* TV COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 27.11.1996 
COM(96) 561 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON ENVIRONMENTAL AGREEMENTS 

TABLE OF CONTENTS 
Executive Summary 
I. Introduction 
H. Contents and Objectives of the Communication 
HI. General considerations on Environmental Agreements as a policy 
tool 
IV. General guidelines for the use of Environmental Agreements 
V. Environmental Agreements implementing certain provisions of 
Community Directives 
VI. Environmental Agreements at Community level 
VII. Conclusions 
Annex: Survey of national experiences 
à bîs 
Executive Summary 
After more than twenty years of Community legislation in the field of environment, the 
basic regulatory framework is in place. Proper implementation of this "acquis 
communautaire" represents one of the main areas of environmental action in seeking to 
achieve sustainable development. Supplementing the regulatory measures by other policy 
instruments is also one of the key objectives set out in the Fifth Environmental Action 
Programme. 
The promotion of agreements with industry is part of the efforts to broaden the range 
of policy instruments. The present initiative therefore falls within the strategy set out in 
the Fifth Action Programme. This was recently confirmed by the Commission in its 
Proposal for a Review of the Programme. 
Agreements with industry represent a versatile instrument which can be used at regional, 
national, Community and international level. So far, they have been mainly non-binding 
and voluntary. Recently, however, some Member States have opted for a more formal 
and binding approach. 
Environmental Agreements can bring about effective measures in advance of legislation 
and thus reduce the volume of regulatory and administrative actions. The present 
initiative is therefore related to the efforts of the Commission to simplify Community 
law and improve its quality. Agreements can be used as a supplement to legislation and 
may represent an particularly appropriate implementation tool. In a binding form, they 
are an effective and appropriate instrument for achieving general objectives set by 
Community Directives, in particular the implementation of reduction programmes. At 
Community level, such agreements enable the Commission to address environmental 
issues without resorting to the traditional regulatory instruments. 
Environmental Agreements have three main advantages. They can promote a pro-active 
attitude on the part of industry, they can provide cost-effective, tailor-made solutions and 
allow for a quicker and smoother achievement of objectives. In order to encourage their 
use, the present Communication provides general guidelines for guaranteeing their 
transparency, which is crucial for their effectiveness. This Communication therefore 
suggests prior consultation with interested parties, a binding form, quantified and staged 
objectives, the monitoring of results as well as the publication of the agreement and of 
the results obtained. These criteria should make it possible to avoid the stipulation of 
merely vague goals, lack of transparency and possible distortion of competition caused 
by "free-riders". 
A Recommendation is addressed to the Member States in order to provide a clear 
framework for the use of Environmental Agreements as an implementation tool of 
Community Directives. 
I. Introduction 
1. With the aim to render environmental policy ever more efficient, the Commission 
has advocated broadening the range of policy instruments since drawing up the 
Fifth Environmental Action programme in 19921. The reason for this new strategy 
orientation is that after more than twenty years of Community action in the field 
of the environment, the basic regulatory framework is in place. However, legislative 
measures alone will not bring about the substantial changes in current trends and 
practices which are necessary to make development sustainable. 
The Fifth Action Programme therefore suggests a new line of cooperative efforts 
with industry: 
"Whereas previous environmental measures tended to be prescriptive 
in character with an emphasis on the 'thou shalt not' approach, the new 
strategy leans more towards a 'let's work together' approach. This 
reflects the growing realization in industry and in the business world 
that not only is industry a significant part of the (environmental) 
problem but it must also be part of the solution. The new approach 
implies, in particular, a reinforcement of the dialogue with industry and 
the encouragement, in appropriate circumstances, of voluntary 
agreements and other forms of self-regulation. " 
2. The Council has explicitly recognised the need to broaden the range of instruments 
and to involve all levels of society in a spirit of shared responsibility2. However, 
broadening the range of instruments has proved to be more difficult than envisaged. 
When reviewing the 5th Action Programme, the Commission therefore suggested 
this issue as one of five key priorities3. To that end, special attention should be 
given to environmental charges, to the encouragement of fiscal reform, to the 
concept of environmental liability and to voluntary agreements. The Commission 
services are at present preparing a draft Communication on environmental levies 
in the Member States, which will seek to ease the introduction of such levies by 
the Member States by clarifying the possibilities and constraints for the use of these 
measures. The Commission also intends to stimulate public discussion on better 
implementation and enforcement of environmental legislation by way of a 
Communication to Parliament and Council. 
3. A stronger reliance on market-based instruments and instruments better adapted to 
the workings of the market helps to give the right signal to economic agents and 
in doing so contributes to deregulation and reducing of bureaucratic interference4. 
Agreements with industry, in particular when concluded at Community level, can 
COM(92) 23 of 3.4.1992, point 31. 
Resolution 93/C/138/0 of the Council and Representatives of the Governments of the Member 
States, meeting within the Council, 1.2.1993, OJ C 138 of 17.5.1993, p.l. 
Proposal for a European Parliament and Council Decision on the review of the European 
Community Programme of policy and action in relation to the environment and sustainable 
development "Towards Sustainability", OJ C 140 of 11.5.96, p. 5. 
Commission Communication on Economic Growth and the Environment, COM(94) 465 of 
3.11.1994. 
prevent the need for regulatory action by bringing about effective measures by 
industry in advance of legislation. They can also be a means for implementing - in 
a cost-effective manner - regulatory objectives established by Community 
Directives. Agreements can also contribute to limit the level of detail of legislation. 
The appropriateness of agreements in these different circumstances needs to be 
assessed on a case by case basis. 
While agreements with industry have been used by practically all Member States, 
the extent to which that has happened and the form these agreements have taken 
vary widely. 
H. Contents and Objectives of the Communication 
4. This Communication focuses on the use of Environmental Agreements as an 
instrument to implement environmental policy in the Community. For the purpose 
of this Communication Environmental Agreements represent agreements between 
industry and public authorities on the achievement of environmental objectives. 
Such Environmental Agreements can be legally binding with obligations for the 
parties to the agreement. They can also take the form of unilateral commitments 
on the part of industry recognised by the public authorities. 
Based on the current situation in the Member States, this Communication 
- develops guidelines for the effective use of Environmental Agreements; 
- sets out the conditions under which such agreements can be used for the purpose 
of implementing certain provisions of Community Directives; 
- ascertains how Environmental Agreements can be used at Community level. 
5. The general purpose of this Communication is to promote and facilitate the use of 
effective and acceptable Environmental Agreements. Clearly, this initiative should 
be seen as an element of a wider policy on voluntary approaches for which the 
principles, reasons and objectives are stated in the Fifth Action Programme. 
Environmental Agreements will be part of a policy mix of instruments contributing 
to sustainable development (see Chapter III). 
Moreover, agreements have to be carefully designed in order to ensure their 
environmental effectiveness as well as their cost-effectiveness, in one word, their 
success. To that end, criteria should be agreed upon to ensure the transparency, 
credibility and reliability of the agreements. The key elements in that respect are 
the setting of quantified objectives, a staged approach providing for intermediate 
objectives, the publication of the agreement, the monitoring and reporting of the 
results. A framework of criteria on the most significant issues related to 
effectiveness and credibility is set out in this Communication (see Chapter IV). 
Compliance with these criteria should prevent a patchwork of different forms and 
approaches which might hinder the smooth functioning of the internal market. 
The third objective of the Communication is to clarify the specific issues 
concerning Environmental Agreements related to the implementation of certain 
provisions of Community Directives (see Chapter V) and the use of agreements at 
European level (see Chapter VI). 
6. Legislation will remain the necessary backbone of Community environmental 
policy, but it needs to be supplemented by market-based instruments and voluntary 
approaches. In that respect, Environmental Agreements are an implementation tool 
rather than a means of deregulation. The Commission strives to simplify and 
improve the quality of Community legislation. An effort to that effect is 
represented by the Report of the independent experts group on legislative and 
administrative simplification5. The Commission has presented its approach 
concerning simplification in its report to the Madrid European Council of 1995 
"Better Law-making"6 and in its interim report to the Florence European Council 
of June 1996 on the application of the subsidiarity and proportionality principles7. 
CI. General considerations on Environmental Agreements as a policy tool 
Benefits and critical issues 
The growing interest in, and use of, agreements in environmental policy is based 
on the recognition that sustainable development needs action rather than reaction 
from the industry sectors concerned. The potential benefits of voluntary measures 
are outlined below. 
