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CHAPTER 7: GREEN JOBS AND ENTERPRISE
Summary
7.1 This chapter describes the wider context of business enterprise and 'green jobs' for Scotland drawing out links between these and policies on business energy efficiency, waste, climate change, sustainable communities, and the role of stakeholders in this area.
Definitions and concepts
7.2 Generally, 'green jobs and enterprise' refers to employment and business opportunities that are created through new technologies for greater eco-efficiency or through the demand for environmental services and eco-management, and there is widespread variation as to what can be included within this category. At the same time, there is academic debate about how and, indeed, whether 'green growth' and dependence on market forces can be relied upon to deliver sustainability.
7.3 Unlike other sectors and disciplines that appear more comfortable with looser definitions of sustainable development (for instance, referring to democracy or justice), business often expresses a need for a clearer definition in order to understand what sustainable development means for the private sector in practical terms.
7.4 In the developing world, and, increasingly, in run-down post-industrial settlements in the northern hemisphere, there is concern over the erosion of local and community-based production as a result of engagement in global employment markets. Community-based initiatives have been used in attempts to ameliorate some of the worst social and economic effects of this, with varying degrees of success. However, transfer of knowledge and evidence of what works in this respect are generally poor.
Global
7.5 Heavy emphasis is being placed on efficiency and innovation at the global level, seemingly at the expense of deeper structural problems. There is concern over the erosion of local culture with the continuing spread of economic globalisation and the drive towards increased market liberalisation; the contentious nature of the WTO's General Agreement on Trade in Services embodies this debate.
European
7.6 A reassessment of the classical economic doctrine that more growth is the answer to high unemployment is currently underway in Europe. This is evident when analysing the various policy initiatives coming from the EU, with questions being raised as to how to harmonize the Sustainable Development Strategy or Cardiff Process with the Lisbon Agenda on increasing competition. Enlargement of the Union has accentuated these tensions.
UK
7.7 Lifecycle or whole-life thinking is becoming increasingly popular at the UK national level, in terms of procurement, production and consumption in industry. There are also some moves towards decoupling economic growth from environmental degradation by improving resource productivity and efficiency. The lack of a clear definition of sustainable development is hampering reform of business practices and halting the spread of corporate social responsibility, with businesses sceptical of reforming their activities without knowing for what and why they are reforming. A move away from the trade-off perception of sustainable development would greatly reduce this problem.
Scottish
7.8 The benefits of more efficient resource use are not always evident to businesses. However, there is a commitment by the Executive in its 2005 green jobs strategy to review the way in which it supports resource efficiency initiatives. There has been some uncertainty about the extent to which initiatives under the green jobs strategy can help to create more entry-level jobs, particularly given the skilled nature of many jobs in industry. Other business priorities include the need to address the peripherality of Scotland from UK, European and global markets and the need to simplify funding mechanisms.
Global
Priorities
7.9 At the global level, prominent debates in academia stem from concerns with the very concept of 'green growth' ( as a theoretical concept see Chapter 2) and an over-reliance on 'eco-efficiency' as a policy solution. It has been argued that too much emphasis is being placed on innovation and efficiency and too little on structural issues (DeSimone and Popoff, 2000). Rather than having a role in possibly educating the market themselves, businesses instead look to cater to an increasingly eco-educated market (Baron and Murry, 2004). It is argued that the displacement of political power upwards to international institutions, though embedding the neo-liberal hegemony in the global economy, does at least allow for some reconciliation between economic growth and environmental concerns, rather than arguing for stronger environmental regulations through protectionism (Hartwick and Peet, 2003).
7.10 There has also been increased criticism of market-based, 'debt-for-nature' solutions that often perpetuate unsustainable practices or lead to the disempowerment of women. This in turn helps entrench the view that trade-offs must be made between economic, environmental and social concerns, a view receiving growing criticism. The bi-lateral trade agreements between Canada and Costa Rica exemplify this problem (Isla, 2001).
