The PROPERIndonesian Environmental Compliance Public Disclosure

Alternative Policy Instrument for Better Air Quality

Rasio Ridho SaniDRS (UI), M.COM (Uni.Sydney), MPM (InWent-Uni.Potsdam)

Ministry of the EnvironmentRepublic of Indonesia

Better Air Quality 2006Yogjakarta Indonesia13-15 December 2006

Program for Environmental Compliance Performance Rating

(PROPER)

………………….. Outline

1. The history of Environmental Management Policy Instrument in Indonesia

2. Rationality of Environmental Compliance Public Disclosure

3. Compliance Improvement Mechanism

4. The Benefits and Results

5. Lessons Learned

1. Environmental Compliance Policy Instrument in Indonesia

Environmental Impact Assessment

Clean River Program

Clean Air Program(Blue Sky)

Hazardous Wastes Control

Water PollutionCompliance

Public Disclosure

MultimediaEnvironmental

CompliancePublic Disclosure

“PROPER”

LicensingSystem

Environmental Law Enforcement

Market Instrument (Cleaner Production, Soft Loan)

2002199919901986

1995

Economic Crisis

1998 - 2002

2. Background and Rationality of Environmental Compliance Public Disclosure

Background: Lack of companies

environmental compliance

Ineffective of conventional environmental law enforcement policy tools

Demand for greater public participation & transparency in environmental management

Alternative policy tools

2002 - 2003

Comply, 28, 33%

Not Comply, 57, 67%

2003 - 2004

Comply, 123, 49%

Not Comply, 128, 51%

2004 - 2005

Comply, 244, 52%

Not Comply, 222, 48%

……….Environmental compliance Performance Public Disclosure will create interaction among

related stakeholders; regulators, workers, investors, customers, public, shareholders

reputational incentives to good performer, and then reputational disincentive to bad performer

Rationality …….

ComplianceMonitoring

Public RightTo Know

PublicParticipation

CompanyInformation

Dissemination

Then …. the Element of PROPER, and its legal foundations

Government shall develop and implement preemptive, preventive, and proactive

policy tools in order to maintain carrying capacity of the environment (Act 23/97

article 10.e)

Minister conduct compliance surveillance .. Act. 23/97 article 22

Every person has a right on environmental information .. 23/97 article 5.2

Everybody whom doing business and activities obligate to provide right

information …. Act. 23/97 article 6.2

Community has equal opportunities to participate in environmental

management …. Act. 23/97 article 5.3

3. Compliance Improvement Mechanism

Compliance Level

Performer Five Color Coded Rating

Beyond

Compliance Good

Gold

Green

Comply Sufficient Blue

Non Compliance

Bad Red

Black

Compliance Mechanism Improvement

Stakeholder reactions Impact

Appreciation from workers, shareholders, investors, customers, and public

Reputation Incentive

Neutral

Pressure from workers, shareholders, investors, customers, and public

Disincentive Reputation

Multi media environmental compliance Rating

Compliance Level

Rating Alternative

Above Compliance

Gold A

Green B

Comply

Blue C

Non Compliance

Red D

Black E

Performance Assessment Type of Compliance

Area Method

Environmental Management System Effort

Oriented VoluntaryResources Conservation and Reuse, Recycle, and Recovery

of Wastes (3R)

CSR: Community Development

Water and Sea Water Pollution

Result Oriented

ObligatoryAir Pollution

Hazardous Waste Management

Implementation of EIA

Color Coded Rating

Government

Cost effective for compliance perforamance

Tool to measure environmental management

program

Instrument to drive beyond compliance program

Company

Benchmarking for non financial performance

Intangible Value Added Better Company Image

Driver for Eco Efficiency

Improving communication between government and

company

Investors and Public

Clearing house for targeted company

performance

Room for public participation in environmental management

4. Benefits and the Results

…….. Benefits to the Stakeholders

Strategic Map PROPER and Conventional Environmental Law Enforcement Tool

Low

High

Time Required

Cost Needed

Public Involvement

Other Stakeholder Involvement

Value Added to Stakeholder

Relationship among

Stakeholders

PROPER

Law

Enforcement

From Indonesia to other part of the World ………..

Indonesia(1995)

Filipina(1997)

China(2000)

Vietnam(2002)

Thailand(2005)

India(2002)

Ghana(2005)

Source: AECEN

The Results

PROPER 2002

BLACK, 25, 29%

BLUE, 20, 24%

GREEN, 8, 9%

GOLD, 0, 0%

RED, 32, 38%

Overall Performance ……..

PROPER 2003

RED, 86, 34%

BLUE, 114, 45%

GOLD, 0, 0%

GREEN, 9, 4% BLACK,

42, 17%

The Results

PROPER 2004/2005

RED, 150, 32%

BLUE, 221, 48%

BLACK, 72, 15%

GREEN, 23, 5%

GOLD, 0, 0%

Overall Performance …….. At 2005

The Effectiveness … Increasing rate of compliance

13.15 % compliance Improvement

09

114

86

42

0

18

138

67

23

1 4

0

20

40

60

80

100

120

140

2003-2004 2004-2005

Rating 251 companies Evaluation period 2003-2004 & 2004-2005

Ditunda Tutup

Media Compliance Performance

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

290336

287

147110

179

29 20

0

100

200

300

400

Comply Non Comply Other

Water Pollution Air Pollution Hazardous Wastes

Compliance performance Air Pollution control PROPER 2005

Air Pollution Compliance Level 113 Industries of Mining, Energy, Oil & Gas

COMPLY, 92, 81%

NOT COMPLY, 21, 19%

Air Pollution Compliance Level251 Industries of Manufacture,

Infrastructure & Services

Comply, 152, 60%

Not Comply, 14, 6%

Other, 85, 34%

Key success factor of the PROPER depends on …………..

Effective Communication

Strategy

Credibility of Executing

Agency

Active Role of Stakeholders

Synergistic approach

with other program

Enlarging Role of Media

Targeting for Law Enforcement and other Financial

Disincentive

Strengthening Role of Independent Advisory Board

5. The Lesson Learned

5. The Lesson Learned

Promoting of non regulated emissions as a criteria for beyond compliance performance ……..

Fugitive Emissions Green House Gases Conservation Energy

5. The Lesson Learned

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

5. The Lesson Learned

Increasing number of targeted companies to achieve critical momentum of the program and therefore ……the role of local government is becoming important

The next …the rating of 525 companies will be publish to the public by early of January 2007

84251

466550

1,000

1,500

2,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

5. The Lesson Learned

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

Thank Youterima kasih

Text message : +62.812 192 4334Email : rasiosani@menlh.go.id