## Orr'S Sustainable Development & Environmental Duties Conclusions April 2007


## Orr'S Sustainable Development & Environmental Duties Conclusions April 2007 Executive Summary

1. 
In October 2006 we consulted on how best to discharge our sustainable 
development and environmental duties1.  Since we issued our consultation 
document a number of significant reports have been published that impact on sustainable development (e.g. the Stern and Eddington reports).  These have reinforced the need to review our policy.  They have further underlined the 
need to develop and maintain a sustainable rail system for future generations and for the rail industry to promote and enhance the sustainable development and environmental advantages of travelling by rail as opposed to other transport modes.  Our consultation recognised the work being undertaken by the industry on identifying the best way to contribute to sustainable development.  This work is now more important than ever before.   
2. 
This document sets out our conclusions on how we intend to discharge our 
duties.  Our policy takes account of the Government's strategy on sustainable development and the Stern and Eddington reports.  It builds on the work being undertaken by the rail industry and takes account of the responses to our consultation.  As there was a significant level of consensus on the way forward, we have moved straight to final conclusions, rather than issue draft conclusions as originally indicated in our consultation document. 
3. 
In setting out our policy position we also set out the workstreams that we 
intend to take forward, with the rail industry, to deliver a more sustainable 
railway as part of a more sustainable transport system.  In particular we will: 
(a) 
ensure that the industry monitors its sustainability including 
environmental performance, and assess and comment on the results.  
By end October 2007, working with the industry, we will ensure that a 
set of key performance indicators is in place to monitor industry performance and that these will be published in National Rail Trends by 
the end of 2007. 
(b) 
review key aspects of industry incentives and processes to ensure that 
sustainable development concerns are adequately taken into account.  
                                            
As part of this we will, following consultation with the industry, issue revised environmental guidelines, incorporating sustainable development issues by end December 2007; 

(c) 
test Network Rail's plans and the emerging conclusions of the periodic review from a sustainability perspective; 
(d) 
integrate our sustainable development policy with our other policies, 
and review our own sustainable development performance; and 
(e) 
be prepared to use our influence as independent regulator of the rail 
industry to pursue sustainability objectives. 
4. 
We will also reassess our performance against other similar regulatory bodies 
during 2008-09 to ensure that we are continuing to adopt best practice. 
 

## 1. Introduction

1.1 
This document sets out: 
(a) 
our conclusions on how we intend to discharge our statutory 
sustainable development and environmental duties; and  
(b) 
publishes our sustainable development policy statement.          

## Background

1.2 
Section 4 of the Railways Act 1993 (as amended) (the Act) places two specific 
statutory duties on ORR that are particularly relevant to sustainable development: (a) 
to contribute to the achievement of sustainable development; and  
(b) 
to have regard to the effect on the environment of activities connected 
with the provision of railway services.  
1.3 
The environment is one of three key pillars of sustainable development, the others being society and the economy.  When, in this document, we make reference to "sustainable development", we are referring to the way in which we discharge both of our relevant duties.  
1.4 
As part of our 2006-09 Corporate Strategy and Business Plan2 we gave a 
commitment to take a more proactive role in discharging these duties.  On 11 
October 2006 we therefore published a consultation document that: 
(a) 
examined the way in which our current activities contribute to 
sustainable development; and 
(b) 
made a number of proposals to improve the way that we discharge our 
duties in order to address the three pillars of sustainable development 
more effectively. 
                                            
1.5 
We held a workshop on 24 November 2006 attended by both industry 
representatives and other interested parties.3 The aim of this workshop was to 
encourage discussion both of the proposals identified in our consultation 
document, and any wider sustainable development issues affecting the railway industry.  We also held discussions with a number of bodies on specific issues that they wished to draw to our attention.  
1.6 
We are grateful to everyone who responded to our consultation document.  All 
the responses are published on our website and the respondents are listed 
within this document at Annex A.  The responses have also been summarised 
in a report produced by Enviros Consulting Limited,4 whose original advice on 
potential sustainable development initiatives contributed toward the proposals outlined in our consultation document.   
1.7 
Twenty-nine responses were received to the consultation from rail industry 
bodies and other parties with an interest in sustainable development issues. Responses suggested that there was general support from Network Rail and train operators for us to influence and facilitate industry sustainable development initiatives, but highlighted the need to ensure that our approach aligns with "better regulation" principles, in particular: (a) 
stating that the field of environmental improvement is already a 
crowded one and we should identify and focus on areas where we can add the most value; 
(b) 
 
supporting our proposal to develop an agreed set of a 'significant few' 
measures of rail's environmental impact; 
(c) 
 
firmly opposing any proposals to introduce an environmental charge 
and indicating that there is a need for considerable caution in relation to the use of price signals for environmental 'externalities'; and 
(d) 
 
suggesting that we should avoid greening all our activities simply for 
completeness. 
                                            
