THE UN GLOBAL COMPACT

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THE UN GLOBAL COMPACT

• THE ENVIRONMENT PRINCIPLES
• Session E2 Principle 7

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UNGC Principle 7
Businesses should support a precautionary
approach to environmental challenges
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Principle 7The Precautionary Approach

• A Brief History of the Concept
• Background in European environmental legislation
• Swedish Environment Protection Act (1969)
  introduced the concept of environmentally
  hazardous activities for which the mere risk
  (if not remote) is to be deemed enough to warrant
  protective measures or a ban on the activity
• The German Vorsorgeprinzip (forecaring)
  Principle implemented in the German clean air
  policies of the 1970s that called for prior care,
  foresight, and forward planning to prevent
  harmful effects of pollution
• Increasing adoption in international agreements
• The UN Framework Convention on Climate Change
  (1992)
• The UN Convention on Biological Diversity (1992)
• The Stockholm Convention on Persistent Organic
  Pollutants (2001)
• The Cartagena Protocol on Biosafety (2003)

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Principle 7The Precautionary Approach

• Precautionary approach or principle?
• A contentious issue causing strong division in
  the negotiation of multilateral environmental
  conventions
• The difference involves a legal and ethical
  debate, with the different interpretations having
  different implications for corporate
  environmental activity
• The debate revolves around
• Whether to apply precaution in an absolutist
  manner (principle) or in a more flexible manner
  (approach)? Or similar meaning, but different
  US / European approaches (legalistic /
  principled)?
• Shifting the burden of proof completely to the
  project proponent (principle) or sharing this
  with stakeholders in identifying the acceptable
  risk (approach)
• The following slides focus primarily on
  implementing the precautionary approach as this
  is specifically referred to in the Global Compact

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Principle 7The Precautionary Approach

• Understanding Principle 7 The Rio Declaration
  
• In order to protect the environment, the
  precautionary approach shall be widely applied by
  States according to their capabilities.
• Where there are threats of serious or
  irreversible damage, lack of full scientific
  certainty shall not be used as a reason for
  postponing cost-effective measures to prevent
  environmental degradation.
• 1992 Rio Declaration (Principle 15)

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Principle 7The Precautionary Approach

• Understanding Principle 7 The Wingspread
  Statement
• When an activity raises threats of harm to
  human health or the environment, precautionary
  measures should be taken even if some cause and
  effect relationships are not fully established
  scientifically.
• In this context the proponent of an activity,
  rather than the public, should bear the burden of
  proof
• The process of applying the Precautionary
  Principle must be open, informed and democratic
  and must include potentially affected parties.
• It must also involve an examination of the full
  range of alternatives, including no action.
• 1998 Wingspread Statement

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Principle 7The Precautionary Approach

• Key Elements of the Precautionary Approach
• Take anticipatory action to prevent harm in the
  face of scientific uncertainty
• Explore alternatives, including the alternative
  of no action
• Consider the full cost of environmental / health
  impacts over time
• Ensure greater public participation in
  decision-making
• The responsibility for providing evidence
  regarding harm (or the lack thereof) is shifted
  to the proponents of an activity

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Principle 7The Precautionary Approach

• A Business Approach Prevention is better than
  cure
• Sound Business Sense
• Although preventing environmental damage entails
  both opportunities and implementation costs,
  remediating environmental harm can cost much more
  (e.g. treatment costs, company image)
• Innovative Investments
• Production methods that are not sustainable (e.g.
  that deplete resources degrade the environment)
  have a lower, long-term return
• Improving environmental performance means less
  financial risk, an important consideration for
  insurers
• RD related to the creation of more
  environmentally-friendly products can have
  significant long-term benefits

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Principle 7The Precautionary Approach

• Managing Uncertainty
• Companies need to have a thorough understanding
  of
• Current environmental impacts
• Baseline environmental conditions
• It requires a life-cycle approach to business
  activities to
• Manage uncertainty
• Ensure transparency

