VOLUNTARY ENVIRONMENTAL INSTRUMENTS- THEIR BENEFITS AND USE IN THE CZECH REPUBLIC

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1 VOLUNTARY ENVIRONMENTAL INSTRUMENTS- THEIR BENEFITS AND USE IN THE CZECH REPUBLIC Ing. Tereza Kadlecová, West Bohemia University, Univerzitní 8, Pilsen Czech Republic ABSTRACT This paper introduces three voluntary environmental instruments based on preventive principle and compares them to reactive strategies of environmental preservation. The paper includes investigations concerning the use of these instruments in the Czech Republic carried out by Czech Statistical Office and Innovation and Development Centre. Results of these investigations are in compliance with results ascertained within the research conducted by the author along with the Institute of industrial management, Ltd. The aim of this paper is to analyse the barriers and level of application of the voluntary environmental instruments. KEYWORDS Cleaner production, ecodesign, ecolabelling, end-of-pipe technologies. INTRODUCTION Many forms of preventive as well as reactive strategies for environmental conservation are being used in industrial engineering. Cleaner production, ecodesign and ecolabelling are examples of preventive strategies. As the name indicates the preventive strategies endeavour to prevent the origin of damage, they seek for sources of pollution and waste. Preventive strategies have more potential and their realization should be supported. The reason why reactive strategies are not so effective or promising is the fact that they do not focus on the sources of environmental damage, they only try to mitigate the consequences of production. Among these end-of-pipe technologies are, for example, refuse compactors, collection containers and vehicles, waste heat recovery systems, air pollution filters, noise abatement investments and sewage treatment plants. As a result the quantity of toxic agents in one environment domain drops, but rises in another domain. As practice has shown, the preventive strategy has a positive impact on the environment and it leads to financial savings, economic profit, cost reduction and enhancement of the competitive advantage at the same time. Preventive strategy is therefore considered as a double profit strategy: environmental and economic a so called win-win strategy. Among the most obvious voluntary instruments are cleaner production, ecodesign and ecolabelling. CLEANER PRODUCTION Concept of Cleaner production The concept of cleaner production is being connected with the integral preventive strategy which is applied especially to the production sector. The aim of this strategy is to do away with those causes of environmental pollution that are a consequence of production. Within cleaner production the material and energy flows are monitored in order to identify the sources of undesirable waste. Afterwards the possibilities of elimination of these sources are explored by considering [1]: 1. Ease of technical feasibility; 2. Final economic efficiency; and 3. Environmental efficiency. All the company processes are observed as a whole - in terms of their impact on all domains of the environment. It is therefore not possible to transfer the negative impact from one domain of the environment into another one, as it is with the end-of-pipe technologies. The implementation of cleaner technology in a company is not a one-shot action, but it is a long-term process. Effectiveness is the reason why a company should deal with cleaner production. In other words, reducing raw material and energy consumption reduces the negative impact on the environment. Waste increase is thus being prevented at the source and this leads to a significant economic effect at the same time

2 The main features of cleaner production are [1]: preventive approach to solving the problems; integration principle; wide range of the application (processes, products, services); and economic benefits. Within cleaner production the type of product, technology used, machines and equipment, raw material, work organization and adherence to the manufacturing processes are controlled.. Cleaner production in the Czech Republic Cleaner production activities began in the Czech Republic in However, the application level of cleaner production is in practice rather low, as can be seen in the following figure. Figure 1: Number of cleaner production projects in years [2] ECODESIGN Concept of ecodesign Ecodesign is one of the preventive oriented voluntary regulative instruments of environmental policy. While cleaner production focuses on a company as a whole, the concept of ecodesign concentrates on product development and design. Ecodesign incorporates requirements of environmental protection into product design and development (see Fig 2). So far there is no unified definition of ecodesign. In general, ecodesign can be defined as a systematic process of product design and development which puts emphasis not only on classical features such as functionality, economics, safety, ergonomics, technical feasibility, aesthetics, but it also puts emphasis on the minimum negative impact of a product on the environment.