% 
i The encouragement of a pro-active approach from industry, ... 
7. In the legislative approach, industry is often involved at a late stage, in more or 
less formal consultations. This is likely to lead to a defensive rather than an open 
and pro-active response. The dialogue and negotiations on 'what to do' and 'how to 
do it' in order to achieve certain goals will help to overcome this defensive attitude. 
Moreover, the negotiation processes as such, regardless of the actual agreement, can 
lead to a common understanding of environmental problems and mutual 
responsibilities. Such a common understanding is in itself an advantage which helps 
to shape sensible environmental policy and which should not be underestimated. 
This also implies that agreements should be seen as the continuation of the 
partnership between authorities and industry rather than just the result of it. 
... cost-effectiveness, ... 
8. An important benefit of Environmental Agreements is that they leave greater 
freedom to industry at company or sectorial level to decide on how to reach the 
environmental targets than does legislation which prescribes or implies, for 
instance, the use of a certain technology. This allows industry the freedom to find 
cost-effective solutions adapted to its specific situation, taking into account, for 
instance, previous investments. Where companies participate in Environmental 
Agreements, licensing authorities may be able to issue less detailed and target 
based licences, leaving the company the scope to find the most efficient way of 
achieving the targets. Moreover, the company may not need to apply for a licence 
for every change in the process. Flexibility also encourages creative solutions and 
technological innovation which might not only reduce compliance costs but also 
COM (95)288 and SEC (95) 2121 final. 
CSE (95) 580. 
CSE (96) 2 final. 
entail spin-off benefits due to innovative solutions involving competitive 
advantages. Where industry commits its responsibility, compliance with an 
agreement duly published and monitored is also likely to be higher. While 
authorities keep their responsibility, they dispose of better data and a better 
understanding of potential problems, which eventually lowers enforcement costs by 
making it more efficient. 
... and faster achievement of objectives, ... 
9. Neither legislation nor agreements are in place over night. However, particularly 
in situations where the targets to be reached concern a limited number of 
companies, the conclusion of agreements can be considerably quicker than the 
adoption of legislation, which means that the environmental obligations for industry 
are effective from a relatively early date. When it comes to setting targets at 
Community level, the intervention of legislators at Community and at national level 
takes a considerable time. For instance, the average time between the Proposal for 
an environmental Directive and its adoption is well over two years with usually 
another two-year period for transposition by the Member States. Once a Directive 
is transposed, which in quite a number of cases happens belatedly, it still has to be 
implemented and applied. For that reason, agreements might be a quicker and thus 
potentially more effective way of action, even if the negotiation and conclusion of 
an agreement takes more than a couple of months. 
... but with due care for certain risks. 
10. However, not all the agreements have in the past been successful. Certain issues 
appear to be crucial for the perception of Environmental Agreements as a credible 
policy tool. 
First, the negotiation of such agreements needs as a pre-condition a clear 
commitment and determination by the authorities to pursue well defined 
environmental objectives. Open ended negotiations or discussions about generic 
commitments cannot lead to substantial action and often are seen by the public as 
a postponement of effective measures. It is certainly helpful to set the general 
targets through legislation. This allows all stakeholders, in particular industry and 
the interested public, to participate in the target-setting by using the constitutionally 
or legally established procedures. Such participation will not only add to the 
justness of the targets, it will also ensure that the targets are not lowered during the 
negotiations. More generally, transparency and public information on the objectives 
is a guarantee against deals which reflect little more than "business as usual" and 
do not correspond to public expectations. 
11. The possibility to enforce an agreement is a second crucial issue. The absence of 
enforcement mechanisms and sanctions is seen as making non compliance an 
attractive option. However, binding agreements can be legally enforced and may 
include sanctions such as fines or other penalties. In the light of certain 
disappointing experiences in the past, Member States have in fact shifted recently 
from an informal to a more formal approach. But also unilateral commitments 
construed according to the guidelines of this Communication would involve a 
number of additional credible mechanisms for discouraging non compliance, from 
public pressure to the prospect of introducing regulatory measures. Agreements 
established and operated in a transparent way can offer to the public opportunities 
for scrutinizing the implementation of measures and exert effective pressure. These 
possibilities compensate for the fact that individuals may not in all cases enforce 
Environmental Agreements by way of administrative or judicial review. 
12. Finally, since Environmental agreements only bind those who have committed 
themselves, (hey can offer unilateral advantages for those who do not participate. 
These "free-riders" avoid sharing the costs which their competitors are paying: the 
work of the good guys primarily benefits the bad guys. However, the risks of free-
riding can generally be assessed by the concluding parties who know from the 
negotiations, who might profit from standing aside, in some cases, the mere threat 
of legislation will discourage free-riding. Practice in the Member States shows that 
their potential benefits do not hinder industry to conclude Environmental 
Agreements. 
It should be noted, however, that the risk of free-riding rises with the marginal 
abatement costs implied by an agreement. Therefore, regulatory measures are more 
appropriate when profits for free-riders would be so important that compliance with 
the agreement is at risk or competition distorted. The use of a mix of instruments 
including certain benefits for those entering into an agreement can also be 
considered in order to provide an incentive to participate in the agreement and to 
discourage free-riding. 
Rationale and characteristics of Environmental Agreements 
13. The policy maker disposes of a number of alternative policy instruments that can 
be categorised under the headings 'regulatory', 'market-based' (e.g. taxes or 
tradeable emission permits), 'voluntary approaches', 'financial support' 
(environmental subsidies) and 'market enhancing' (such as provision of information, 
training). All these instruments have different properties in terms of environmental 
effectiveness, economic efficiency and implementation feasibility, which should be 
taken into account when choosing a policy instrument to tackle an environmental 
problem in a cost-effective way. 
14. The suitability of Environmental Agreements as an environmental policy instrument 
depends largely on their design and the policy context in which they are used. Most 
likely, cost-effective use of this instrument will be made as part of a policy-mix 
together with, for instance, regulatory or economic instruments. Agreements can, 
for instance, supplement legislation. They can also be used as a transitory 
complement to an environmental tax, lowering transition costs to the economy on 
its way to cleaner production modes (e.g. loss of employment in sectors with high 
pollution and strong international competition without an equivalent creation of new 
employment in cleaner sectors). In a sector where a tax would result in high 
macroeconomie transition costs due to a high pollution intensity and strong 
international competition, parties to an agreement could be exempted from that tax, 
provided that Community rules on competition and Internal Market are complied 
with. 
15. A further field of application is the use of agreements to implement comprehensive, 
long term objectives, which most appropriately can be achieved by setting in place 
integrated environmental management and production programmes in one or several 
sectors of industry. In these cases, there is sufficient room for cost-efficient, 
creative solutions which could not easily be achieved by general and abstract 
legislation. 
Such objectives relate for instance to : 
- Emission targets (e.g. C02„ S02, NOx, Volatile Organic Compounds); 
- Environmental quality objectives, e.g. in the field of noise, water and air quality; 
- Waste reduction or recovery or recycling targets; 
- Reduction or elimination of certain substances or materials; 
- Energy efficiency; 
- Collection of data (in view of emissions inventories etc.). 
16. Certain obvious conditions apply to potentially successful agreements and help 
identify the circumstances, general form and characteristics of such agreements. 
Firstly, negotiations are likely to be successful, if the number of concluding parties 
is limited since transaction costs of agreeing on the allocation of abatement efforts 
are reduced. 
Secondly, agreements have to cover sufficiently the sector in question, because it 
is only then that it is possible to set ambitious overall objectives. This is another 
reason why agreements are particularly appropriate when a few players have 
control over most of the issues covered by the agreement. Where business 
associations are able to negotiate on behalf of a large number of companies with 
a view to a conclusion also by the companies themselves, the number of players 
is less important. In this case, however, the concerns of small and medium sized, 
enterprises not being members of a business or trade association should be taken 
into account. 
Furthermore, public authorities must be able to clearly define their position as 
regards the objectives, so that they can make sure that the agreement provides an 
added value as opposed to "business as usual" under existing policy instruments. 
This will often imply a prior assessment of technical abatement potentials and costs 
and a prognosis of measures taken without public intervention ("baseline"). 
Fourthly, public awareness of the problems to be solved motivates both sides to 
take action and provides a driving force for compliance. 
