COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT ON ENVIRONMENTAL AGREEMENTS
Date: 1996-11-27
Institutions: European Commission
Subjects: EU environmental policy, European industrial area, directive (EU), environmental law, negotiation of an agreement (EU)

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

* 

TV 

Brussels,  27.11.1996 
COM(96)  561  final 

COMMUNICATION  FROM THE  COMMISSION 
TO THE  COUNCIL  AND THE EUROPEAN  PARLIAMENT 

ON  ENVIRONMENTAL  AGREEMENTS 

T A B LE  OF  C O N T E N TS 

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). 

% 
i 

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. 

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 

emission  permits), 

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 
support' 
'voluntary 
tradeable 
(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. 

approaches', 

'financial 

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 
into 
consideration  in the final negotiation  of the  agreement. 

informed  and  comments  should  be  taken 

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 
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). 

in  general  better  safeguards 

in 

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 

to  communicate  such  draft  agreements 

Thus,  Member  States  have 
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. 

to 

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^ 
implementing  measures throughout the  Community. 

.of the 

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 
(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. 

industry,  the  foam  plastics  industry  and  the  refrigeration 

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. 

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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 

3/