3 Aesthetics Impact on the environment Ergonomics Safety Functionality Product design Economics Quality Figure 2: Influences on product design and development [3] The main purpose of ecodesign is to design a product with a minimum impact on the environment in its own life cycle ( from cradle to grave ). Within ecodesign all phases of the product life are considered, especially: getting the raw material; production; usage; and disposal. This means that the method of disposal is considered during product design. It is therefore the most preventive and economical approach towards the mitigation of a product s negative impact on the environment. There are several types of ecodesign strategies: 1. Development of a brand new product concept 2. Change in product construction, a) Strategies focusing on product ingredients, b) Strategies focusing on product structure c) Strategies of waste disposal optimization [4] Ecodesign in the Czech Republic Ecodesign is not an unknown concept for Czech engineering designers and some manufacturing corporations. Ecodesign activities are mainly concerned with [3]: substitution of dangerous material with less dangerous ones, implementing measures leading to waste minimization, reduction in raw material consumption, packing and transportation optimization. Product innovation volume in the Czech Republic, however, is unsatisfactory. On the basis of the Innovation and Development Centre investigation from 2004 it is obvious that the total investment in development and innovative technologies in companies was only 48 billion Czech crowns, which is less than 2 % of the sales in all innovating companies. According to these investments 45 % was spent on new technologies and equipment, but only 2 % was invested in design projects. [3]

4 ECO-LABELLING (ENVIRONMENTAL DECLARATION TYPE I.) Concept of ecolabelling Ecolabelling is a system that certifies that specific products and services have less negative impacts on the environment than their competitors and are, therefore, friendlier to the environment. This system is directed by an independent third party. Nowadays there are more than 30 ecolabelling systems and their number is increasing. National or supranational labels are assigned within those systems. Ecolabelling is regulated by ISO The products and services that apply for the certification have to meet many requirements concerning: quality of the product (service); particular production phases; use of raw material and technologies; and final disposal. In contrast to the majority of preventive strategies focusing on systematic examination of manufacturing processes, ecolabelling makes use of market mechanisms outside the company which is based on supply and demand. Ecolabelling in the Czech Republic In the Czech Republic the ecolabelling system is executed as the National Programme of Environmentally Friendly Products Labelling, respectively on the basis of the Government decree Nr. 159 from April 7, [5] The following figure shows the number of ecolabelling licences awarded in years 1994 to Figure 3: Number of ecolabelling licences awarded in years 1994 to 2004 [2] Despite this, the environmentally friendly products market has so far not evolved very much in the Czech Republic. Economic return is therefore relative low. The ecolabelling eco-efficiency is rather poor, despite the fact that the Czech ecolabelling programme is so far much cheaper than foreign programs, as a registration fee of only 735 EUR needs to be paid. [6] BENEFITS ARISING FROM ENVIRONMENTAL FRIENDLY BEHAVIOUR Many companies are reluctant to implement environmental management because they are afraid of enhanced costs connected with environmental preservation. One could say that the application of voluntary preventive strategies and instruments is not worth it. It is very costly to monitor energy and material flows, environmental costs and revenues. Using environmentally friendly raw material and other resources brings with it higher costs. Are there any benefits resulting from a company s environmental approach? Measures for environmental protection can really increase costs in the short-term. However in the long-term those measures should bring a variety of financial as well as non-financial benefits to a company. The question is what are the company s preferences - short-term profit or fixing the market position, building reputation and long-term sustainable growth? CONDUCTED RESEARCH The author along with the Institute of industrial management, Ltd conducted a research regarding Environmental approach to production and business activities in a company. 130 companies from engineering branch were sent questionnaires, from which 35 companies (26,9 %) returned the completed questionnaire. The interviewed companies