Finally, consumer behaviour needs to be taken into account. As Environmental 
Agreements do not have a direct lever to influence consumer behaviour, specifying 
commitments in a way that compliance depends to a large extent on demand 
development, should be avoided. At the same time, public authorities can undertake 
to encourage consumers, in a non-discriminatory manner, to base their choice on 
environmental considerations. 
IV. General guidelines for the use of Environmental Agreements 
17. The following requirements should be seen as guidelines to be taken into account 
when designing, concluding and implementing an Environmental Agreement at 
national or local level, whether in application of a Community Directive or 
independently from Community legislation. 
They are aimed at ensuring effectiveness, credibility and transparency. However, 
guidelines in this area should not be too detailed and rigid, in order to leave room 
for manoeuvre for adaptation to specific circumstances and sufficient flexibility in 
order to exploit the efficiency potential of this tool. 
Consultation 
18. Before concluding an Environmental Agreement, interested circles should have the 
opportunity to comment on the draft. In addition to those actually negotiating the 
agreement, all relevant business associations or companies concerned, 
environmental protection groups, local or other public authorities concerned should 
therefore be appropriately informed and comments should be taken into 
consideration in the final negotiation of the agreement. 
Contractual form 
19. Although the use of agreements in contractual form is still limited, experience in 
Member States extensively using agreements as a policy instrument suggests that 
the legal status of agreements is an important element for their success. Contracts 
are a well known and generally accepted legal instrument. Contracts are binding 
for both parties and provide a clear framework, which may include sanctions in the 
case of non-compliance and are enforceable through Court decisions. Binding 
agreements provide in general better safeguards in terms of achieving 
environmental objectives. This form of agreement is the most appropriate for the 
implementation of specific provisions of Community Directives by Environmental 
Agreements (see Chapter V). 
The substantive contractual obligations will usually lie with the industry, as the 
objective of the agreements is to guide the environmental performance of industry. 
However, there may be a number of important tasks for the public authorities too. 
For instance, it might often be appropriate to entrust public authorities with setting 
up a statistical data base, facilitating the exchange of information, coordinating 
research or reporting or to provide for prior consultation in case of doubts 
regarding the compliance with the agreement. 
Implicit is often the understanding that no legislative action will be proposed if and 
as long as the agreement works satisfactorily. In fact, where industry can be certain 
about the targets to achieve and the measures to be taken, it can subscribe to 
ambitious environmental objectives. In order to provide such certainty, it might be 
explicitly acknowledged that administrative ordinances will not be adopted in the 
field of a valid agreement, if national constitutions so allow (e.g. the Flemish 
decree on Environmental Agreements). However, in most cases such a formal 
10 
commitment will not be needed, since a public authority entering into an 
Environmental Agreement would act in contradiction with itself if it took regulatory 
measures while the agreement proves to be effective. 
Quantified objectives 
20. The weakness and bad reputation of certain past agreements partly derive from the 
lack of quantified objectives, leaving room for the perception that agreements were 
used to avoid or delay effective action. The objectives have to be quantified in 
figures as opposed to best effort clauses, i.e. they have to be expressed either in 
absolute figures (for example, a maximum amount of emissions) or as a percentage 
(for example, a reduction of emissions expressed in a percentage of the emissions 
at a given time). The advantage of absolute figures is that there is certainty about 
the contribution of the sector to the overall environmental target, whereas relative 
targets avoid the risk that external factors, such as consumer behaviour, lead to an 
increase in the abatement costs. 
Great care should be taken to make the quantification unequivocal. For instance, 
when describing the percentage of a reduction to achieve, not only the base year 
has to be indicated, but also how the reference value for the target is being 
calculated. 
Staged approach 
21. Intermediate objectives should be set. In order to do so, a timetable has to be 
defined and objectives have to be quantified accordingly ("milestones"). These 
milestones ensure that all parties get a clear picture of whether the agreement is 
effective or not. It is then possible to decide at an early stage how to react to 
arising difficulties. It also allows parties to prove that the agreement is effective 
and that the choice of the instrument was correct. 
These intermediate objectives, which may also be indicative, will not create 
additional obligations. They just describe the different stages necessary to achieve 
the overall objective in due time. However, it should be considered to specify at 
what stages and under which circumstances the authorities intend to take legislative 
action, complementing or substituting the agreement. 
Monitoring of results 
22. The results have to be monitored. The agreement has to define how monitoring 
takes place. It is important to ensure sufficiently complete, comparable and 
objective data, i.e. monitoring must be organized in such a way as to give sufficient 
guarantees of reliability and accuracy. In many cases, appropriate monitoring 
mechanisms already exist, be it on the basis of Community Directives or national 
provisions. In addition, the Regulation on a voluntary, environmental management 
and auditing scheme (EMAS)8 may provide a mechanism for companies to monitor 
Regulation (EEC) 1836/93 allowing voluntary participation by companies in the industrial sector in 
a Community eco-management and audit scheme, OJ L 168 of 10.7.1993, p.l. 
their own environmental performance. The European Environment Agency could 
be involved in assessing and verifying the results achieved at Community level. 
Public information, transparency 
23. Another reason for certain agreements being unsuccessful in the past is the lack of 
knowledge about the content and the commitments. The slogan 'don't trust us, track 
us' reflects a response to these concerns. The first step to achieve transparency is 
hence to publish the agreement in the Official Journal or a document equally 
accessible to the public. Public authorities, including the Commission, could also 
consider to set up a register of existing agreements in order to enable interested 
persons to become acquainted with the overall relevance of agreements. In this 
context, the use of information technology tools may prove to be useful in 
providing interested parties including consumers with complete information on the 
content and implementation of the agreements. 
Periodic reporting by the participants to the competent authority about the results 
has to take place in order to give appropriate publicity to the agreement, the efforts 
undertaken and the results achieved. The reporting should follow the set milestones. 
It should include at least a description of the measures taken, the measures to take 
next, the results achieved so far and a non-technical explanation of how they have 
been achieved. 
Given that transparency is crucial to assure third parties that non-regulatory 
obligations are kept, parties to the agreement could undertake to make relevant 
information available to individuals upon request. The easiest way to ensure this 
access to information is submit companies to the relevant articles of Directive 
90/313/EEC9 or the corresponding national provisions transposing the Directive in 
so that they grant access to information as if they were public authorities. 
These obligations are not to be viewed as additional burdens. They also allow the 
establishment of a "green" reputation with all its importance for the employees and 
the customers of the companies that concluded an agreement. 
Independent verification of results 
24. In some cases, it might be appropriate to set up a committee or an independent 
body entrusted with collecting, evaluating or verifying the results. This is 
particularly important in cases where the measuring methods differ or where the 
disclosure of business secrets has to be avoided. To that end, the agreement has to 
define the mechanism and the procedure for assessing the results. These will very 
much depend on the circumstances of the different cases, in particular in view of 
existing standards and methods, which should be used in order to ease the 
verification and avoid unnecessary costs. 
Council Directive 907313/HHC on the freedom of access to information on the environment, (XI I. 
158, 23.6.1990, p. 56; Article 3 and 5. 
12 
Additional guarantees 
25. As an additional guarantee for its fulfilment, parties to a binding agreement can 
agree on dissuasive sanctions such as fines and penalties in case of non-compliance. 
Unilateral commitments can be translated into enforceable obligations where they 
can be linked to licensing procedures, for instance in relation to industrial 
processes. New or reviewed licenses can include the relevant elements of the 
commitment in the conditions for the permit. 
The determination of public authorities to introduce regulatory measures or a tax, 
if agreements fail to reach the set target, is another important driving force for 
compliance. 
General provisions 
26. Environmental Agreements need to address a number of general questions. 
There must be an express indication of the parties to the Environmental Agreement. 
Where business associations are involved, it should be indicated whether they act 
on behalf of their members or in their own right. 
The subject of the agreement must be specified. This will help to better understand 
the implications of the agreement and to answer questions of interpretation which 
might arise at a later stage. 
The objectives should be translated into obligations of the parties. In short, it has 
to be made clear who does what to achieve the objectives. For instance, where 
business associations are party to the agreement, it is necessary to clearly 
distinguish between their own obligations (e.g. collection of data) and the 
obligations of their members. For branch agreements it is also advisable to indicate, 
in more general terms, the contributions of individual firms. In case of unilateral 
commitments, which at present are used in several Member States, public 
authorities may commit themselves in the act of recognition to undertake certain 
actions, such as to enhance research or to participate in the monitoring or the 
verification of the results. 
