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In recent years, industrializing countries havedevoted much attention to developing andstrengthening environmental institutions andregulatory frameworks to reduce industrial pol-lution. Many governments have established na-tional environmental agencies and have adoptedstandards and regulations similar to those of in-dustrial countries. Although much can be learnedfrom the experience of countries with more ma-ture environmental programs, simply importingsystems developed elsewhere has often not beeneffective. Similarly, some countries have experi-mented with market-based instruments to en-courage compliance, but this approach has notbeen applied to the extent anticipated.Effective environmental regulations must firstreflect their own context and be compatible withthe administrative capabilities of regulatoryagencies. Regulations meant for industrial coun-tries are inherently unenforceable in developingcountries, where institutional capabilities areweak. The success of environmental regulationsalso depends on a culture of compliance that isthe result of a country’s legal traditions, the ma-turity of its institutions, the available resources,and the capacity and support of citizens and theprivate sector. Compliance does not automati-cally happen when requirements are legislated

Developing a Culture of IndustrialEnvironmental Compliance

Efforts to reduce industrial pollution in developing countries have focused on developing envi-ronmental institutions and legal frameworks, largely by establishing command-and-controlregulations and market- based incentives. Overall, however, formal regulation alone has not proved very effective in reducing industrial pollution in these countries. Although there is nosubstitute for an environmental regulatory regime, there is a need to focus on incentives for action by industry. Several innovative approaches are now emerging as effective ways toimprove environmental compliance. These include pollution inventories, information onenterprise performance, cleaner production, environmental management systems, negoti-ated agreements, and government-industry partnerships. International experience, althoughstill limited, suggests that industrializing countries may have much to gain from theseapproaches in developing a culture that fosters improved industrial environmental compli-ance and overall environmental performance.

and issued; rather, it is achieved as a result of targeted efforts that encourage behavioralchanges on the part of polluters.Several mechanisms are now emerging as ef-fective ways to improve environmental com-pliance in countries that lack the necessaryinstitutional capabilities for formal regulation.Rather than being alternatives to environmen-tal regulation, these approaches provide path-ways for achieving environmental goals withina legal framework by developing a

culture of compliance. Although experience with these ap-proaches is still limited, industrializing countriesmay have much to gain by adopting them (seeTable 1).

Pollution Inventories

Pollution inventories can accelerate environmen-tal compliance by providing an information basefor understanding pollution problems, identify-ing priority actions, making informed decisions,and identifying opportunities for waste minimi-zation and cleaner production.On the facility level, a pollution inventory is acomprehensive, accurate, and current account-ing of specific pollutant discharges. On thegovernment level, it is a database of reliable,

Pollution Prevention and Abatement Handbook WORLD BANK GROUPEffective July 1998

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Developing a Culture of Industrial Environmental Compliance

regularly updated, aggregated, and publiclyavailable information quantifying industrial re-leases of specific pollutants. The OECD has de-veloped a common framework for a pollutioninventory, the Pollutant Release and TransferRegister (PRTR).In the Netherlands, an emissions inventory isused to track pollution reduction targets undernational environmental goals to determinewhether covenants between firms and regulatorsare being implemented. In the United Kingdomand Denmark, data reported in pollution inven-tories cover substances included in the permit-ting process. The baseline information about thepollution burden provided by the inventory isincreasingly being used by firms in the UnitedStates and Europe to set internal environmentalgoals, often in connection with industry stan-dards, including environmental managementsystems.Similar approaches are now being adopted byindustrializing countries. For example, QuerétaroState, Mexico, is using a PRTR to identity priori-ties and develop a state-level environmental strat-egy that complies with existing federalregulations. The Czech Republic has developeda PRTR, and Colombia, India, and the Philippinesare working on pilots. (See the chapter on Pol-lutant Release and Transfer Registers.)

Information on Enterprise Performance

The collection and dissemination of environmen-tal information are essential to building an in-formed constituency that will support thechanges necessary to achieve environmental im-provement. Disclosure of actual performance in-formation allows the relevant public to monitorprogress (or lack of it) and develop informedpositions; it also strengthens confidence in com-

Mechanism

Pollution inventoriesInformation on enter-prise performanceCleaner productiontechniquesEnvironmental man-agement systemsSupplier chainimpactsNegotiated agree-ments and govern-ment-industrypartnerships

Requirements

Industry and government monitoringand dissemination of data on ambi-ent environment and pollution loadsIndustry monitoring of pollution loads;communications strategy for dis-seminating informationFor government: regulation and realnatural resource pricingFor industry: commitment from man-agementInternational trade and market pres-sures; commitment from manage-mentInternational trade and market pres-sures; concern of large firms withreputation and quality of productsFlexible government structures; po-litical stability; trust between govern-ment and industry; persuasion andsocial pressures