5 were classified into three groups (small, middle and large) according to criteria of the Industry Association of Czech Republic. According to this research (see Table 1), only 19,4 % (big companies only) of all interviewed companies are voluntarily environmentally-proactive beyond the remit of legislation. What is the approach of your company towards protection of the environment? Company size Small Portion Middle Portion Large Portion Total Portion We only conform to the environmental legislation 4 100% % 15 68,2% 29 80,6% We are voluntarily environmentallyproactive beyond the remit of legislation 0 0% 0 0% 7 31,8% 7 19,4% Total 4 100% % % % Table 1: Companies environmental activities Companies attitude to environmental activities is interesting as well. Environmental activities are perceived by one half of the small companies interviewed as costly and providing hardly any benefits. Three fifths of middle companies believe, on the contrary, environmental activities to be prestigious and beneficial to business. This view is shared by almost 91 % of all large enterprises. Figure 4 demonstrates this situation. From the Table 2 on the next page it is obvious that end-of-pipe technologies prevail in Czech industrial companies. This relates especially to small and medium enterprises (SME). Larger companies implement some of the environmental voluntary instruments like cleaner production (24,2 % enterprises), environmental management accounting (6,1 %), ecodesign (6,1 %) and other. Cleaner production seems to be popular, to some extent, to small and middle enterprises as well. On the contrary, ecolabelling is not being used by the interviewed companies at all. Lack of interest in environmental friendly products indicates the poor relation of Czech enterprises to ecolabelling as well. 36,1 % of interviewed companies do not buy green products and services at all, 27,8 % buy these products rarely and 36,1 % buy these products from time to time. No enterprise buys the green product regularly. This is a close cycle: no demand, no supply. Poor green products demand is probably the reason why companies do not produce and offer environmental friendly products and services. 100,0% 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 50,0% 50,0% 40,0% 60,0% 9,1% 90,9% Small Middle Large Figure 4: Company approach towards protection of the environment Nowadays it is more and more difficult to avoid the environmental approach. It is very costly matter for a company. Nowadays it is more and more difficult to avoid the environmental approach. However, this approach can bring along various financial as well as nonfinancial benefits for a company.

6 Environmental methods and instruments Company size Small Middle Large Total End-of-pipe technologies 75% 81,8% 57,6% 64,6% Environmental management accounting 0% 0% 6,1% 4,2% Cleaner production 25% 9,1% 24,2% 20,8% Ecodesign 0% 0% 6,1% 4,2% Ecolabelling 0% 0% 0% 0% LCA 0% 0% 0% 0% Other 0% 9,1% 6, % 6,3% Total 100% 100% 100% 100% Table 2: Level of environmental instruments application by Czech companies The conducted research has acknowledged the conclusions of investigations undertaken by the Czech Statistical Office. According to these investigations [2] carried out in 2006 and 2007, companies with end-of-pipe technologies still prevail in the Czech Republic. In 2006 the total investment for environment conservation was about 418 thousand EUR, whereas the investment volume of end-of-pipe technologies was 57.5 %. A year later the situation seemed to be slightly more favourable, although the total investment for environment preservation dropped to 374 thousand EUR, the portion of end-of-pipe technologies was approximately 52 %. Conversion from corrective measures towards prevention is indisputably a positive trend. SUMMARY Nowadays more and more emphasis is put on the protection of the environment. Companies can be voluntarily environmentally active above the ambit of the legislation. Companies have a wide range of voluntary environmental instruments at their disposal. However, the level of use of these voluntary instruments is, for various reasons, unsatisfactory in the Czech Republic. Among the main barriers are poor awareness of these instruments, aversion to the new, the insufficiently developed green-products market and finally, lack of funds. According to investigations carried out by Czech Statistical Office it is obvious that the end-of-pipe technologies still prevail in Czech companies. This situation was acknowledged by the research conducted by the author along with Institute of industrial management, Ltd. ACKNOWLEDGEMENTS Tereza Kadlecova would like to express her gratitude to her supervisor Prof. Ing. Lilia Dvorakova, CSc. whose help, stimulating suggestions and encouragement helped her throughout her research. REFERENCES [1] Remtova, K.: Cleaner production, Ministry of the Environment in the Czech Republic, Prague, 2003, ISBN [2] [3] Innovations and Development Centre of the Czech Republic, [4] Remtová, K.: Ecodesign, Ministry of the Environment in the Czech Republic, Prague, 2003, ISBN [5] Aid programme for environmental technologies in the Czech Republic Program, Ministry of the Environment in the Czech Republic, Prague, 2005 [6] Vlčková, J. Ekoprofit.