assistance will help strengthen regulations, enforce legislation and transfer cleaner technologies or provide Danish expertise to reduce environmental stress and build local environmental competence.

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