190107.pdf).  
1.8 
A number of other views were expressed, ranging from: 
(a) 
support for all of our proposals, noting that they were consistent with 
best practice within Europe; 
(b) 
a suggestion that we should not do anything on sustainable 
development, concentrating instead on marketing rail's environmental 
advantage over other modes and reducing track access charges as a means of further encouraging modal shift; and 
(c) 
a general view that our proposals did not go far enough, and that we 
should be more intrusive by introducing stronger compulsion and in some cases a view that we should seek to 'promote' sustainable development.  
1.9 
In developing these policy conclusions, it is not our intention to summarise the 
responses received in any detail, although we do comment on key themes 
that emerged through the consultation process.    
1.10 Our consultation document indicated that we would initially publish draft 
conclusions, with final conclusions to follow in May 2007.  In the light of the responses received, which we consider give a clear indication of the role that ORR is expected to play, we have opted to publish our conclusions directly so that our proposals can be taken forward without delay.  Where we intend to take forward any further workstreams in order to implement our proposals, we have outlined this intention at the appropriate place within the document.  

## Structure Of This Document

1.11 This document is structured as follows: 
- 
Chapter 2 sets out the objectives that underpin our sustainable development policy statement, and the approach that we intend to take to implement it. 
- 
Chapter 3 publishes our sustainable development policy statement. 
- 
Chapter 4 explains our views on the initiatives that we originally 
proposed, and our intentions for taking these forward. 

## Next Steps

1.12 In line with the proposals set out in the remainder of this document, we will 
take the following actions: (a) 
by end October 2007, working with the industry, ensure that a set of 
key performance indicators (KPIs) is in place to monitor industry 
performance.  We envisage that these indicators will first be published by the end of 2007 (paragraphs 4.3 to 4.15); 
(b) 
by end December 2007, review and reissue our environmental 
guidance, issued in accordance with the current environmental licence 
condition, to ensure that it is fit for purpose (paragraphs 4.16 to 4.18); 
(c) 
evaluate on an annual basis Network Rail's contribution to sustainable 
development as part their annual assessment (paragraphs 4.21 to 
4.25);      
(d) 
by end March 2008, review our own sustainable development 
performance in order to set a good corporate example; 
(e) 
during 2008-09, reassess our performance against other relevant 
bodies; and 
(f) 
continue to work with the industry to: 
(i) 
identify the benefits/feasibility of introducing on-train metering 
and other energy efficient initiatives; 
(ii) 
encourage continuous sustainable development improvement; 
and  
(iii) 
in the longer term, review the potential introduction of financial 
incentives and environmental charges. 

## 2. Sustainable Development Objectives Introduction

2.1 
Until now our approach to our sustainable development duties has been 
based on the view that, since rail is relatively sustainable compared to other 
modes of transport, we should focus on improving rail performance and 
efficiency, and rail's competitive position against other transport modes. We 
have therefore discharged our duties to date in a way that has reflected this position (see paragraph 1.6 of our October 2006 document).  
2.2 
We consider that the improvement of performance and efficiency must remain 
a key element of our approach to regulating the industry (e.g. through the 
2008 periodic review (PR08) process),5 but believe that we should now be 
adopting a more explicit policy on sustainable development with a particular focus on the environmental pillar.  Such a policy should reflect: (a) 
our belief that the rail industry can and should do more to improve its 
relative performance in comparison to other forms of transport, and that 
this can be achieved without detracting from its competitive position against other modes (and indeed often enhancing it); and 
(b) 
 
the increasing importance attached to these issues by the public and 
by government.  This does not mean that we will simply adapt our 
approach because that seems the right thing to do under current circumstances.  Any initiatives that we take forward should add distinct value to the industry approach to sustainable development.  We do, 
however, have to have regard to any explicit references to sustainable development objectives contained in general guidance we receive from the Secretary of State or Scottish Ministers.  Other government policies, no doubt including the proposed July long term strategic framework for rail and in Scotland the rail strategy, do and will make explicit reference to economic development and social inclusion. 

