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Model for selection of future target areas in the Danish Program for Cleaner Products 2 Sources for development of the modelThis chapter gives a description of the statistical information, literature and books consulted, and know-how used in the preliminary version of the model. 2.1 Input-output analysesAn economic input/output model divides the national economy into sectors. The use of such an input/output analyses on environmental matters has the advantage that the environmental impact is related to the added value of the product. Therefore the environmental impact can be compared across the borders of product groups and sectors respectively industrial sectors. Three different sources to input/output analyses have been considered:
The American input/output database has been chosen for the present project as the information is on product level and the degree of details is reasonably high. The Danish model is based on Danish conditions, but the environmental impact is calculated on industrial sector level. This level is not a suitable starting point for the environmental screening of products, which is the basis of the present study. The Swedish report has information on a superior level, which makes it unsuitable for the present study. The American method is described in detail below while the other two methods are described in the chapter: Further development of a model for selection of future target areas (chapter 5). 2.1.1 eiolca.netThe American database eiolca.net (Economic Input-Output LCA) has been prepared by the Carnegie Mellon Green Design Initiative. It comprises detailed input/output information about 500 product groups. The home page www.eiolca.net presents information about atmospheric emissions, working environment, consumption of water, emission of toxic substances, green house effect, fertilizers, energy consumption, consumption of metals, dangerous wastes and costs due to pollution. The environmental costs refer to the added value of the product. The principle is called "cradle-to-port" in Life Cycle considerations. Further information can be found at the home page. The information presented by the American database is used as background for the environmental assessment of product groups in the present study. The classification of near by 500 different product groups or services means that some of them have to be put together in order to match the Danish product groups as presented by Statistics Denmark, Statistics of goods, "Varegruppestatistik". 2.2 Information from Statistics DenmarkStatistics Denmark prepares a number of different statistics about products and their use in industrial sectors, imports and exports, production etc., but no statistical information about the movement through the supply chain is available neither on national nor on international level. It is therefore necessary to draw an outline based on information from different statistics and accept the uncertainty related to this procedure. A short description of the most relevant statistics issued by Statistics Denmark and their applications in this model is presented below. 2.2.1 Statistics of GoodsThe Statistics of goods presents information about the goods produced and in which industrial sectors they are produced. This applies only to industrial sectors having a production in Denmark. The Statistics of goods is not so extensive as the Statistics of foreign trade (see below) since only companies with at least 10 employees are obliged to report to Statistics Denmark. The Statistics of goods covers all 10.000 product codes (8-digit KN codes), but covers only manufacturing companies, i.e. the industrial sectors 15.1-36.5 (3-digit DN code level). For the sake of clearness the present model is based on a two-digit product code level, which means 95 product groups. For these 95 product groups information about the value of imports, exports and indigenous production has been gathered from Statistics Denmark. 2.2.2 Statistics of Foreign TradeInformation concerning foreign trade allows establishing the relations between import-export and industrial sectors. This gives a clear picture of which goods are imported and to which industrial sectors and which goods these branches are exporting subsequently. In this way parts of the supply chain are illustrated. As an example iron is imported to the "iron and metal industry", which in turn is exporting articles made of iron. The Statistics of foreign trade is adequate since all companies in Denmark are obliged to report about import and export of goods to Statistics Denmark. The Statistics of foreign trade applies to all 10.000 product codes and to all industrial sectors. 2.2.3 CPA-nomenclatureStatistics Denmark also draws up a CPA-nomenclature, which relates products with industrial sectors. It gives information about which goods are expected to be produced and in which industrial sectors. It should be stressed that it deals with expectations contrary to the Statistics of goods and the Statistics of foreign trade, which are both based on reports of factual events. A correlation between the CPA-nomenclature and the information about import/export of goods divided on industrial sectors in the Statistics of foreign trade may thus give an overview of the relation between import and export. As an example, a product is imported to industrial sector 15 (manufacture of food and beverages), but is exported from industrial sector 53 (retailer). The above-mentioned correlation will show to which industrial sector the product really belongs and subsequently indicate the trade within the Danish borders (from producer to retailer). 2.2.4 Statistics of Raw MaterialsStatistics Denmark has recently established an annually reporting of raw materials and sub-products giving information about the supply chain-of-goods before manufacturing. The statistics shows exactly the art and amount of raw materials and sub-products being acquired by Danish companies in order to do further processing. It shows which industrial sectors are using which raw materials and sub-products, but does not distinguish whether the raw materials are imported or bought in Denmark. The Statistics of raw materials is not covering totally since it only applies to mainly large companies having more than 50 employees, i.e. about 1,300 companies. In order to complete the picture some smaller companies from industrial sectors having few or none large enterprises have been included in the statistics. About 55% of the total turnover is included in the study. The Statistics of raw materials does not cover all product codes, but only raw materials and sub-products, which gives a total of 1,400 products. The statistics only applies to the manufacturing industry. 