The agreement has to provide a defimtion of the most important terms, in particular 
technical terms, taking into account existing definitions in relevant legislation. 
Since Environmental Agreements are of public interest and part of environmental 
policy, third parties, including those who are not members of a business or trade 
association, should have the right to join. The conditions and procedure for 
adherence should therefore be defined. Where specific objectives have been set 
(environmental performance per unit), adherence does not affect the obligations of 
the parties. However, where objectives relate to the whole branch, it might be 
necessary to agree on a new burden sharing. 
13 
The duration of the Environmental Agreement must be indicated. Agreements 
should in principle end once all objectives have been achieved. If this is not the 
case within the set lime period, the agreement may, for instance, allow for an 
extension or for unilateral termination by the party respecting its obligations. 
A revision of the Environmental Agreement must be possible so that new findings, 
adaptations to technical progress or changed market conditions (e.g. consumer 
preference for environmentally sound products) can be taken into account. 
Unilateral termination of a binding agreement must be allowed by either party in 
response to non-compliance. It might also be considered to allow industry to revoke 
its commitment if, contrary to the common understanding when the agreement was 
concluded, additional regulatory measures or taxes directly relating to the subject 
of the agreement are introduced. 
In the case of an agreement in contractual form two additional aspects need to be 
considered. Given the fact that public authorities are parties to the agreement and 
depending on the legal system of the Member States it is necessary to define 
whether it is a contract under civil or public law. The legal nature of the contract 
decides for instance on the applicable contract law, the liability scheme and the 
competent jurisdiction. It does not, however, affect the general content of the 
agreement nor its binding force. Therefore, the legal nature of the contract, which 
may also depend on national traditions in the Member States, may be defined by 
the national legal system or the contracting parties themselves. Moreover, the 
competent jurisdiction or, where appropriate, a court of arbitration entrusted with 
the settlement of disputes, should be designated. The agreement can also provide 
for a prior arbitration between the parties themselves before appeal is made to the 
competent court. 
Compliance with EC Treaty 
Needless to say, Environmental Agreements have to comply not only with 
provisions of the national law they fall under but also with the EC Treaty and its 
derived legislation. To describe the framework set by the Treaty, the provisions 
relevant for agreements in the field of the environment are briefly recalled below. 
27. Environmental Agreements shall not create barriers to the smooth functioning of 
the internal market. Thus, agreements relating to products may only impose 
restrictions on the free movement of goods if these are justified on grounds of the 
protection of human health or the environment and if they are not a means of 
arbitrary discrimination or a disguised restriction on trade between Member States. 
Because of their potential impact on the internal market, technical specifications for 
products, relating for instance to product quality or packaging, have to be 
forwarded to the Commission for a prior screening. Since July 1995, this procedure 
also applies to draft agreements to which a public authority is contracting party10. 
Council Directive 83/189/EEC laying down a procedure for the provision of information in the field 
of technical standards and regulation (OJ L 109 of 19.4.1983), as amended by Council Directive 
88/182/EEC, OJ L 81 of 26.3.1988 and by European Parliament and Council Directive 94/10/EC, 
14 
Thus, Member States have to communicate such draft agreements to the 
Commission, which notifies in turn the other Member States. Both the Commission 
and the other Member States may make comments or deliver a detailed opinion if 
in their view the draft agreement may create obstacles to the free movement of 
goods within the Internal Market. 
28. The freedom of undertakings to cooperate is limited by the requirement to maintain 
effective competition: in practice, undertakings' freedom of cooperation is limited 
by the application of Articles 85 and 86 of the Treaty. 
Article 85(1) states that all agreements between undertakings, decisions by 
associations of undertakings and concerted practices which may affect trade 
between Member States and which have as their object or effect the prevention, 
restriction or distortion of competition within the common market, shall be 
prohibited. 
However, Article 85(3) makes an exemption for restrictions which contribute to 
improving the production or distribution of goods or to promoting technical or 
economic progress, while allowing consumers a fair share of the resulting benefit. 
Such restrictions must, however, be indispensable to the attainment of these 
objectives and must not give the undertakings the possibility of eliminating 
competition in respect of a substantial part of the products in question. 
In analysing individual cases under Article 85(3), the Commission, applying the 
proportionality principle, weighs the restrictions of competition resulting from the 
agreement against the environmental objectives to be attained by that agreement. 
In practice, this involves, on the one hand, establishing whether the restrictions are 
indispensable in order to achieve the environmental objectives and, on the other, 
ensuring that consumers receive a substantial share of the benefits of the 
agreement. In particular, the protection of the environment might be considered as 
an element which contributes to improving the production or distribution of goods 
and to promoting technical and economic progress. 
In order to benefit from an exemption on the basis of Article' 85(3), the parties 
must notify the agreement to the Directorate-General for Competition of the 
European Community". The Commission has exclusive authority to apply Article 
85(3). Thus, in the event of a complaint before a national court, the latter could not 
conduct an analysis based on paragraph 3 of Article 85. 
Finally, in the event that national legislation delegates power in an economic sphere 
to private operators and the result is an appreciable restriction of competition, there 
would be twofold infringement of the rules of the Treaty (with the Member State 
infringing Articles 3(g) and 5, and the undertakings infringing Articles 85 and/or 
86 of the EC Treaty). Article 86 prohibits any abuse of a dominant position. 
OJ L 100 of 19.4.1994, p. 30. 
Article 4 of Regulation 17/62/EEC implementing Articles 85 and 86 of the Treaty, OJ 13, 21.2.1962, 
D. 204. 
15 
29. Where financial contributions from public authorities or other benefits such as tax 
exemptions or a redistribution of revenues from levies are part of an agreement, 
compliance with Article 92 of the Treaty has to be ensured. To take account of a 
broader range of financial measures, the Commission has issued new guideline on 
state aid for environmental protection, indicating where state aids are prohibited 
and where exemptions can be granted12. 
Compliance with WTO Rules 
30. It is also essential to ensure that agreements comply with rules of the World Trade 
Organisation relating to free trade in goods, and technical barriers to trade. Most 
importantly, the principle of national treatment of GATT article III, which requires 
imported goods to be treated in the same way as domestically produced goods, has 
to be respected. It is thus important to ensure that foreign producers are allowed 
to enter into an agreement under no less favourable conditions than national 
industry, if that agreement has effect on international trade. 
Furthermore, technical specifications for products, whether mandatory "technical 
regulations" or merely non-mandatory "standards", must comply with the rules 
governing consultation and non-discrimination in the WTO Agreement on 
Technical Barriers to Trade. 
The provisions of the Agreement on Subsidies and Countervailing Measures, 
designed to discourage, inter alia, subsidies which favour the use of domestically 
produced goods or which subsidise exports, may also be relevant. 
V. Environmental Agreements implementing certain provisions of Community 
Directives 
31. The EC-Treaty does not specify how Directives, which are binding as to the results 
to be achieved, but leave to the national authorities the choice of form and 
methods, have to be implemented. Only the agreement on social policy explicitly 
refers to agreements between management and labour as a means of implementing 
Directives adopted in that field13. It also explicitly specifies that Member States 
have to be at any time in a position to guarantee the results imposed by those 
Directives. 
It follows from the binding nature of Directives that Member States need to ensure 
their full and timely transposition and application. For that purpose, it is crucial that 
the domestic law provides a clear legal framework and thus legal certainty. This 
does not necessarily require that Directives be incorporated formally and verbatim 
in express, specific legislation; a general legal context may, depending on the 
content of the Directive, be adequate. In fact, Directives "shall leave to the national 
authorities the choice of form and methods". However, where Directives intend to 
create rights and obligations for individuals, for instance by setting limit values of 
general application aimed to protect human health, the transposing acts need 
Community guidelines on State aid for environmental protection, OJ C 72 of 10.3.1994, p. 3. 
Agreement on a social policy, OJ C 224 of 31.8.1992, p. 127, article 2. 
16 
^' tjMMgfôrc^ 
be able to ascertain the full extent of their rights, relying on them, where 
appropriate, before the national courts14. 