## Our Objectives

2.3 
Our October 2006 consultation document set out the following specific aims 
that we considered needed to be addressed in order that we can better deliver our sustainable development duties: (a) 
that the railway industry should better understand its sustainable 
development performance and the way in which it is measured;  
(b) 
to encourage the efficient development and improvement of such 
performance;  
(c) 
to promote the application of best practice principles across the 
industry; and  
(d) 
to ensure that as an organisation we adopt policies and practices, so 
far as practicable, that will further the UK's sustainable development 
strategy.   
2.4 
Respondents were generally content with these objectives, although a 
number of others were also suggested, namely: (a) 
that there should be an overarching objective that ORR's role should 
be facilitative; 
(b) 
that we should focus on promoting the role of the railway in delivering a  
sustainable rail transport system; and  
(c) 
that we should ensure that the industry contributes to government 
objectives on sustainable development. 
2.5 
We are content that our overall role should encompass all of these principles 
and have therefore reflected these within our policy statement (set out at chapter 3).  
2.6 
A number of other comments were made which related more generally to the 
way in which we should approach our role in contributing to sustainable development.  These included suggestions that: 
(a) 
comparisons of performance should be made with other modes to 
recognise rail's advantage in delivering a sustainable transport 
alternative; 
(b) 
we should set and adopt policies and practices to further UK 
sustainable development at a reasonable cost to the industry; 
(c) 
we should not duplicate the efforts of others, but focus on encouraging 
the greater use of rail by highlighting its green credentials; 
(d) 
we should "ensure" rather than "promote" the dissemination of best 
practice across the industry; and 
(e) 
we should operate light touch regulation informed by research. 
2.7 
We propose to address the majority of these suggestions either within our 
policy statement or through the implementation of specific initiatives as 
outlined in chapter 4.  In terms of cost to the industry, it is not our intention to 
cause any unreasonable additional financial burden through the measures we 
propose.  We do recognise that certain limited costs may need to be incurred 
in establishing and reporting on performance measurement indicators (which are discussed further in paragraphs 4.3 to 4.15). However, as we propose to build on work already being taken forward to develop an industry agreed set of KPIs, we do not believe that cost will be a significant issue.   We consider, however, that any costs will be outweighed by the overall benefit that these measures bring in demonstrating and improving the industry's sustainability.  
2.8 
To avoid duplicating other workstreams being taken forward elsewhere, we 
will work closely with those industry members who are already taking forward a number of worthwhile initiatives, contributing to their projects where we can, and building on their outputs where that is appropriate. 
2.9 
The suggestion that we should ensure that best practice is adopted across the 
industry picks up on another more general theme of responses to the consultation.  This was that ORR should be doing much more to promote the 
adoption of more sustainable initiatives by Network Rail and train operators, forcing them to adapt their operating practices in a way that would push 
forward improvements in the environmental performance of the railway.  Our 
sustainable development duty places an obligation on us to "contribute to" 
rather than actively "promote" sustainable development issues. This was the 
underlying theme of our consultation document and we do not consider that this position has changed.  We do not believe that we have the legal/legislative powers to force operators to adopt best practice or implement specific initiatives.  We also have to strike an appropriate balance between all of our statutory duties,6 when exercising our functions.          

2.10 Therefore, we have concluded that our primary focus should be to 
communicate with the industry and other interested parties on our role, publicising the performance and benefits of railways to a wider audience, and 
encouraging the industry to improve its sustainability performance.  Where we can perhaps influence behaviour, for example through the publication of information and commentary on best practice, it is our intention to pursue this approach in a suitable manner.  Whilst "light touch regulation" may be considered to be an appropriate way forward, this is more about ensuring that 
we add value through our activities rather than simply defining the way in 
which we discharge our statutory obligations. We have a clear duty to "contribute to the achievement of sustainable development", and this 
document sets out our proposals for discharging this.  

## Environmental/Economic Focus

2.11 Our consultation document referred to the three recognised pillars of 
sustainable development (economic, environmental and social) and indicated that our proposals for improvement focused mainly on environmental decision making.  In suggesting this approach we recognised that: 
(a) 
economic considerations of all industry initiatives/plans were taken into 
account as part of our general activities; and  
(b) 
other bodies (Department for Transport (DfT), Transport Scotland, 
Department for Environment Food and Rural Affairs (Defra) and Network Rail, for example) were better placed to take the lead on developing policies that promote and address social issues.   
2.12 This proposed strategy drew a mixed response; a number of consultees 
considered that this was an appropriate approach, whilst others expressed the firm opinion that all three pillars should be treated in equal measure.  This 
latter view reflects the approach that we have endeavoured to adopt 
                                            
6  These can be found on our website at http://www.rail-reg.gov.uk/server/show/ConWebDoc.5056. 

previously.  Indeed, paragraph 1.3 of our consultation document clearly recognised that, within the UK sustainable development strategy, all three pillars are afforded equal importance. 

