Blue Sky Disclosure

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					                              The PROPER
Indonesian Environmental Compliance Public Disclosure
          Alternative Policy Instrument for Better Air Quality


               Rasio Ridho Sani                               Better Air Quality 2006
     DRS (UI), M.COM (Uni.Sydney), MPM (InWent-Uni.Potsdam)
                                                                 Yogjakarta Indonesia
         Ministry of the Environment
                                                                 13-15 December 2006
           Republic of Indonesia
Program for Environmental Compliance
          Performance Rating
           (PROPER)
      ………………….. 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
                              1. Environmental Compliance
                              Policy Instrument in Indonesia
               Market Instrument (Cleaner Production, Soft Loan)
      1986                1990              1999                    2002

                        Clean River
                         Program


                     Clean Air Program      Licensing            Multimedia
                         (Blue Sky)          System            Environmental
  Environmental                                                 Compliance
Impact Assessment    Hazardous Wastes                         Public Disclosure
                          Control
                                                             “PROPER”
                      Water Pollution
                       Compliance        Economic Crisis
                     Public Disclosure


                         1995            1998 - 2002

                       Environmental Law Enforcement
  2. Background and Rationality of Environmental
                  Compliance Public Disclosure
                                         2002 - 2003
Background:
 Lack of companies                                     Com ply,
                                                        28, 33%

   environmental
   compliance                   Not
                                                                                   2003 - 2004



 Ineffective of
                              Com ply,
                              57, 67%



   conventional                                                           Not                    Com ply,

   environmental law                                                    Com ply,
                                                                        128, 51%
                                                                                                 123, 49%



   enforcement policy tools
 Demand for greater                                   2004 - 2005

   public participation &
   transparency in                         Not
   environmental                         Com ply,
                                         222, 48%
                                                                     Com ply,
                                                                     244, 52%
   management
 Alternative policy tools
                      Rationality …….

……….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
               Then …. the Element of PROPER, and
                       its legal foundations
  Minister conduct compliance                                    Every person has a right on environmental
surveillance .. Act. 23/97 article 22                                 information .. 23/97 article 5.2




         Compliance                                                                Public Right
         Monitoring                                                                 To Know
                                 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)
         Company                                                                     Public
        Information                                                               Participation
       Dissemination



 Everybody whom doing business and                                  Community has equal opportunities to
                                                                        participate in environmental
   activities obligate to provide right
                                                                     management …. Act. 23/97 article 5.3
  information …. Act. 23/97 article 6.2
                                       3. Compliance Improvement
                                                       Mechanism


                                          Compliance Mechanism Improvement
Compliance   Performer    Five Color
  Level                     Coded          Stakeholder reactions        Impact
                            Rating


 Beyond                     Gold         Appreciation from workers,   Reputation
Compliance     Good                       shareholders, investors,     Incentive
                            Green          customers, and public

  Comply     Sufficient     Blue                                        Neutral



   Non         Bad           Red          Pressure from workers,      Disincentive
Compliance                                shareholders, investors,    Reputation
                            Black
                                           customers, and public
                                      Multi media environmental
             Color Coded
               Rating                        compliance Rating

                                  Performance Assessment                Type of
Compliance     Rating                                                 Compliance
  Level      Alternative               Area                Method
                            Environmental Management
                                     System                 Effort
  Above      Gold    A
Compliance                  Resources Conservation and     Oriented    Voluntary
                           Reuse, Recycle, and Recovery
             Green   B            of Wastes (3R)
                                 CSR: Community
                                  Development
  Comply                   Water and Sea Water Pollution
             Blue    C
                                   Air Pollution
                                                            Result    Obligatory
                                 Hazardous Waste
                                                           Oriented
   Non       Red     D             Management
Compliance                     Implementation of EIA
             Black   E
                                    4. Benefits and the Results

…….. Benefits to the Stakeholders

       Government                      Company              Investors and Public

Cost effective for compliance
                                 Benchmarking for non
        perforamance
                                 financial performance       Clearing house for
                                                             targeted company
      Tool to measure
                                 Intangible Value Added         performance
environmental management
                                 Better Company Image
         program
                                Driver for Eco Efficiency

                                                              Room for public
 Instrument to drive beyond     Improving communication
                                                              participation in
    compliance program          between government and
                                                               environmental
                                        company
                                                               management
                  Strategic Map PROPER and Conventional
                    Environmental Law Enforcement Tool



High
                                                                        PROPER




                                                                          Law
                                                                      Enforcement

Low


         Time      Cost     Public        Other       Value Added     Relationship
       Required   Needed Involvement   Stakeholder   to Stakeholder      among
                                       Involvement                    Stakeholders
From Indonesia to other part of the
         World ………..