Moreover, the fact that a practice is consistent with the protection afforded under 
a Directive does not justify the failure to implement that Directive in the national 
legal order15. Member States are therefore required to take binding action and may 
not only rely on the recognition of unilateral commitments on the part of industry. 
For certain provisions of Community Directives, binding agreements may be a 
sufficient means of implementation. For instance, Directive 85/339/EEC on 
containers of liquids for human consumption required Member States to draw up 
programmes for reducing the tonnage and the volume of such containers16. The 
French authorities had concluded agreements with the relevant industry circles in 
order to establish such reduction programmes. The Court of Justice of the European 
Communities found that these agreements contained undertakings by the authorities 
and could therefore, in principle, be considered as programmes for the purpose of 
that Directive17. 
32. Thus, where Directives intend to create rights and obligations for individuals, it is 
generally not possible to implement the relevant provisions through agreements: 
Member States will not be in a position to ensure that these provisions are 
applicable to anyone ("free-riders", new-comers on the market)18. 
On the other hand, where a provision of a Directive provides for the setting up of 
general programmes or for the achievement of general targets, the full achievement 
of the set objectives or targets does not necessarily require regulatory action. In 
fact, a number of environmental Directives require Member States inter alia to set 
up reduction programmes and achieve general targets. For such provisions, binding 
Environmental Agreements would be an appropriate and adequate implementation 
tool. They contain undertakings given by the public authorities and may therefore 
constitute the appropriate implemention measure for Member States to fulfil such 
obligations under Community Directives. 
33. In some cases, the Community legislator might provide that Member States may 
chose to reach the objectives either through Environmental Agreements or through 
national legislation. For instance, where a Directive provides for the setting of limit 
values in order to achieve a defined reduction in emissions of certain substances, 
Member States could be allowed to achieve these targets through agreements rather 
than through limit values. This is particularly appropriate in view of agreements put 
14 
15 
16 Consistent jurisprudence of the Court of Justice of the European Communities, first in case C 29/84, 
ECJR 1985, p. 1661. 
Court of Justice of the European Communities, case C 339/87, ECJR 1990, p. 851. 
Council Directive 85/339/EEC on containers for liquids for human consumption, OJ L 176 of 
6.7.1985, p. 18, repealed by European Parliament and Council Directive 94/62/EC on packaging and 
packaging waste, OJ L 365 of 31.12.1994, p.10. 
Judgement of 5.10.1994, C-225/93, ECJR 1994, p. 4949. The Court concluded, however, that the 
agreements failed to comply with the Directive in substance since no quantified objectives and no 
time-table for the completion of the programmes were included. 
Only where agreements can be declared of general application (DK), transposition by way of such 
a generally applicable agreement seems acceptable. 
17 
in place by a Member State prior to the adoption of a Directive. The Community 
legislator should, however, restrict this possibility to clearly defined circumstances 
and make it subject to expressly stated and verifiable conditions in order to ensure 
legal certainty and efficient enforcement of Community Directives throughout the 
Community. 
34. However, the requirement of legal certainty normally implies that, when used, 
Environmental Agreements are combined with the transposition of a Directive by 
national legislation. The transposing legislation could exempt parties to an 
agreement from the relevant provisions, as long as they comply with the terms of 
the agreement. Such a legislatory fall-back provides an effective basis to prevent 
'free-rider' profits and also a guarantee for compliance with Community legislation. 
Also, since the implementation of all provisions of a Directive will require national 
legislation, the fall-back legislation can easily be adopted together with the 
transposition of the Directive. 
35. In order to clarify the scope for the use of Environmental Agreements within the 
framework of a Directive, the Commission will explicitly list the eligible provisions 
in its proposals for relevant Directives. Such specific reference to the possible use 
of agreements provides legal certainty with respect to the form and methods of 
implementation. This will allow for scrutiny by the Community institutions of the 
suitability of Environmental Agreements, in particular with regard to the 
functioning of the Internal Market. 
36. Where Member States might wish to use an Environmental Agreement, they would 
have to ensure that it could be in place within the time frame set by the Directive. 
Therefore, negotiations on an Environmental Agreement need to be concluded 
before the period for transposition has expired so that in case of failure to conclude 
an agreement, legislation could be adopted in time. 
Member States also have to ensure effective compliance with the Environmental 
Agreement in order to achieve the objectives set by the Directive. An effective tool 
in ensuring compliance could, for instance, consist in making individual permits 
subject to compliance with the agreement. 
Where it becomes clear that an agreement is not concluded in time, where 
compliance with an agreement cannot be ensured or where compliance with the 
Directive is at risk for example because of "free-riders", the adoption of legislation 
is in any event indispensable. While it is true that in these (exceptional) cases of 
failure, time delays may occur to introduce and implement binding measures, the 
knowledge gained during the negotiation or implementation of the agreement will 
allow the presenting of relevant legislation in a short period of time and the 
political context should be more favourable for establishing sufficient consensus on 
those measures. In such a case, however, the legal responsibility of Member States 
is at stake since they fail to comply with Community law. 
37. As with all laws, regulations and administrative provisions enacted with the purpose 
of implementing a Directive, Member States are obliged to notify the Commission 
of Environmental Agreements concluded for that purpose and to provide all other 
relevant information for the evaluation of the agreement as a means of 
transposition. This will permit the Commission to scrutinize the agreement and 
18 
exercise lts~'duties as guarà^ .of the 
implementing measures throughout the Community. 
38. It should be noted, finally, that the use of Environmental Agreements as an 
implementation measure of a Directive is, when allowed by the Community 
legislator, an option and not an obligation for Member States. It is for the 
individual Member State to decide whether negotiations on an Environmental 
Agreement should be opened or not. This choice corresponds with the responsibility 
of the Member States to achieve the results prescribed by the Directive. 
39. The guidelines given under Chapter IV apply to Environmental Agreements 
implementing Community Directives, being understood that to this purpose they 
have to take a binding form. In order to provide Member States with a clear 
framework for the use of Environmental Agreements, the Commission combines 
the present Communication to the Council and the European Parliament with a 
Recommendation addressed to the Member States. This Recommendation sets out 
the guidelines as explained in the previous chapters. On the basis of experience 
gathered with the use of Environmental Agreements, the Commission will, if 
necessary, revise the Recommendation. 
VI. Environmental Agreements at Community level 
40. To date, a rather limited number of non-binding agreements, taking the form of 
unilateral commitments promoted or recognized by the Commission, have been 
concluded at European level. Following a Council resolution, the Commission 
addressed several Recommendations to relevant branches of industry regarding the 
reduction of chlorofluorocarbons and halons19. The Commission, under Article 155 
of the EC Treaty, also issued a Recommendation regarding the labelling of 
detergents and cleaning products20. 
41. Binding agreements, however, have not been concluded with the European 
Community as party to the agreement. Although the Community, represented by 
the Commission, enters regularly into contracts under the laws of the Member 
States, such contracts are not policy measures in the strict sense. Indeed, binding 
policy instruments explicitly named by the Treaty are Regulations, Directives and 
Decisions. 
For the time being, the Commission has therefore to resort to non-binding 
agreements as the available instrument to encourage a pro-active approach from 
industry and as an incentive for effective environmental action. Such "agreements" 
can take the form already used in the past (industry commitment recognized by the 
Commission) or any other form of a non-binding understanding (e.g. exchange of 
notes, letters of intent, declarations signed in the presence of a Member of the 
Commission or non-binding agreements). The Commission will consider on a case 
Council Resolution 88/C/285/01 (OJ C 285 of 09.11.1988) and Commission Recommendations 
regarding the aerosol industry, the foam plastics industry and the refrigeration industry 
(Recommendations 89/349/EEC, 90/437/EEC and 90/438, OJ L 144 of 27.05.1989, p. 56, OJ L 227 
of 21.08.1990 p. 26 and p. 30). 
Recommendation 89/542/EEC, OJ L 291 of 10.10.1989, p. 55. 
by case basis whether commitments of industry can be used as an effective 
environmental measure. 
42. Four key aspects have to be considered: The appropriate conditions for a 
Environmental Agreement at Community level, the possible fields of application, 
the institutional framework and the requirements for their design and content. 