2.13 We recognise that our future approach is, however, likely to depend upon the 
particular activity being addressed, and that the relative emphasis of each 
consideration may change over time. For example, an access charges review will be principally driven by economic factors, whilst the development of a Route Utilisation Strategy (RUS) could take a more balanced view of each of 
the three pillars.  
2.14 The specific activities on which we consulted were focused on the 
environment as it was felt that this was the area in which, by adapting or 
strengthening our current activities, we could have the most significant impact.  
This view remains unchanged. 
2.15 We believe that we can, however, identify aspects of the wider sustainable 
development agenda on which we should exercise our functions.  These are: (a) 
continuing to improve the performance, efficiency and market position 
of rail, which will generally be good in sustainable development terms;  
(b) 
pressing and facilitating the industry to improve its relative performance 
on sustainable development, and address areas of specific concern;  
(c) 
acting as the 'conscience' of long term sustainability (for instance 
through the periodic review) and highlighting inter-generational issues, 
and the need to be responsive to longer term developments and trends; and  
(d) 
recognising the railway industry's role in sustainable economic 
performance (e.g. as highlighted by the Eddington report7), and in 
addressing social inclusion and development of sustainable communities. 

## Our Proposed Policy Approach

2.16 We believe that our duties can best be discharged, and greatest value added, 
by adopting an approach which comprises the following key elements: (a) 
ensuring the industry monitors its sustainability including environmental 
performance, with ORR assessing and commenting on the results; 
(b) 
reviewing key aspects of industry incentives and processes to ensure 
that sustainable development concerns are adequately taken into 
account;     
(c) 
testing Network Rail's plans and the emerging conclusions of the 
periodic review from a sustainability perspective.  This is likely to 
involve, in particular, testing them in relation to the Government's thirtyyear strategy for railways; 
(d) 
integrating our sustainable development policy with our other policies, 
ensuring that our own house is in order (e.g. updating our environmental guidance, and looking at the impact on sustainability in the way we carry out our activities). This is an area that we have already started to review; 
(e) 
not seeking to become an environmental regulator or enforcer for the 
railway industry, but considering what feedback from our staff in undertaking their safety and economic duties (particularly on the 
ground) can do to contribute to our policy.    At this stage we do not 
consider it appropriate to seek to modify operator licences (which 
currently include a specific requirement to produce environmental policies only) to cover sustainable development, but we will keep this under review in the light of our monitoring; and 
(f) 
being prepared to use our influence more effectively.  In particular we 
will encourage the industry to regard improvement in sustainability 
issues as part of industry success.  We will assess and comment on emerging policies (e.g. the DfT long term strategic framework for rail in 
July 2007) in the light of our sustainability duties.  We will consider whether to encourage/facilitate industry adoption of specific policies (for instance development of on-train metering of traction current, and/or wider use of regenerative breaking). 
Chapter 4 contains more specific detail on how we will take forward our specific proposals. 

2.17 In our business plan for 2007-08 we set out our commitment to ever more 
focused and effective regulation, and we believe the approach set out above is consistent with this.   

## Recent Developments

2.18 A number of external documents relating to the sustainable development 
agenda have been published since our consultation document was issued in October 2006, all of which may have an impact on the way in which we implement our policy.  These include: 
(a) 
the *Stern Review Report*, published on 30 October 2006.8   This 
recommends that the polluter pays principle9 should be applied to all 
carbon emissions in order to incentivise carbon reductions and limit the 
impact of global warming.  This is on the basis that the economic costs of taking this approach now will be significantly less than those of mitigating the effects of global warming in the long term.  It notes, 
however, that, globally, transport is only responsible for 14% of greenhouse gas emissions (rail transport being responsible for 2% of 
CO2 emissions worldwide);  
(b) 
the Eddington report, published on 1 December 2006.   This concluded 
that whilst most of the transport system works well, some parts are 
under strain. For a sustainable transport network, the focus should 
therefore be on alleviating congestion at key pinch points rather than 
investing in major schemes.  It also concluded that transport modes should be appraised alongside each other, and that the process should take the economic, environmental and social costs into account; 
(c) 
a Defra consultation on measures to reduce carbon emissions in the large non-energy intensive business and the public sector, published on 
                                            
8 November 2006.10  Defra's proposals, if taken forward, will impact on metered electricity supplies where the annual cost is greater than £250k per annum, potentially impacting on train operators and Network Rail. The consultation sought views on the introduction of an emissions trading scheme for energy consumption.11 The scope of application of such measures is currently under review; and  

(d) 
a report by the Better Regulation Commission entitled Regulating to 
mitigate climate change published on 6 February 2007.12  This report, 
in responding to the *Stern Review Report*, proposes seven tests for 
better climate change regulation.  It also makes a number of recommendations relating to carbon pricing, and energy efficiency and innovation, all of which, it suggests, should be completed by the end of 
2007. 
2.19 We have evaluated our policy against the proposals outlined in these 
documents and are content that it is both robust and sufficiently flexible to adapt to any future initiatives that might be proposed/implemented.  
2.20 We expect that the forthcoming DfT long term strategic framework for rail will 
include a focus on the importance of rail as a sustainable mode of transport. In addition, the draft Climate Change Bill was published by Defra on 13 March 
2007.13  Responses to consultation on the Bill's proposals are required by 12 
June 2007 and we will be responding within the context of our sustainable development policy.  
                                            
13  See: Draft climate change bill: *consultation document* at 
http://www.defra.gov.uk/corporate/consult/climatechange-bill/consultation.pdf. 

