European Report: Good Environmental Regulation Good For Competition

Good environmental management and regulation encourages competition and sustainable economic development, according to a report released by the heads of all European Environmental Protection Agencies (EPAs).

Launching the report on Nov. 22 at Environment Agency's conference (Environment 2005), the UK's Environment Agency's Chief Executive Barbara Young said the findings demonstrated the importance of good environmental regulation.

"This new analysis shows that businesses and industries with environmentally-friendly practices are prospering and making savings -- its solid evidence that effective environmental regulation can drive innovation, it can foster new markets and reduce business risks.

"In the past we have often been forced to defend claims that rigorous regulation inhibits economic development and reduces competitiveness -- this simply is not true -- countries with good, well-designed environmental regulation are the best countries to do business in.

"I hope the business community will take part in our conference and join the debate that is shaping environmental protection at a local, national and international level and assess the commercial opportunities of upcoming policy initiatives," she said.

The EPAs found that good environmental regulation:

  • Reduces business risk and increases investment market and insurer confidence -- Banking and insurance sectors provide better access to capital and lower insurance premiums for businesses with good environmental record and low environmental risks.
  • Assists competitive advantage and creates competitive markets -- The negative impact of regulation on competitiveness is frequently overstated, ignoring the role of industry self-regulation and voluntary action. Regulation can help provide the certainty and equity needed for competitiveness.
  • Drives innovation -- data clearly shows that the costs of addressing environmental regulations can be minimized, if not eliminated, through innovation that delivers other benefits.
  • Creates markets for environmental goods and services -- Countries with high environmental standards often have market-leading firms and record better economic performance than those with lower standards.

Young said: "Business can benefit directly because regulation in areas such as energy efficiency and waste reduction can deliver major cost savings -- as we see in the UK -- and help companies develop more attractive products.

"The challenge is to ensure regulations focus on environmental outcomes, that regulations focus on the highest environmental risks, and are proportionately implemented in ways which reduce administrative burdens, rather than to have a bonfire of regulations," Young said.

Other benefits of good regulation include:

  • Improving the health of the workforce and the public -- 4,225 fewer deaths in the UK in 2004 as a result of a reduction in air pollutants being emitted due to regulation.
  • Protecting the natural resources on which business and communities depend.

The Environment 2005 conference was held on Nov. 22 and 23 in London. It focused on the challenges facing governments in delivering effective environmental change.

UK's Environment Agency:

This article originally appeared in the 11/01/2005 issue of Environmental Protection.

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