Firstly, it is essential that the number of concluding parties is easy to survey or that 
the parties are able to negotiate through business associations. Only under these 
circumstances can the economic operators negotiate effectively and with low 
transaction costs. Furthermore, strong business associations can help in the burden-
sharing between the participating companies, a task which is likely to be more 
difficult at Community level than at national level. Even more importantly, the 
potential risk of free-riders and thus the suitability of the instrument, can be quickly 
assessed. 
43. The appropriateness of agreements at Community level furthermore depends on the 
ability to deal with the environmental issue in a satisfactory manner. This is 
because there is little or no advantage in agreeing on environmental measures in 
advance of legislation if, in addition, legislatory action becomes necessary at 
Community level. Moreover, such Community action would not prevent Member 
States from introducing national measures in the same field. 
44. General considerations on the second aspect, the possible fields of application, have 
already been outlined in Chapter III. Agreements are particularly suited to 
implement comprehensive, long term objectives or as a transitory complement to 
an economic instrument. Possible issues to be dealt with at Community level 
therefore relate, for instance, to the reduction of C02 emissions from passenger 
cars, S02 and NOx emissions from electricity suppliers and the reduction of energy 
losses in the stand-by phase of devices such as televisions and video-recorders. 
45. As regards the institutional framework, it is necessary to base non-binding 
agreements on objectives already endorsed by the Community institutions, for 
instance through the Fifth Action Programme, Parliament and Council resolutions 
or international conventions. Keeping the institutional balance is not only a 
guarantee for equitable results, it also provides industry with an element of 
stability. Where Council and Parliament have confirmed clear policy objectives and 
the Commission has negotiated how to best implement these objectives, additional 
regulatory measures in the same field are unlikely to be necessary. 
46. Finally, as regards the drawing-up of Environmental Agreements at Community 
level, the criteria and requirements mentioned in Chapter IV apply, the only 
exception being of course the contractual form. The Commission will ensure 
periodic reporting to the European Parliament and Council on the application and 
effectiveness of the action taken by industry, as it is the case for a good number 
of Directives. Such reporting will increase transparency and allow, should this be 
necessary, the non-binding agreement to be amended or replaced by binding 
actions. 
20 
VIL Conclusions 
47. As it appears from the attached Annex, the use of agreements with industry in the 
area of environment policy has become more common in practically all Member 
States since the beginning of the 1990's. 
Environmental Agreements with industry have an important role to play within the 
mix of policy instruments sought by the Commission since the adoption of its Fifth 
Environmental Action Programme. They can offer cost-effective solutions when 
implementing environmental objectives and can bring about effective measures in 
advance of and in supplement to legislation. In order to be effective, it is essential, 
however, to ensure their transparency and reliability. Binding agreements provide 
in general better safeguards in terms of achieving environmental objectives. 
Therefore, whenever possible and appropriate,an Environmental Agreement should 
take the binding form. 
48. The Commission therefore draws the following conclusions. 
- Taking into account the reactions to the present Communication, the Commission 
will consider on a case by case basis whether Environmental Agreements are an 
appropriate instrument for the purpose of achieving environmental objectives. 
- The requirements for an effective use of Environmental Agreements are 
summarized in the attached checklist. This list serves as a guideline for any 
public authority intending to conclude an Environmental Agreement. 
- With respect to Environmental Agreements concluded at Member State level, the 
Commission, as guardian of the Treaty, will ensure their compliance with the 
Treaty and in particular internal market requirements and competition rules. 
- Whenever regulatory action becomes necessary for the Community, the 
Commission will carefully consider whether certain provisions of these 
legislative measures will allow for implementation by binding Environmental 
agreements and will include, if appropriate, such provisions in its proposals. 
The Commission addresses a Recommendation to the Member States which 
provides a clear framework for the use of Environmental Agreements as a means 
of implementing certain provisions of Community Directives. 
- In recognizing Environmental Agreements at Community level, the Commission 
will ensure their transparency and credibility. It will therefore ask for quantified 
objectives, a staged approach, appropriate monitoring and reporting. The 
Commission will make such commitments public and report to the Council and 
the European Parliament on the results achieved. 
o o 
o 
21 
Checklist for Environmental Agreements 
This checklist is valid for Environmental Agreements concluded at whatever level. 
Elements such as the legal nature and the competent jurisdiction are only relevant in 
case of agreements in the form of a contract. 
I. Reasons for the choice of the instrument 
1. Advantages compared to legislative and economic measures 
(environmental and cost-effectiveness, feasibility) 
2. Sector coverage, strength of business associations 
3. Public awareness of the issue 
4. Previous involvement of legislator in setting objectives 
II. Content 
1. Parties to the agreement (associations and/or individual firms) 
2. Subject 
3. Definition of terms 
4. Quantified objectives 
5. Staged approach 
6. Specification of obligations 
7. Monitoring of results 
8. Periodic reporting 
9. Access to information 
10. Arrangements for collection/evaluation/verification of results 
11. Sanctions 
12. Accession of third parties 
13. Duration 
14. Revision 
15. Termination 
16. Legal nature of the agreement 
17. Jurisdiction 
III. Compliance with EC Treaty 
1. Notification to the Commission required ? 
2. Free movement of goods affected ? 
3. Competition affected (competitors excluded, prices fixed, etc.) ? 
4. State aid rules applicable and respected ? 
5. Distortion of competition justified on environmental grounds ? 
6. Distortion a proportionate means to reach the objective ? 
IV. Publication 
22 
Annex 
Brief survey of experiences in Member States 
The present survey is meant to give a factual description of where and how Member 
States have used Environmental Agreements. It is based on previous consultations 
between the Commission and representatives of the Member States as well as on a study 
launched by the Commission. The use of agreements in the Member States has provided 
an insight into how agreements can be adapted for the purpose of implementing 
environmental policy in the European Union. 
The Belgian experience 
In all, 14 agreements have been concluded in Belgium since the late 1980, concerning 
the reuse, recovery and recycling of waste (packaging and household), the phasing out 
of CFC (aerosol, refrigerators, plastics) and the substitution of polluting substances in 
products such as batteries. Two sectoral agreements ("accords de branche") have been 
concluded in order to reduce emissions from the electricity suppliers (S02 and NOx, 
satisfactorily implementing directive 88/609/EEC on large combustion plants) and the 
furnaces for smelting glass. 
Since the competence in this field is shared between the federal state and the regions, 
this sectoral agreement is signed by the federal state together with the three regions. The 
regions also entered into regional agreements: The Brussels region (Ministry of the 
Environment) has established with commercial offices agreements regarding the sorting, 
recycling and recovery of office waste. In the Walloon Region, agreements concern the 
preservation of natural resources and the reduction of solid waste. Flanders had made 
negative experience with agreements which lacked binding character. In 1994, the 
Flemish region therefore adopted a decree on Environmental Agreements, which 
exhaustively defines in a legally binding way the criteria for agreements. Environmental 
agreements take the form of a contract (contract sui generis), parties need to have legal 
status, to be representative for the sector and to have the explicit mandate to conclude 
agreements. The draft agreement has to be published in the Official Journal, public 
bodies have to be consulted ("Sociaal-Economische Raad", "Milieu en Natuurraad"). The 
maximum duration of an agreement is five years. As long as a valid agreement is in 
place, the Region may not set more stringent legislative rules. 
No agreement has yet been concluded pursuant to this decree. 
Hie Danish experience 
In Denmark, sixteen voluntary environmental agreements have been concluded since 
1987, relating to energy saving, waste management (e.g. controlled recycling or disposal 
of refrigerants containing chlorofluorocarbons (CFC) and hydrochlorofluorocarbons 
(HCFC), fire protection equipment, batteries, packaging, tires), the phasing out of 
specific substances (e.g. organic solvents used in paints and varnishes, volatile organic 
compounds, PVC, heavy carbon hydrates in diesel) and the clean-up of contaminated 
sites. Current initiatives also relate to waste management (electronics, vehicles, 
23 
demolition waste). 
Parties to the agreements are usually the Minister for Environment and Energy or the 
Danish Environmental Protection Agency and the industry sectors concerned (companies 
or their organisations). 
The agreements generally take the form of a declaration of intend or an action plan, 
which are not legally binding but which the parties perceive as being binding. 
A main feature of agreements concluded in Denmark is their combination with economic 
incentives such as tax reductions or with deposit funds. 
