the proper indonesian environmental compliance public disclosure alternative policy instrument for...
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The PROPERIndonesian Environmental Compliance Public Disclosure
Alternative Policy Instrument for Better Air Quality
Rasio Ridho SaniDRS (UI), M.COM (Uni.Sydney), MPM (InWent-Uni.Potsdam)
Ministry of the EnvironmentRepublic of Indonesia
Better Air Quality 2006Yogjakarta Indonesia13-15 December 2006
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Program for Environmental Compliance Performance Rating
(PROPER)
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………………….. Outline
1. The history of Environmental Management Policy Instrument in Indonesia
2. Rationality of Environmental Compliance Public Disclosure
3. Compliance Improvement Mechanism
4. The Benefits and Results
5. Lessons Learned
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1. Environmental Compliance Policy Instrument in Indonesia
Environmental Impact Assessment
Clean River Program
Clean Air Program(Blue Sky)
Hazardous Wastes Control
Water PollutionCompliance
Public Disclosure
MultimediaEnvironmental
CompliancePublic Disclosure
“PROPER”
LicensingSystem
Environmental Law Enforcement
Market Instrument (Cleaner Production, Soft Loan)
2002199919901986
1995
Economic Crisis
1998 - 2002
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2. Background and Rationality of Environmental Compliance Public Disclosure
Background: Lack of companies
environmental compliance
Ineffective of conventional environmental law enforcement policy tools
Demand for greater public participation & transparency in environmental management
Alternative policy tools
2002 - 2003
Comply, 28, 33%
Not Comply, 57, 67%
2003 - 2004
Comply, 123, 49%
Not Comply, 128, 51%
2004 - 2005
Comply, 244, 52%
Not Comply, 222, 48%
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……….Environmental compliance Performance Public Disclosure will create interaction among
related stakeholders; regulators, workers, investors, customers, public, shareholders
reputational incentives to good performer, and then reputational disincentive to bad performer
Rationality …….
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ComplianceMonitoring
Public RightTo Know
PublicParticipation
CompanyInformation
Dissemination
Then …. the Element of PROPER, and its legal foundations
Government shall develop and implement preemptive, preventive, and proactive
policy tools in order to maintain carrying capacity of the environment (Act 23/97
article 10.e)
Minister conduct compliance surveillance .. Act. 23/97 article 22
Every person has a right on environmental information .. 23/97 article 5.2
Everybody whom doing business and activities obligate to provide right
information …. Act. 23/97 article 6.2
Community has equal opportunities to participate in environmental
management …. Act. 23/97 article 5.3
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3. Compliance Improvement Mechanism
Compliance Level
Performer Five Color Coded Rating
Beyond
Compliance Good
Gold
Green
Comply Sufficient Blue
Non Compliance
Bad Red
Black
Compliance Mechanism Improvement
Stakeholder reactions Impact
Appreciation from workers, shareholders, investors, customers, and public
Reputation Incentive
Neutral
Pressure from workers, shareholders, investors, customers, and public
Disincentive Reputation
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Multi media environmental compliance Rating
Compliance Level
Rating Alternative
Above Compliance
Gold A
Green B
Comply
Blue C
Non Compliance
Red D
Black E
Performance Assessment Type of Compliance
Area Method
Environmental Management System Effort
Oriented VoluntaryResources Conservation and Reuse, Recycle, and Recovery
of Wastes (3R)
CSR: Community Development
Water and Sea Water Pollution
Result Oriented
ObligatoryAir Pollution
Hazardous Waste Management
Implementation of EIA
Color Coded Rating
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Government
Cost effective for compliance perforamance
Tool to measure environmental management
program
Instrument to drive beyond compliance program
Company
Benchmarking for non financial performance
Intangible Value Added Better Company Image
Driver for Eco Efficiency
Improving communication between government and
company
Investors and Public
Clearing house for targeted company
performance
Room for public participation in environmental management
4. Benefits and the Results
…….. Benefits to the Stakeholders
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Strategic Map PROPER and Conventional Environmental Law Enforcement Tool
Low
High
Time Required
Cost Needed
Public Involvement
Other Stakeholder Involvement
Value Added to Stakeholder
Relationship among
Stakeholders
PROPER
Law
Enforcement
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From Indonesia to other part of the World ………..
Indonesia(1995)
Filipina(1997)
China(2000)
Vietnam(2002)
Thailand(2005)
India(2002)
Ghana(2005)
Source: AECEN
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The Results
PROPER 2002
BLACK, 25, 29%
BLUE, 20, 24%
GREEN, 8, 9%
GOLD, 0, 0%
RED, 32, 38%
Overall Performance ……..
PROPER 2003
RED, 86, 34%
BLUE, 114, 45%
GOLD, 0, 0%
GREEN, 9, 4% BLACK,
42, 17%
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The Results
PROPER 2004/2005
RED, 150, 32%
BLUE, 221, 48%
BLACK, 72, 15%
GREEN, 23, 5%
GOLD, 0, 0%
Overall Performance …….. At 2005
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The Effectiveness … Increasing rate of compliance
13.15 % compliance Improvement
09
114
86
42
0
18
138
67
23
1 4
0
20
40
60
80
100
120
140
2003-2004 2004-2005
Rating 251 companies Evaluation period 2003-2004 & 2004-2005
Ditunda Tutup
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Media Compliance Performance
Air pollution compliance level is higher than water pollution, and hazardous waste management
290336
287
147110
179
29 20
0
100
200
300
400
Comply Non Comply Other
Water Pollution Air Pollution Hazardous Wastes
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Compliance performance Air Pollution control PROPER 2005
Air Pollution Compliance Level 113 Industries of Mining, Energy, Oil & Gas
COMPLY, 92, 81%
NOT COMPLY, 21, 19%
Air Pollution Compliance Level251 Industries of Manufacture,
Infrastructure & Services
Comply, 152, 60%
Not Comply, 14, 6%
Other, 85, 34%
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Key success factor of the PROPER depends on …………..
Effective Communication
Strategy
Credibility of Executing
Agency
Active Role of Stakeholders
Synergistic approach
with other program
Enlarging Role of Media
Targeting for Law Enforcement and other Financial
Disincentive
Strengthening Role of Independent Advisory Board
5. The Lesson Learned
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5. The Lesson Learned
Promoting of non regulated emissions as a criteria for beyond compliance performance ……..
Fugitive Emissions Green House Gases Conservation Energy
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5. The Lesson Learned
………….However, supporting infrastructure such as the availability of accredidated laboratory facilities is still limited
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5. The Lesson Learned
Increasing number of targeted companies to achieve critical momentum of the program and therefore ……the role of local government is becoming important
The next …the rating of 525 companies will be publish to the public by early of January 2007
84251
466550
1,000
1,500
2,000
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
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5. The Lesson Learned
The PROPER will be more effective in nationwide framework than local type of environmental compliance public disclosure