Govt introduces new environmental rating system

Govt introduces new environmental rating system

Debbie A. Lubis, Contributor, Jakarta

The idea of strolling along a riverbank to soothe your eyes or
ease your mind has always been wishful thinking for Jakarta
residents. Rotting trash, waste and sewage from factories,
hotels, housing estates, and slums make Jakarta's water look and
smell foul.

The government has issued numerous rules and regulations on
waste management and environmental protection since the 1990s but
legal enforcement has been weak. A recent study conducted by the
Ministry of Environment has shown that only one quarter of
industrial companies comply with those rules.

These conditions have forced the ministry to revive its
Program for Pollution Control, Evaluation and Rating (PROPER)
that was introduced in 1994 but stopped in 1998 due to
unfavorable circumstances.

"We were afraid the people would react negatively to the audit
report since circumstance could lead them to vandalize or loot
the polluters' office or factory," said Rasio Ridho Sani,
secretary of the PROPER technical team.

The ministry will soon release a report on the PROPER
environmental audit that was conducted last year, which is
slightly different than the 1994 project that emphasized water
pollution.

The main objective of last year's audit was to increase
compliance with environmental regulations (including hazardous
waste, water, air and soil pollution, and to promote the adoption
of clean technologies, create incentives for polluters to
strengthen their environmental management capabilities, community
development, and to support ISO 14000 certification (on
Environmental Management System)).

"ISO 14000 is given to companies that have shown their
commitment and efforts to comply with Environmental Law. But is
possible that an ISO certificate holder is considered a polluter
based on PROPER assessment because the audit relies on samples
from the field," he said. He added that a company can be given a
poor rating not simply because it has harmed the environment but
also if it has the potential to harm the environment.

The 2002 audit was conducted on only 85 selected companies
because of constraints on the government's financial and human
resources.

The companies are chosen from selected industries that have
the potential to harm the environment such as textiles, cement,
pulp and paper, mineral and coal, oil and gas, and sugar and palm
oil. The companies are located in provinces of West Java, Banten,
East Java, Central Java, Lampung, Riau, Bangka Belitung, South
Sumatra, Aceh, South Sulawesi, North Sulawesi, South Kalimantan,
East Kalimantan, and West Nusa Tenggara.

Under PROPER, polluters are given environmental performance
ratings that will be announced to the public through special
reports on media and the Ministry of Environment's website.

The ratings use a simple color-coding format that grades the
company's environmental performance from excellent to worst.

It is expected that by disclosing the ratings pressure from
society and the private sector will coerce the polluters to
comply with environmental regulations and reduce pollution levels
to meet the emission standards.

The pressures range from boycotting the products of the
polluters to imposing legal sanctions.

"This approach is more effective and cheaper than legal
enforcement because companies are more afraid of tainting their
reputation than the judiciary system. It takes years and costs a
lot of money to settle one environmental case through law
enforcement. With PROPER, it is the stakeholders -- the
community, NGOs, policy makers, the business sector, and
international funding agencies- who will judge the polluters,"
Rasio said.

Countries such as the Philippines, Mexico, and Colombia have
used PROPER's principles to design pollution control measures.
Public information and community participation in PROPER have
been considered successful in combining voluntary compliance
agreements, negotiated settlements, legal sanctions and market
incentives to coerce companies to comply with Environmental
Regulations.

The first-round PROPER ratings in 1995 showed that
multinationals had the best performance, private domestic firms
had the worst, and public enterprises were in between.

In a bid to avoid the risk of biased ratings, several steps
were taken to ensure accurate assessments. The Ministry of
Environment established a rigorous overall rating process
involving several high-level reviews (peer review among technical
team members and a review by senior officials) before the public
disclosure of final ratings. This process is aided by reliable
analysis from the Advisory Board over the companies' compliance
rating status.

Currently, PROPER's Advisory Board consists of credible
figures like environmentalist Prof. Dr. Otto Sumarwoto, academic
Prof. Dr Muladi, environmentalist Sarwono Kusumaatmadja, Tom
Walton of World Bank, Agus Purnomo of WWF, M. Achmad Santoso of
ICEL, and Isa Karmisa Adiputra, Deputy for Environmental Impact
Management from Institutional Sources at the Ministry of
Environment.

Since the introduction of PROPER, polluters have been under
great pressure to change their complacent attitude towards
pollution control since good ratings enhance the reputation of
their business.

Between 1995 and 1997 the program helped increase the level of
compliance 10 percent from 213 industries that were involved in
the environmental audit. Several polluters succeeded in improving
their ratings several levels.

"The environmental performance reflects the overall
performance of the company's management. If the company's rating
is good, the banking system will not be reluctant to give them
financial assistance while investors will be confident to invest
their because the rating guarantees that the company is
sustainable and a small risk".

However, public disclosure may have little impact on
persistent polluters who do not care about their reputations. The
State Minister of the Environment Nabiel Makarim, said during the
hearing session with the House of Representatives' Commission
VIII on Environment that the government can consider imposing
sanctions on companies that cause environmental damage through
special chambers in district courts. The first analysis will be
conducted in Java, Sumatra and Kalimantan.