The PROPER Indonesian Environmental Compliance Public Disclosure Alternative Policy Instrument for Better Air Quality Rasio Ridho Sani DRS (UI), M.COM (Uni.Sydney), MPM (InWent-Uni.Potsdam) Ministry of the Environment Republic of Indonesia Better Air Quality 2006 Yogjakarta Indonesia December 2006

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 Environmental Impact Assessment Clean River Program Clean Air Program (Blue Sky) Hazardous Wastes Control Water Pollution Compliance Public Disclosure Multimedia Environmental Compliance Public Disclosure “PROPER” Licensing System Environmental Law Enforcement Market Instrument (Cleaner Production, Soft Loan) Economic Crisis

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

………. 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 …….

Compliance Monitoring Public Right To Know Public Participation Company Information 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

3. Compliance Improvement Mechanism Compliance Level PerformerFive Color Coded Rating Beyond ComplianceGood Gold Green ComplySufficientBlue Non Compliance BadRed Black Compliance Mechanism Improvement Stakeholder reactionsImpact Appreciation from workers, shareholders, investors, customers, and public Reputation Incentive Neutral Pressure from workers, shareholders, investors, customers, and public Disincentive Reputation

Multi media environmental compliance Rating Compliance Level Rating Alternative Above Compliance GoldA GreenB Comply BlueC Non Compliance RedD BlackE Performance AssessmentType of Compliance AreaMethod Environmental Management System Effort OrientedVoluntary Resources Conservation and Reuse, Recycle, and Recovery of Wastes (3R) CSR: Community Development Water and Sea Water Pollution Result Oriented Obligatory Air Pollution Hazardous Waste Management Implementation of EIA Color Coded Rating

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

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

From Indonesia to other part of the World ……….. Indonesia (1995) Filipina (1997) China (2000) Vietnam (2002) Thailand (2005) India (2002) Ghana (2005) Source: AECEN

The Results Overall Performance ……..

The Results Overall Performance …….. At 2005

The Effectiveness … Increasing rate of compliance % compliance Improvement Rating 251 companies Evaluation period & DitundaTutup

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

Compliance performance Air Pollution control PROPER 2005

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

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 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

5.The Lesson Learned The PROPER will be more effective in nationwide framework than local type of environmental compliance public disclosure

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