## Proposed Policy

2.21 Our policy statement is set out in chapter 3.  This reflects the policy objectives 
that we included in our consultation document, consideration of the responses received in relation to these, what we currently do to discharge these duties, 
and our proposed policy approach as discussed above. 
ORR's sustainable development & environmental duties: conclusions 

## 3. Orr Policy Statement Introduction

3.1 
We have developed this statement on sustainable development14 after 
consulting the industry on 11 October 2006.   
3.2 
This statement sets out our approach to delivering our specific duties in 
section 4 of the Railways Act 1993 (as amended). These are to: 
- 
"contribute to the achievement of sustainable development"; and 
- 
"have regard to the effect on the environment of activities connected 
with the provision of railway services".  
You can find a full list of our duties on our website.15  

3.3 
We will review this statement at appropriate intervals to make sure that it is 
still relevant. 

## Background

3.4 
We know how important sustainable development is to the UK Governments, 
as shown in: (a) 
guidance issued to us by the Secretary of State and Scottish    
Executive; and 
(b) 
the Government's strategy - 'Securing the future: delivering UK 
sustainable development strategy' published in March 2005.16  
                                            
quality of life, without compromising future generations." 
This means development that provides benefits for society now and in the future without harming the environment for future generations.   

## Our Policy On Sustainable Development

3.5 
We will use our regulatory powers and influence to work to develop a more 
sustainable railway as part of a sustainable transport system. 

## Putting Our Policy Into Action

3.6 
We will put our policy on sustainable development into practice according to 
regulatory best practice. This will involve: (a) 
reflecting our sustainable development policy in our other policies; and 
(b) 
taking action if we can add value in terms of benefit to the public, and 
after we have assessed the likely effect our involvement will have. 

## Aims Of The Policy

3.7 
We will set up and put into practice procedures to make sure we consider the 
environmental, social and economic effect of delivering our and the rail industry's activities, alongside our other duties under section 4. 
3.8 
The railway industry should better understand its performance in terms of 
sustainable development by effectively measuring and improving it:  This will 
involve: (a) 
developing and maintaining effective ways of measuring performance 
that help the industry understand its effect on sustainable development; 
and 
(b) 
measuring the performance of individual organisations within the 
industry and across other industry sectors and forms of transport. 
3.9 
We will encourage the industry to contribute to sustainable development by 
making sure that arrangements are in place to allow the industry to identify 
and share best practice. 
3.10 We will make sure that the industry, its customers and anyone with an interest 
has access to relevant information relating to the industry's role and 
responsibilities in dealing with the effect on the environment of its activities so they can tackle any concerns.    
3.11 We will work with the rail industry and anyone with an interest, to identify 
research topics to improve how the industry can best contribute to sustainable 
development.  We will encourage the rail industry to carry out this research. 
3.12 We will review the need to introduce new targets and incentives to  make sure 
we manage sustainable development effectively so we can speak to people in the industry, anyone with an interest, and the Government on the best way 
that the industry can contribute to sustainable development.  We will review, as appropriate, any existing targets or incentives to make sure that they continue to provide the right encouragement to promote sustainable development. 
ORR's sustainable development & environmental duties: conclusions 
 

## 4. Delivering Our Policy

4.1 
This chapter sets out the way in which we will implement our policy, with 
reference to the proposals set out in our October 2006 document and in the 
light of consultation responses. 

## Introduction

4.2 
In chapter 3 of our October 2006 document we set out a number of specific 
proposals to improve the way in which we discharge our sustainable development duties.  As part of our consultation we were interested in 
gathering views from the industry as to whether there were any initiatives that 
could be added to those that we had considered.  This provoked a wide range of general comments covering issues such as: (a) 
a need to guard against duplicating industry effort; 
(b) 
communicating the benefits of rail and encouraging modal shift; 
(c) 
the publication of a formal policy statement; and 
(d) 
the provision of economic incentives. 
We have considered all of these issues in reaching our conclusions.   