The Environmental Protection Act of 1991 introduced the possibility for the Minister of 
the Environment to make agreements with enterprises or associations thereof to meet 
national targets for pollution reduction. The Minister can also lay down rules on the 
basis of which agreements are made and on general agreements terms including penalties 
for delaying or otherwise violating the agreement. The Minister is also empowered to 
lay down requirements similar to those of the agreements for enterprises not covered by 
the agreement, i.e. he can react to "free-riders". 
Before implementing such an agreement, it shall be negotiated with the most relevant 
national trade and environment organizations, with organizations of local authorities and 
with other state authorities involved. 
The first agreement concluded on the basis of the Environmental Protection Act in April 
1996 relates to the collection and recovery of lead accumulators. Another agreement on 
electric and electronic waste is in preparation. 
The German Experience 
In Germany, industry has issued about 80 self-commitments in the field of the 
environment since the late 1970's. They mainly cover waste management (e.g. batteries, 
paper, packaging, end of life vehicles), the phasing out of specific substances (asbestos, 
CFC in a number of appliances, certain substances in detergents), discharges of 
dangerous substances into the water (ammonium, safety concept for chemical 
installations) and C02 emissions (fuel consumption from cars and a variety of industry 
sectors). Bavaria has recently concluded a formal agreement with industry, trade and 
commerce associations, covering a range of general issues such as participation of 
companies in the eco-management and audit scheme, waste reduction, energy efficiency 
and an increased use of railways as a means of transport. 
With the exception of the latter agreement, public authorities are not formally involved 
in these commitments which take the form of unilateral declarations. However, these 
declarations are often the outcome of intensive discussions with the competent ministries 
(environment, economic affairs) and recognized in an informal way, for instance a press 
release or a press conference of the ministry concerned. Virtually all of them contain 
reporting requirements of industry. 
The use of such informal agreements has recently attracted more attention, the discretion 
24 
of the parties as to the design of the commitments being limited, however, by the Law 
against restraints of competition. A number of commitments have been issued in 1996 
(end of life vehicles, chemical industry, paper industry and editors). The commitment 
of industry to reduce C02 emissions, undertaken in view of the 1995 Berlin Climate 
Conference, has recently been extended and clarified (more participants, unequivocal 
objective, independent evaluation of results). 80 % of the energy consumption by the 
German industry is covered by this revised commitment. 
The latter commitment as well as the Bavarian agreement seem to indicate a shift to a 
more formal and public approach in Germany. 
The Spanish experience 
To date, a total of 6 agreement has been established in Spain. Numerous agreements are 
currently under discussion, and it appears as though they will gain importance in 
meeting environmental goals. 
The agreements concluded by the Ministry of Public Works, Transportation and 
Environment (MOPTMA) relate to the phase-out of chlorofluorocarbons in aerosols (by 
the year 1989) and to waste management. The latter agreements aim at facilitating the 
implementation of the Ministry's National Master Plan for Waste Management and 
Disposal; industry and regional Governments at each Autonomous Community must 
implement the plan at a regional basis; Municipalities are the final responsible for waste 
collection, treatment and disposal. Financing at each administrative level is included. 
Recent agreements relate to end-of-life vehicles and used tires. A waste management 
levy on new tire sales is to raise money for the collection, recycling and disposal of 
tires. Current initiatives concern electric and electronic equipment, 12 types of 
equipment where agreements could be used have been identified. Other areas (solvents, 
chlorine products, paints, construction wastes) are also being considered. 
Direct reference to the use of agreements has also been made in the Royal Decree 
484/1995 on waste water regulation and control. Recognizing the deficit in industrial 
waste water treatment and control, the new regulation empowers watershed authorities 
(Confederaciones Hidrograficas) to negotiate and conclude with industrial associations 
sectorial plans for waste water control. The Decree also includes a provision of financial 
aid to industries to facilitate reaching these goals. 
In its Strategy for Energy and Environment, 1995-2000, the Ministry of Industry and 
Energy has identified agreements as one of the tools to meet environmental goals at 
short and medium terms. These agreements will aim at creating a framework to 
encourage environmental investments so as to promote environmental retrofitting of 
industries. Enforcement of existing regulations will not be restricted by these 
agreements. Several financing programmes for industry environmental retrofitting 
(PITMA, PAE) recognize agreements between Industry and Public Authorities as the 
preferred way to obtain financial contributions. 
25 
The French Experience 
France appears to be the first Member State to have concluded an agreement in the field 
of environmental protection; an "accord de branche" was concluded between Ministry 
of Environment and the cement sector in August 1971. The agreement established a 
time-table for taking corrective actions through a sector-wide programme for existing 
facilities (programme de branche). New facilities were required to meet emissions 
standards. 
About twenty agreements were issued for the major polluting industrial sectors in the 
ensuing decade. These agreements had different functions and names (eg. contrat de 
branche, programme de branche, contrat d'entreprise, programme d'entreprise, plans 
sectoriels anti-pollution). A limiting factor are legal requirements protecting the authority 
of the State and third party rights. For instance, the Administrative Court (Conseil 
d'Etat) ruled that a facility contract from 1975 between the Ministry for the environment 
and a paper manufacturer was illegal because it restricted the State's authority and the 
required protection of third parties. Ultimately, most of the early agreements served as 
a basis for developing national legislation and emission standards which replaced them. 
Recent agreements relate to packaging waste and end-of-life vehicles. About ten 
agreements concerning C02 emissions from industrial sectors (smelting, chemical, paper, 
welding, glass, plaster, sugar, cement) are being prepared, a corresponding agreement 
with the aluminum sector has recently been signed. 
The Greek experience 
At present, there are no environmental agreements in Greece. The general assessment 
of public authorities and industry seems to be that regulatory measures are necessary and 
sufficient for the protection of the environment. However, because agreements may 
succeed in fostering partnership between industry and public authorities, some 
representatives of industry start appreciating the potentials of agreements. 
The Irish Experience 
In Ireland, agreements usually take the form of business "initiatives" welcomed but not 
signed by the Irish Government. An agreement on packaging waste, called REPAK, was 
signed in February 1996 by the department of the environment and business associations 
(Irish Business and Employers Confederation as well as the associations of retail 
grocers, soft drinks and beer bottlers, plastic industries, food drink and tobacco, and 
wine and sprits). 
The latter agreement was initiated in 1994, when the Department of the Environment 
published a recycling strategy, including targets for the recycling of waste such as 
packaging, beverage containers, composting. The strategy document went on to invite 
industry to propose agreements. 
The Irish Business and Employers Confederation (IBEC) set up an industry task force 
which reported back to the Minister in December 1995 and proposed REPAK, as one 
element in their response. The Society of the Irish Motor Industry is currently drafting 
26 
an agreement on car batteries. Other possible target sectors for future agreements 
include waste newspaper, detergents, pharmaceutical and chemical manufacturing. 
The Waste Management Bill, which was adopted in mid-1996, gives the Minister wide 
powers to specify how packaging might be recycled, how it should be marked, how 
refund systems might work and what collection mechanisms might be required. By 
signing up to REPAK, industry avoids such prescriptive rules, because the Act allows 
the minister to approve an agreement which exempts participants from other 
requirements. 
The Italian experience 
Eleven agreements have so far been concluded in Italy, both at federal and at regional 
level. In the late 1980's, the Ministry of Environment and the Fiat group exchanged a 
letter of intend concerning air pollution and noise reduction in the metropolitan areas. 
Following this initiative, a protocol "Environment and Development" was concluded, 
covering not only the depollution of metropolitan areas but also waste reduction, the 
development of non-polluting vehicles and environmental research programmes. 
In the waste sector, "REPLASTIC", which started as a voluntary consortium before 
becoming compulsory, deals with the separate collection, sorting out and reuse of plastic 
liquid containers. The recovery of discarded lead batteries is the subject of an agreement 
signed in 1995 between the Ministry of Environment, the municipalities (ANCI -
Associazione Nazionale Comuni d'ltalia) and Federambiente (Federation of Public 
Services of Environmental Hygiene) on the one hand and industry associations on the 
other hand. Examples of agreements concluded at regional level regard the recovery of 
toner cartridges (Lombardia) and the collection of paper and cardboard. 
The experience in Luxembourg 
Five agreements have been concluded in the field of the environment and energy. The 
first agreement, dealing with industrial waste, was introduced in 1989. An agreement on 
energy efficiency within the industrial sector has just been concluded (1996) and some 
more are to come up, involving banking, insurance, medical care and trade sectors. 