7.11 There is considerable concern over the erosion of local culture by global pressures, and much praise for local and community-based initiatives that help to stop or reduce such processes. Attention is also being paid to the 'digital divide' between developed and developing countries and the effect this has on business activity (Griese, Mueller, Reichl and Stobbe, 2001).
7.12 The challenges faced in achieving sustainable development at the global level are well illustrated in one current example: subsidised cotton from the US and EU is deflating cotton prices, which in turn is having a damaging affect on West and Central Africa (Gillson, Poulton, Balcombe and Page, 2004).
Policy responses
7.13 In 2000, the World Bank published The Quality of Growth, advocating a broadening of the growth framework to a complementary agenda that involves key quality aspects in the structural, human, social, and environmental dimensions of sustained growth, emphasizing a more equitable investment in people, the need to sustain natural capital, deal with global financial risks, improve governance and control corruption (Thomas et al, 2000). The World Business Council for Sustainable Development report (2005), Creating Business Value and Accountability, restates the need to increase accountability and change the business approach to sustainable development. Accountability and value creation must be made mutually reinforcing throughout any enterprise, integrating sustainable development amongst all areas of business practice, rather than creating a 'specialist silo.' Although not specific policy responses, the two reports suggest a change in the policy outlook of international institutions (WBCSD, 2005).
7.14 The World Trade Organisation's General Agreement on Trade in Services (GATS), first conceived back in 1995, has increasingly garnered criticism from the voluntary sector and civil society, especially over the last five years. The WTO has been at pains to point out that under the GATS national treatment rule (Article XVII) national treatment commitments are perfectly legitimate and that market-access commitments neither remove the right to regulate services nor oblige governments to permit the entry of unlimited numbers of service suppliers. Regulations do not have to be submitted for approval, nor do member governments have to demonstrate that they are employing least-trade-restrictive practices. There is, however, an apparent contradiction in the WTO's approach to licensing, in that licensing should not be a restriction to the supply of services. In the GATS agreement, the term 'restriction' seemingly acts as a euphemism for regulation. Article XIV contains a General Exception stating that:
"nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures necessary to protect human, animal or plant life or health." (WTO provisions described in Love, 1999)
7.15 The GATS agreement encourages Foreign Direct Investment (FDI) which will lead to important challenges over the financing of health care in developing countries, particularly with the growing mobility of health professionals and the power of multinational corporations (Smith, 2004).
7.16 The International Organisation for Standardisation published the ISO Action Plan for Developing Countries: 2005-2010 in December of 2004, looking to build capacity and empower stakeholders in the developing world, with the aim of creating a standardization infrastructure. Information technology and communication are seen as key to this process.
Possible lessons
7.17 Fortune magazine compiles an annual list of 'The World's Most Admired Companies', those companies demonstrating best sustainable practice, which offers one example of non-formal education influencing the agenda, in this case with multi-national corporations.
7.18 In response to the conditions laid out in the Kyoto Protocol, Peugeot has created a carbon sink - a recreated eco-system capable of absorbing large amounts of CO_ - in the State of Mato Grosso in the Brazilian Rainforest. 5,000 hectares of deforested agricultural land will be replanted, plus 7,000 hectares of old and second-growth forest mixed with cultivated land (Allen, Bonazzi and Gee, 2001).
European
Priorities
7.19 At the European level, there is academic questioning of the assumption that more economic growth is the answer to high unemployment. This is particularly pertinent for countries like France, Germany and Spain, who are experiencing low growth and high unemployment. As regards implementation, much research has been undertaken on the benefits of focusing on the local level when analyzing the relationships among socio-economic activities and the environment.
Policy responses
7.20 At a Stakeholder Forum on Sustainable Development, in Brussels, April 2005, Margot Wallström, Vice-President of the European Commission with responsibility for Institutional Relations and Communication Strategy, announced a significant development in the EU's approach to business development and competition.