                      China
                      (2000)

                 Vietnam
                  (2002)
                                   Filipina
   Ghana      Thailand             (1997)
   (2005)      (2005)

              India
             (2002)            Indonesia
                                 (1995)



                                       Source: AECEN
The Results
        Overall Performance ……..

                        PROPER 2002                                             PROPER 2003

                GR EEN , 8 ,
                               GOLD , 0 ,                           GREEN, 9,        GOLD, 0,
                                 0%
                    9%                                                4%               0%       BLACK,
                                            B LA C K, 2 5,
                                                29%
                                                                                                42, 17%

B LU E, 2 0 ,
   24%


                                                             BLUE, 114,
                                                               45%


                                             R ED , 3 2 ,
                                                                                                RED, 86,
                                                38%                                              34%
              The Results
Overall Performance …….. At 2005
               PROPER 2004/2005

                       GOLD, 0,
      GREEN, 23,
                         0%       BLACK,
         5%
                                  72, 15%




 BLUE, 221,
   48%                             RED, 150,
                                     32%
The Effectiveness …
Increasing rate of compliance

              13.15 % compliance Improvement


                         Rating 251 companies
               Evaluation period 2003-2004 & 2004-2005
                                                     138
    140
                  114
    120
    100                 86
    80                                                     67

    60                       42
    40                                                          23
                                                18
    20        9
          0                               0                          1 4
     0
               2003-2004                         2004-2005
                              Ditunda   Tutup
                             Media Compliance Performance

Air pollution compliance level is higher than water
     pollution, and hazardous waste management

   400           336
           290         287
   300
                                147           179
   200                                110
   100                                                   29   20

     0
            Comply              Non Comply                Other


            Water Pollution   Air Pollution     Hazardous Wastes
                                           Compliance performance Air
                                          Pollution control PROPER 2005
           Air Pollution Compliance Level
     113 Industries of Mining, Energy, Oil & Gas



NOT COMPLY, 21,                                                        Air Pollution Compliance Level
     19%
                                                                       251 Industries of Manufacture,
                                                                          Infrastructure & Services




                                                          Other, 85,
                                                             34%



                                        COMPLY, 92, 81%


                                                                                                    Com ply, 152,
                                                                                                       60%

                                                          Not Com ply,
                                                             14, 6%
                               5. The Lesson Learned
     Key success factor of the PROPER
           depends on …………..

                            Active Role of
                            Stakeholders


                        Strengthening Role of
                     Independent Advisory Board
Enlarging                                                         Targeting for Law
 Role of                    Credibility of                        Enforcement and
 Media                       Executing                             other Financial
                               Agency                               Disincentive
              Effective                          Synergistic
            Communication                         approach
               Strategy                      with other program
              5. The Lesson Learned


Promoting of non regulated emissions as
a criteria for beyond compliance
performance ……..
     Fugitive Emissions
     Green House Gases
     Conservation Energy
                 5. The Lesson Learned


………….However, supporting
infrastructure such as the availability of
accredidated laboratory facilities is still
limited
                                    5. The Lesson Learned

                                                                                                          2,000
                                   2,000
Increasing number of targeted      1,800
companies to achieve critical                                                                   1,500
                                   1,600
momentum of the program and
therefore ……the role of local      1,400
government is becoming             1,200                                              1,000
important                          1,000
                                     800                                    550
                                     600                          466
The next …the rating of 525
companies will be publish to the    400                251
                                    200      84
public by early of January 2007
                                      0
                                           2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
              5. The Lesson Learned



The PROPER will be more effective in
nationwide framework than local type of
environmental compliance public disclosure
Thank You
 terima kasih
    Text message   : +62.812 192 4334
    Email          : rasiosani@menlh.go.id

				
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