Impact

Inventories provide stakeholders with an environ-mental information base for understanding pollu-tion problems better and for making informeddecisions.Collection and dissemination of environmental in-formation can result in (a) an informed constitu-ency that can effectively demand improvement fromfirms with poor performance and (b) open discus-sions with communities that can reduce mistrust.Improvements in industrial processes and manage-ment reduce the volume of pollution generated,increase production efficiencies, and cut overalloperating costs.Impacts of industry facilities are managed by aprocess of continuous environmental improve-ments that are regularly monitored, measured, andreported.Large firms work with smaller ones to provide ad-vice and mentoring on developing environmentalmanagement systems and improving overall envi-ronmental performance.Mechanism for consensus building among majorstakeholders facilitates commitment to achievingclearly defined environmental goals.

Table 1. Mechanisms for Developing a Culture of Industrial Environmental Compliance

122IMPLEMENTING POLICIES:INDUSTRIAL POLLUTION MANAGEMENT

pany statements about compliance and improve-ments. An informed public can achieve muchthrough informal pressure, and progressive firmsare finding that open discussions with their com-munities can reduce mistrust.Under the Community Right-to-Know Act, theUnited States publishes an annual Toxic ReleasesInventory (TRI) based on mandated reportingand disclosure of specific toxic chemical releasesand transfers by industrial facilities. It is up tolocal governments or community groups to as-sess the performance of firms in their vicinity andto act on this information through public appeals,negotiations, or citizen suits. When TRI data werefirst released, the ensuing pressure led manyfirms to announce goals for reducing significantamounts of pollution, and many met these goals.Although few developing countries have suchfar-reaching right-to-know legislation, in Indo-nesia and the Philippines, public pressure stem-ming from release of environmental informationhas led to similar improvements in industrialbehavior. Under Indonesia’s PROPER programand the Philippines’ Ecowatch program, firms aregraded on the basis of their environmental per-formance, ratings are made public, and facilitiesare held accountable. Similarly, in Korba, India,newspapers publish daily levels of ambient par-ticulate and effluent discharges by two thermalpower plants and an aluminum plant. A commit-tee of citizens, constituted by the local adminis-tration, can inspect these plants at any time. As aresult of such awareness raising, ambient particu-late levels have dropped significantly, and dis-charges into the river no longer go unnoticed.

Cleaner Production

Cleaner production (CP) techniques offer im-provements in industrial processes and manage-ment that can reduce the volume of pollutiongenerated, increase production efficiencies, andreduce operating costs. Industry most often usesthis approach in response to external pressures,including government regulation and the costsof natural resources and of pollution manage-ment (e.g., water charges and costs of treatingwastes).In China, the World Bank is collaborating withthe UNEP to establish a CP Center that will pro-vide local expertise to evaluate CP options forcompanies. Studies carried out under the projectidentified several areas of major savings. Similarwork, supported by donors and internationalorganizations, has been done in Chile, India, thePhilippines, Poland, and Tunisia. Unfortunately,in many cases, only a few of the recommenda-tions have been put into practice. Such limitedsuccess emphasizes the importance of motivat-ing, involving, and obtaining commitment fromsenior management. (See the chapter on Imple-menting Cleaner Production.)

Environmental Management Systems

Environmental management systems (EMSs) arelogical complements to cleaner production tech-niques. They help firms establish a structuredprocess of continuous environmental improve-ments that are monitored, measured, and re-ported. Management commitment to improvingperformance, as well as strong existing manage-rial and measurement capacities, are prerequi-sites for a successful EMS.In a world of increasing free trade, much at-tention has been focused on internationally co-ordinated specifications for EMS under the ISO14001 standard issued by the International Or-ganization for Standardization (ISO). A key com-ponent of the ISO 14001 standard is that itidentifies the elements of an EMS that can be in-dependently audited and certified. However,obtaining certification can involve significantcosts, and there are issues relating to the interna-tional acceptance of national certification. The useof ISO 14001 certification to replace statutory re-porting is a topic of considerable interest.While it is clear that EMS is not a substitutefor a regulatory framework, there may be caseswhere the monitoring and reporting systems of a well-managed firm might substitute for somestatutory inspections, audits, and reports. How-ever, the extent to which a government can relyon the capabilities and commitment of a firm toself-monitor its environmental performanceneeds to be determined. While a number of prac-tical issues have to be sorted out with ISO 14001,EMS can be used as a mechanism for achievingimprovements in environmental performanceand for supporting the trade prospects of goodperformers. (See the chapter on EnvironmentalManagement Systems and ISO 14000.)

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