## Key Performance Indicators

4.3 
One of the primary thrusts of our consultation document outlined our belief 
that it is imperative that information published in respect of rail industry performance is robust and is effectively disseminated to a wide audience both 
within and external to the industry. In our opinion this would help the industry to understand: 
(a) 
any underlying reasons for changes in performance, either detrimental 
or beneficial; and 
(b) 
how actions undertaken across the industry can influence future trends 
(through the implementation of best practice principles, for example). 
4.4 
In order to achieve this, we proposed to build on the work currently being 
undertaken by the Rail Safety and Standards Board (RSSB) to develop a set of standard, cross-industry KPIs.  In doing so we realise that the usefulness of 
such data is dependent upon the industry producing, and taking ownership of, the data underpinning such indicators. 
4.5 
In general, respondents were supportive of the production, publication and 
use of KPIs to measure industry performance and publicise the environmental benefits of rail transport (both passenger and freight).  We have therefore 
concluded that we will pursue the proposals outlined in our consultation document.   
4.6 
There were a number of key recurring themes expressed by respondents, 
these being: (a) 
that any such KPIs should be applicable throughout the industry;  
(b) 
their production and use should be voluntary, not compulsory; 
(c) 
it will require considerable work to fully identify/implement appropriate 
indicators; 
(d) 
any agreed KPIs must add value and not impose additional costs; 
(e) 
that, to be of value, KPIs should be comparable with other transport 
modes; 
(f) 
that there should only be a limited number of key indicators; and 
(g) 
they should be externally verified to add credibility. 
4.7 
With the potential exception of the voluntary nature of KPIs, these are all 
views with which we concur.  We believe that all sectors of the industry will participate willingly in the collection and publication of the data required to populate such indicators.  However, there will only be any value in gathering and publishing such information if it represents a fully inclusive, verifiable data set that can enable the whole industry to be measured both for internal comparisons and against other transport sectors.  By taking this approach, the credibility of the data will be established, and the environmental benefits of the 
industry will be promoted, protected, improved and encouraged.     
4.8 
We recognise that there may be some cost involved in gathering the required 
data, and this will need to be evaluated as part of the process.   We do 
believe that there are real industry benefits to be gained from adopting such 
an approach.    However, if the industry does not voluntarily deliver on this issue, we will need to consider whether to place a specific obligation on 
industry parties to participate in this process, e.g. through an amendment to 
the licence.  This is not something, however, that we consider necessary to explore at this stage in the process.    
4.9 
In taking this issue forward we are aware that the RSSB workstream to 
develop and benchmark an industry set of indicators has also considered how such data can be gathered.  We also note the work that ATOC is taking forward to establish details of the energy demand and carbon footprint of passenger journeys, although we note that this work does not currently reflect freight operators or Network Rail.  We will continue to work closely with 
relevant organisations to establish how such workstreams can inform or 
produce the KPIs that we will use.   We believe that such data should be published and commented on by ORR in our quarterly National Rail Trends publication, and also be incorporated into other Government publications such 
as DfT's *Transport Statistics for Great Britain*,17 and Defra's Sustainable 
development indicators in your pocket,18 to ensure consistency of data 
published on behalf of the railway. 
4.10 Respondees expressed the view that, not only should the number of KPIs 
developed be kept to a minimum in order to focus on key significant issues, 
avoid complexity and minimise the reporting burden, but they should be flexible to reflect changing sustainable development priorities and be equally applicable across all parts of the industry.  Our concerns with this suggestion are as follows: (a) 
the requirements of individual stakeholders are likely to be diverse; and 
(b) 
subject to constant change, not only on a year-by year basis, but 
potentially more frequently as specific issues of concern/importance to 
a particular organisation arise.    
                                            
4.11 We aim to develop, working with the industry, a limited number of KPIs 
(maybe five or six) that show how the railways are performing in terms of key, recognisable sustainable development issues.  It will be important that such 
indicators: (a) 
are able to be populated with sufficient and accurate data; 
(b) 
are likely to remain relevant over a number of years; 
(c) 
provide a good overview of the wider sustainable development agenda; 
(d) 
address issues of general industry interest so as to encourage both 
participation in the programme and improvement of performance; and 
(e) 
have some relevance to the general public in order to stimulate interest 
and understanding. 
4.12 Industry parties may, of course, wish to develop their own additional KPIs to 
be used to manage their own business activities.   
4.13 There is also the question of who should collate such data.  Responses on 
this issue were mixed with the ORR or the RSSB being the preferred choice 
as leader in this area.   We remain of the view that the data underpinning such 
indicators needs to be produced, verified and owned by the industry in order to provide the credibility that is required to make them meaningful.  However, we will publish such data, and provide an independent assessment of, and 
commentary on, industry performance.     
4.14 In order to take this process forward we will: 
(a) 
review the completed work of ATOC and the RSSB to establish what 
information is already available, its completeness, and how best it can be gathered in future; and 
(b) 
consider with industry stakeholders which KPIs will be most appropriate 
to use, how they might be populated, and how and when they should be published.   
4.15 Our aim is that a first set of KPIs should be published by the end of 2007. 
These will be further refined or expanded over time as is considered appropriate.       