2.3 Sources describing the actions until nowThe Model for selection of future target areas gives information about the industry-oriented actions carried out until now. The information comes from the following reports: "Presentation of selected areas suited for main projects", May 19, 2001". Comprises a summary of preliminary projects, which have been started respectively concluded. "General information and expectations to a preliminary project", 2000. Comprises a survey of industrial sectors in which preliminary projects have been started up and summary of concluded projects. "Plan of priority for the Danish Program for Cleaner Products 1998-2002" – survey of possible branch-oriented actions. "Basic information about selection of new preliminary projects", September 14, 2001". Comprises a survey of industrial sectors in which product panels have been established, branches having carried actions out and an overall evaluation of the industrial sectors from an environmental point of view. "Environmental Management and Audits in Danish Companies". 2001. Survey of industrial sectors, which have had priority under the scheme. 2.4 Aspects of sustainabilityThe Danish Consumer Information has launched a database "Etikbase" (Ethics base) on the Internet. This service should not be regarded as a warranty or an eco-label, but the companies involved have voluntarily presented sensitive information. An independent chartered accountant looks after the scheme. The social responsibility of a company has three aspects: social, environmental and economic aspects, which can be expressed by three times P, i.e. People, Planet, Profit. In a first approach this service focuses on "people" taking the human rights into consideration. Presently (June 2002) a total of 19 companies have joined the scheme while a number of other companies are thinking a membership over. This service will be open to the public in September 2002. The companies joining the scheme are distributed on industrial sectors as follows: Table 2-1:
The Global Reporting Initiative (GRI) is an international initiative, which aims at the promotion of a total reporting of economic, environmental and social conditions in the companies. GRI has issued "Sustainable Reporting Guidelines" for the companies. On the home page www.globalreporting.org/GRIGuidelines/Reporters.htm the companies, which have issued reports according to the guidelines are listed. The list is not complete, but in relation to sustainable development considerations on industrial sector level it tells about social and ethic aspects coming into the international agenda. The model for selection of future target areas also has information about the number of companies and the size of companies. The search tool MultiMark, which is based on information from the business information service "Købmandsstandens Oplysningsbureau", up to date on February 2002. The companies in the sub-trades are divided into the following categories:
The reason for this relatively detailed classification is that the distribution between small and large companies may be decisive when initiating a branch-oriented action. Furthermore this detailed division may give precious information. As an example, all holding companies, branch and subsidiary companies are included in the total listing of companies, despite the fact that some companies do not report about production already reported by the holding company. Typically holding companies, branch and subsidiary companies have less than 9 employees and therefore belong to a group representing 74% of the total. If companies with less than 2 employees are subtracted, the share is only 21%. It should be mentioned that the Statistics of goods does not cover production, which takes place in companies having less than 10 employees. Therefore the information with regard to industrial sectors having many small companies is misleading. Statistics Denmark states that the Statistics of goods covers more than 91% of the values turned over. 2.5 Other sourcesThe model for selection of future target areas also has information about the product groups, which are suited for eco-labelling as well as the number of companies, which have been awarded a licence. This information originates from the home page of the eco-labelling secretariat: www.ecolabel.dk. The information is up-dated February 1st, 2002. The model for selection of future target areas also includes information about the superior product groups for which environmental guidelines for Public Purchasers have been prepared. This information originates from the home page of the Danish EPA. The list has been up-dated on February 19, 2002. The model also includes information about the companies, which are submitted to environmental approval according to chapter 5 in the Danish Environmental Protection Act. The list has been prepared based on the recent ministerial decree No. 646 dated June 29, 2001 – "Bekendtgørelse om godkendelse af listevirksomhed" (Decree about approval of a company which is obliged to obtain an environmental approval of the company). It has not been possible to make a complete list since certain limitations concerning the size of production exist. Only companies having a certain production in certain industrial sectors are included in the list. The list thus represents the best possible estimation and gives a survey of the industrial sectors (three-numbered code level) submitted to the ministerial decree. Finally on an industrial sector level the model includes information about the number of companies having received subsidies according to the Environmental Competence Scheme (miljøkompetenceordningen) launched by the Danish EPA. The survey has been prepared based on information (six-numbered branch level) from the Danish EPA. This list has been transferred to the three-numbered level used in the model. Furthermore for each industrial sector the number of companies having received subsidies to product-oriented actions such as LCA, eco-labelling etc. is indicated. 2.6 Relations between the different sources of informationThe model for selection of future target areas should as mentioned earlier be able to point out important areas for action with relation to products and supply chains, but also relate products with industrial sectors. The relation between industrial sectors and products of Danish origin is established via the Statistics of goods. The relation between industrial sectors and products imported and marketed in Denmark, but not produced in Denmark, is established via the Statistics of foreign trade. The supply chain aspect until and including production has been included in the present model via the Statistics of raw material and the commercial activities after production via the Statistics of foreign trade. No information about the flow of goods is available, but thanks to the numbers of import from the Statistics of foreign trade the following assumption can be made: Raw materials and sub-products imported to an industrial sector will probably follow the same flow. Statistics Denmark has stated that about half of all goods produced in Denmark are sold to end-consumers via wholesalers/retailers, and the other half directly to the consumers.
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