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Principle 7The Precautionary Approach

• Tools to Assess Uncertainty
• Environmental Risk Assessment
• Life Cycle Assessment (LCA)
• Environmental Impact Assessment
• Strategic Environmental Assessment

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Principle 7The Precautionary Approach

• Examples of precautionary activities
• Build in safety margins when setting standards in
  areas where significant uncertainty still exists
• Ban or restrict an activity whose impact on the
  environment is uncertain
• Promote Best Available Technologies (BAT)
• Implement Cleaner Production and Industrial
  Ecology approaches
• Communicate with stakeholders about risks

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Principle 7The Precautionary Approach

• The precautionary approach and the
  decision-making process
• When deciding on project that could have
  potentially significant environmental impacts, a
  business should
• 1) Assess whether a comprehensive precautionary
  approach is required, by identifying the
  potential negative effects and evaluating the
  risks
• 2) Undertake an assessment of all reasonable
  alternative options the burden of proving
  acceptable harm shifts onto the organisation
  whose activities raised suspicion of harm in the
  first place
• 3) Adopt a transparent, inclusive and open
  decision-making process
• 4) Implement an ongoing process of research and
  monitoring, periodically re-examining the
  decision on the basis of new information
• 5) Implement the proportionality principle -
  ensuring that the costs of action to prevent
  hazards are not disproportionate to the likely
  benefits

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Principle 7The Precautionary Approach

• Assessing when to invoke the precautionary
  approach
• Whether or not to invoke the Precautionary
  Principle is a decision exercised where
  scientific information is insufficient,
  inconclusive, or uncertain and where there are
  indications that the possible effects on the
  environment, or human, animal or plant health may
  be potentially dangerous and inconsistent with
  the chosen level of protection. European
  Commission (2000)
• Critical questions
• When is the available scientific information no
  longer insufficient, inconclusive or uncertain?
• What actions should the industry proponent take
  to provide assurance of this? Can you prove a
  negative?
• How (and who?) to judge the acceptable level of
  risk to society?

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Principle 7The Precautionary Approach

• Considerations relating to the stakeholder
  engagement process
• Significant potential for mutual benefits
• Stakeholders should be viewed as potential assets
  and opportunities, rather than as liabilities and
  risks
• Understand that public perceptions may be driven
  by feelings not facts, and instinctive feelings
  matter
• Continue to solicit input from stakeholders - and
  be adaptable
• Unsatisfied stakeholders must not be dismissed -
  rather show that their demands may conflict with
  other legitimate stakeholder needs
• Maintain effective communication with the media,
  recognising their interests in promoting a
  controversial story

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Principle 7The Precautionary Approach

• Integrating Precautionary Approach into business
  activities (1)
• Ensure top management understanding of the
  implications of the principle and a visible
  commitment to this
• Develop and implement a code of conduct with a
  commitment to health/environment
• Develop and implement specific company guidelines
• Create a managerial committee or steering group
  to oversee application of precaution,
  particularly on sensitive issues

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Principle 7The Precautionary Approach

• Integrating Precautionary Approach into business
  activities (2)
• Establish two-way communication with stakeholders
• Support independent scientific research on the
  issue involved, working with relevant national
  and international institutions
• Join industry-wide collaborative efforts to share
  knowledge and deal with issues relating to
  production processes/products around which high
  levels of uncertainty, potential harm and
  sensitivity exist
• In the context of a contentious project decision
  that needs to be taken, implement the
  decision-making step outlined in Slide 8

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Principle 7The Precautionary Approach

• The Precautionary Approach A final thought
• The precautionary approach can have profound
  implications for "business as usual" (i.e. growth
  and innovation at any cost)
• For example, requiring companies to
  systematically assess alternatives would (by
  itself) affect current innovation activities
• An effective assessment of alternatives requires
  an evaluation of what it is the activity is
  trying to achieve and to identify the
  least-damaging way of accomplishing this
• It also requires the company to consider whether
  we might we be better off without the particular
  innovation