## Licence Holder Environmental Policies

4.16 In general, respondents were satisfied that ORR's 1996 guidance19 should be 
reviewed and updated to reflect sustainable development issues.  They were less convinced of the need to either strengthen the current licence obligation, or require operators formally to report on activities. 
4.17 We will consider how the scope of the current guidance can be revised to 
address both wider sustainable development issues and improve the way that 
performance against such policies is monitored and reported in future.  We 
will consult industry licence holders shortly setting out our proposals.  
4.18 In respect of the existing licence condition, we do not at present propose to 
seek to amend this.  We will, however, monitor future performance against any revised guidance and consider what further action, if any, might be required to ensure future compliance.   

## Network Rail Business Plans And Route Utilisation Strategies

4.19 Our proposals with regard to both the Network Rail Business Plan and Route 
Utilisation Strategies were aimed at ensuring that sustainable development 
objectives are at the forefront of Network Rail's strategic thinking.  The general view of consultees was that the rail industry's sustainable development aims and objectives should inform such strategies rather than be 
informed by them, although it was recognised that it was important not to place any undue burden on Network Rail through such a process. 
4.20 In taking this issue forward, we have already asked Network Rail20 to propose 
suitable indicators within its strategic business plan, to be submitted in October 2007, to demonstrate how its proposed activities will contribute to sustainable development.  

## Network Rail'S Annual Business Plan

4.21 In respect of the annual Network Rail Business Plan, we suggested in our 
2006 performance assessment21 that Network Rail not only report more fully 
within future annual reports on the sustainable development initiatives that it has undertaken, but also set out more detailed objectives on such issues within future business plans.  
4.22 It is encouraging to note that Network Rail, in its response to our assessment, 
has indicated that information on the environmental initiatives and 
achievements during 2006-07 will be provided in the Annual Return 2007.  
4.23 In terms of the proposals outlined in our consultation document, we have 
already implemented the suggestion that we should require Network Rail to 
address sustainability issues within its annual Business Plan.  Paragraph 6(h) 
of the guidance that we issued on 13 October 200622 clearly stipulated that 
Network Rail should address such matters within its 2007 plan.23  However, 
whilst this plan recognises that the delivery of a sustainable railway is one of Network Rail's strategic objectives, and acknowledges the role that railways have to play in delivering sustainable development, it only contains details of a limited number of specific safety and environmental activities that the company is planning to address during the current year.  The scope of future plans, and level of information that they should contain in terms of sustainability, is therefore something that needs to be considered further going forward.     
4.24 We do not, however, propose at this time to seek to make an amendment that 
formally reflects this requirement in paragraph 5 of Condition 7 of Network 
Rail's network licence.  This position will, however, be reviewed in the light of the content of future Business Plans and Annual Returns.  
4.25 Such an approach reflects our general intention that all environmental policies 
should: 
                                            
23  Delivering for you, *Business Plan 2007*, Network Rail, 3 April 2007, available at 
http://www.networkrail.co.uk/aspx/3085.aspx. 
(a) 
be widened to include sustainable development; 
(b) 
include initiatives to improve performance; and 
(c) 
be reported on annually, outlining achievements against objectives.  

## Route Utilisation Strategies

4.26 In producing a RUS, Network Rail seeks to balance capacity, passenger and 
freight demand, operational performance, infrastructure maintenance, and 
costs, to address the requirements of funders and stakeholders.   It is therefore already addressing a number of sustainable development issues. 
4.27 There was, however, general support from consultees that future RUS 
consultation documents should specifically detail the sustainable development impacts of the strategies being proposed.   
4.28 The published RUS guidelines24 currently make specific reference to, 
amongst other things, safety considerations.  In order to ensure that appropriate account is taken of sustainable development issues, we propose 
that the guidelines should also make specific reference to sustainable 
development initiatives and, as with the recently published Cross London RUS, take account of the Network Rail Environmental Policy.  We believe that this would formalise the approach that, in many respects, is already being taken by Network Rail in the RUS development process.  We will therefore 
consult further with Network Rail on this particular issue. We would not, 
however, anticipate that any changes of approach be implemented in respect of those strategies that are currently being developed.    