Agreements in the waste management field were developed from the Directory 
Programme of the Ministry of Environment and relate to construction waste, hazardous 
waste, packaging waste from beverages and industrial waste. 
The Dutch Experience 
More than hundred agreements have been concluded in the Netherlands. They mainly 
cover waste management (e.g. packaging, recovery of asbestos, plastics), the reduction 
of emissions (e.g. volatile organic compounds, S02 and NOx from electricity suppliers, 
ammoniac from livestock), clean-up of contaminated soil (petrol stations), energy saving 
or reduction strategies for industrial noise. Some of the agreements specify 
comprehensive programmes for the integrated pollution control in various sectors of 
industry (base metals, chemical, print, dairy). Current initiatives relate, for instance, to 
27 
the paper and cardboard industry. 
Usually, such written and signed agreements, used as a policy instrument and with 
public authorities as one party are summarized under the title covenant, although they 
can actually be entitled declaration of intend or code of conduct. 
The general background for the increased use of covenants is provided by the National 
Environmental Policy Plan (NEEP) and the NEPP Plus, published in 1989 and 1990. 
These plans set out a strategy for achieving sustainable development by the year 2010. 
The plans establish quality objectives across a number of environmental issues and 
translate these into over 200 quantified targets. In this context, covenants represent a 
commitment by industry sectors to play their part in meeting the established 
environmental objectives. To date, declarations of intent set environmental objectives for 
16 industry sectors, involving some 12.000 companies responsible for over 90 % of 
industrial pollution in the Netherlands. 
While most of the first generation of covenants are not enforceable by law, more recent 
covenants take the form of a contract enforceable under civil law and are part of an 
overall strategy of the Government. 
Although the procedure is not defined by law, covenants are usually concluded 
according to the following procedure: The competent Minister informs both Houses of 
the States General of his intention to conclude a covenant. An integrated target plans is 
established for the sector in question pursuant to negotiations between public authorities 
(including provincial and municipal government) and the industry sector (sometimes 
including employer's and trade unions). On the basis of this plan a covenant is drawn 
up at branch level if the sector uses similar processes allowing for a standardised 
approach. In heterogeneous sectors, company environmental plans are prepared in close 
cooperation with the licensing authority. 
Signed covenant are published in the Official Journal (Staatscourant). 
The Ministry of Housing, Spatial Planning and the Environment has issued guidelines 
for the conclusion of covenants in the form of a code of conduct. An administrative 
direction, issued by the Prime Minister in December 1995, gives instructions on content 
and procedure of covenants in general. 
The Austrian Experience 
In Austria, some 25 agreements have been concluded since the early 1980's. Most of the 
agreements concern the recycling of waste (end of life vehicles, paper, tires, building 
material, car batteries, electronics, plastics, packaging), others aim at introducing vapour 
recovery units at petrol stations (to reduce hydrocarbons emissions) or at reducing the 
import of tropical timber. A particular voluntary agreement is the climate coalition 
founded in 1994. It primarily comprises municipalities and states commitments with 
respect to supply of public services and procurement, but is also open to industry. 
Two types of agreements can be distinguished: Self-commitments by industry, where 
public authorities are not formally involved although the commitments are normally the 
outcome of intensive negotiation with the competent ministry, and agreements concluded 
28 
between industry and government. Self-commitments are predominant. 
Parties to the agreements are usually the competent ministry and the national industry 
association (Federal Economic Chamber) or national branch associations (subdivisions 
of the Federal Economic Chamber), in some cases also individual firms. 
Almost all voluntary self-commitments and agreements have been concluded at national 
level. 
The Portuguese experience 
Portugal's first experience with voluntary agreements dates from 1984 with the setting 
of targets on water discharges, air pollution and waste reduction from the pulp sector. 
In all, around 10 agreements have been reached, mainly relating to waste reduction and 
elimination of substances. 
In 1994, the government has pursued the application of agreements through its 
publication of the Global Agreement Protocol on Environment and Sustainable 
Development. This document summarizes the Government's orientation towards 
environmental challenges faced, and outlines an approach towards achieving them. 
Based on this protocol, the government has issued a framework for Sectorial Voluntary 
Agreements. This framework was derived through negotiations between the Ministries 
of Environment, Agriculture and Industry on the government side and several national 
and regional confederations of Portuguese agriculture and industry. The Sectoral 
Protocol requires Industry to develop an environmental plan for reaching compliance 
with environmental laws according to their particular situations. This plan must receive 
approval from the public authorities. The Government commits itself not to impose new 
environmental standards for the duration of the agreement. If new community 
regulations are issued, the government agrees to a phased imposition of these. 
The Sectoral Protocol includes provisions for renegotiating the agreement in such a case, 
and for proposing specific measures if required after diagnosis studies. It also provides 
for the creation of a steering committee representing signatory parties in order to 
monitor whether objectives are met and, if necessary, to formulate new measures. It 
should also resolve problems as they are encountered - one anticipated problem is that 
some industrial facilities may lack an environmental permit. Agreements concluded in 
the framework of the Sectoral Protocol terminate by the end of 1999, provide for 
periodic governmental reporting and include free rider provisions. 
The Finnish experience 
Agreements concern the phasing out of chlorofluorocarbons and the energy saving. The 
latter agreements are based on the Council of State Programmes on Energy 
Conservation, which the government established in 1992 as part of its efforts to curb 
energy consumption. The main goal of these agreements is to diminish energy 
consumption 10-15% by 2005. A new programme on energy conservation was presented 
in December 1995. This programme promotes agreements which would support 
monitoring energy efficiency, the preparation of conservation plans, energy audits, 
investments in conservation, the introduction of new technologies, and mechanisms to 
29 
provide consumers with information and guidance on their energy consumption. 
Agreements are usually concluded between the competent ministry and business 
associations; two of the agreements relating to energy conservation have been concluded 
between the Ministry of Trade and Industry and local municipalities (the City of 
Helsinki and the Association of Finnish Local Authorities). 
The Ministry of the Environment has recently (1995) concluded an agreement with the 
packaging industry. Negotiations regarding certain product groups (cars, tires, car 
batteries, electronics, household appliances) have been started in an overall strategy to 
proceed with voluntary agreements in waste management. 
The Swedish experience 
The thirteen agreements concluded in Sweden relate to waste management (car tires, 
construction products and materials, magazine paper and packaging materials), energy 
conservation (cars and individual companies), the phasing out of certain substances (lead 
in petrol and in paints), research and development (alternative fuels for vehicles) and the 
heavy metal contents of sludge from sewage treatment plants. 
In practice, most agreements could be characterized as gentlemen's agreements or 
letters of intent by industry. Individual industries can not be held responsible if the 
industry organisation which developed and administered the systems fails to achieve the 
targets. The failure of industry to meet a target would typically lead to the introduction 
of taxes, or to a sharing of the regulatory responsibilities with local municipalities 
instead. 
Agreements in the energy sector have been made with individual companies and thus 
allow recourse to sanctions if industries fail to comply. 
The UK experience 
The United Kingdom has used a wide range of voluntary approaches rather successfully, 
for instance in the form of Best Practice Programmes relating to energy efficiency (e.g. 
Making a Corporate Commitment - "MACC"), environmental technology or producer 
responsibility initiatives or initiatives to encourage a dialogue between Government and 
business (e.g. advisory committee on business and the environment, local green business 
clubs). 
Eight agreements have been concluded since the early seventies, relating to the storage 
and transport of pesticides ("BASIS", its standards and certification of staff selling 
pesticides being formally recognized by the Control of Pesticides Regulation of 1986), 
the banning of certain substances in domestic and industrial washing products (alkyl 
phenol ethoxylates and for domestic use nitrilo tri-acetic acid), the collection of plastic 
film from farms and the use and the emissions of hydrofluorocarbons (HFCs). In order 
to reduce HFCs, which present an important alternative to chlorofluorocarbons (CFCs) 
but still have a high global warming potential, the British Government concluded in 
January 1996 three separate agreements and one declaration of intend with associations 
of the aerosol, air conditioning and refrigeration, fire protection and foam industries. 
30 

ISSN 0254-1475 
COM(96) 561 final 
DOCUMENTS 
EN 14 10 06 
Catalogue number : CB-CO-96-626-EN-C 
ISBN 92-78-12844-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
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