## The Access Regime

4.29 Our primary focus in terms of the access regime related to Part E of the 
Network Code, which is currently being reviewed by the Economic and Contractual Framework Industry Steering Group (ISG).  We sought views on 
any specific issues that should be included within such a review. 
4.30 Responses on this issue were mixed, ranging from proposals that Part E: 
(a) 
should address ongoing problems where all parties are compliant with 
their environmental obligations; 
(b) 
is already consistent with the "polluter pays" principle and therefore 
does not need to be amended; to 
(c) 
should be abolished.   
4.31 To ensure that all of the expressed views are given appropriate consideration, 
we will produce a separate summary of the issues raised and forward this to 
the ISG working group for consideration.   
4.32 A number of respondees (First Group, National Express Group, and ATOC) 
expressed concern about an intention to create an "environmental landlord" 
under the proposed Depots Code.25 This is an issue specific to the working 
arrangements of the Depots Code, and therefore not strictly relevant to this particular consultation (although we do recognise that any changes to Part E 
of the Network Code that arise from this package of work may need to be considered for corresponding incorporation into the Stations and Depots codes).  ORR's Stations & Depots team is considering this issue.  
4.33 In respect of our more general role in approving access arrangements, we 
remain content that the current application and consideration processes 
provide us with sufficient information with which to assess the impact of any new or additional train services on sustainable development.  We do not therefore propose to make any changes to the current procedures at this time.     

## Noise And Social Impact

4.34 No specific comments were made on the subject of mitigation of complaints 
about nuisance caused by railway activities. Our position on this issue, that Network Rail and other licence holders should take proactive steps to prevent such complaints occurring and, where they do, deal with them appropriately, 
therefore remains unchanged. 

## Health And Safety Management

4.35 We will continue to address our responsibilities by fulfilling our obligation to 
provide health and safety information to a wide audience (including the 
publication of relevant KPIs), and providing support and advice on specific 
safety initiatives organised by the rail industry.   

## Sustainable Development Research

4.36 We were interested in receiving views on whether ORR should become more 
involved in sustainable development research activities and, if so, whether the industry would be prepared to fund such work. 
4.37 The majority message from consultees was that this role is already fulfilled by 
the RSSB and, whilst ORR should play a supporting role in helping to shape 
and facilitate the industry research programme, there was no requirement for it to undertake its own separate workstream in this area. Certainly there was 
no appetite that any such work should be funded by licence holders. 
4.38 On this basis we will continue to support and contribute fully to the work being 
undertaken by the RSSB, both in developing the Sustainable Case for Rail and in any further research activities that could improve the future sustainability of the railway, including commissioning such research ourselves where appropriate. 

## Incentives Framework And Access Charges

4.39 Chapter 4 of our consultation document explained the ways in which we 
considered that more environmentally friendly behaviour could be influenced through greater financial incentives and modifications to the access charges 
regime. We recognised the need for caution when considering any changes that might increase costs to rail, and which might therefore cause modal shift away from rail, given rail's relatively good environmental performance compared to road and some other forms of transport.  Our original proposals indicated that: (a) 
the introduction of any new financial incentive (perhaps linked to the 
KPIs currently under development) would need to be considered carefully (particularly those issues identified in the consultation document); and 
(b) 
that no new environmental charge would be implemented at the start of 
CP4. 
4.40 Our February 2007 PR08 document - Advice to Ministers and framework for 
setting access charges26 - confirmed that  
(a) 
we consider that a financial incentive may be useful in the future, but 
ideally this should only be introduced where all parties have a clear understanding of the KPI(s) that underpin it; and 
(b) 
we do not intend to introduce an environmental charge before or during 
CP4 unless an equivalent charge is introduced for other transport modes. 
4.41 The February 2007 PR08 document also provides an update on encouraging 
on-train electricity metering and the extended use of regenerative braking in CP4. 
4.42 Finally, in order to ensure that the industry, its stakeholders and customers 
are able to access appropriate information relating to the industry's 
sustainable development role and responsibilities, we will ensure that our 
website and quarterly publications are updated regularly to reflect the issues outlined within this document.  We will also encourage industry parties to be open and transparent in respect of their sustainable development activities.   

## Annex A: List Of Respondents

Asset Management Consulting Limited (AMCL) Association of Train Operating Companies (ATOC) Mr David N Bradley Department for Environment Food and Rural Affairs (Defra) Mr Martin Dover East of England Regional Assembly (EERA) English Welsh & Scottish Railway (EWS) First Group Freightliner Limited Greater Manchester Passenger Transport Executive (GMPTE) Great North Eastern Railway (GNER) Govia Limited HSBC Rail Mr J L Lean Lloyd's Register Rail Mayor of London Merseytravel National Express Group Trains Division (NEG) Natural England Network Rail infrastructure Limited Northern Rail Passenger Focus Pre Metro Operations Ltd Rail Freight Group (RFG) Rail Safety & Standards Board (RSSB) Railway Industry Association (RIA) Sciotech Project South West Trains Limited Transport Scotland