"Sustainable development has become a core issue on the world's political agenda, and is a top priority for the European Union. With Europe facing rising un-employment and low growth rates in many countries our immediate concern has been the re launch of the Lisbon strategy. But as the European Council confirmed - Lisbon has to be seen within the wider context of sustainable development." (EuropaWorld, 2005)
7.21 It remains to be seen how the EU Sustainable Development Strategy and commitments made under the Cardiff Process, putting Article 6 of the EC treaty on environmental integration into practice, will fit with the White Paper on European Governance and the Lisbon Agenda on competitiveness. One 'positive synergy' clearly picked up on by the European Union elites is eco-efficient innovation, something in keeping with the neo-classical hegemony in theoretical developments. The Lisbon Agenda constitutes the driver of this relationship between competitiveness and clean technologies.
7.22 At a meeting of the Council of the European Union, in Luxemburg in October 2004, it was agreed that a major challenge was to reinforce and exploit the 'positive synergies' between environmental protection and competitiveness. Heavy emphasis was placed on eco-efficient innovations and the creation of new lead markets for these innovations. This will entail considerably more collaboration and joint working with business and stakeholders, as well as a swift implementation of the Environmental Technologies Action Plan. Eco-efficient innovations must be provided with a fair and competitive market perspective, external costs will need to be internalized through instruments such as performance-based green public procurement, fiscal incentives, reform of subsidies and risk-sharing facilities, especially for small and medium scale enterprises.
7.23 This approach of creating effective market conditions for eco-efficient innovations must be coupled with the effective conditions to innovate. There is, however, still considerable strain on the EU budget from the Common Agricultural Policy and little money for research, development and innovation, with considerable intransigence from particular member states on addressing this imbalance.
7.24 The last five years or so have seen a gradual move in various member states to environmental taxes and environmental tax reform, as well as market-based approaches at the EU-level that are starting to have an effect on business (for example, emissions-trading, where the European Emissions Trading Scheme is the key fiscal instrument) and spatial planning. Analysis is currently being undertaken on the growing use of regulatory impact assessment and how this is likely to affect business and investment.
7.25 Other key European Directives for the business community are:
- The Control of Major Accident Hazard Regulations 1999 (COMAH): aims to prevent major accidents involving dangerous substances and limit the consequences to people and the environment of accidents that occur.
- The End-of-Life Vehicles (ELVs) Directive (2000/53/EC): passed into European law in October 2000, vehicles are subject to 'depollution', use of certain hazardous substances during production are limited and treatment facilities operate to higher environmental standards.
- The Landfill (England and Wales) Regulations 2002: came into force on 15 June 2002, implementing the Landfill Directive (Council Directive 1999/31/EC), and will have a major impact on waste regulation and industry in the UK. The regulations aim to prevent, or to reduce as far as possible, the negative environmental effects of landfill.
- Waste Electrical and Electronic Equipment (WEEE) Directive: aims to reduce the amount of WEEE being produced and encourages reuse, recycle and recover of equipment. It also aims to improve the environmental performance of businesses that manufacture, supply, use, recycle and recover electrical and electronic equipment.
Possible lessons
7.26 At member-state level, Sweden appears to be becoming something of an exemplar of a socio-economic framework realigning itself to become sustainable. At the start of 2005, the Swedish government created the Ministry for Sustainable Development, with responsibility for environmental and energy issues, alongside, significantly, construction and housing. This level of policy integration, it is hoped, will reconcile good economic progress with social justice and protection of the environment. The Swedish model of a Green Welfare State might not be to the liking of all members, but Sweden has one of the better rates of economic growth amongst the pre-enlargement states. Ireland, with an impressive forecast of 3.6% growth for 2006 is being monitored, in academia in particular, as an example of an emerging economy needing to make decisions as to how it becomes more sustainable as a society and an economy (Kennelly and Bradley, 2005).
UK
Priorities
7.27 Across the UK, level lifecycle or whole-life thinking has gained prominence, with clear implications for the business world. The DTI's Sustainable Development Strategy was published in October 2000, following consultation with key stakeholders from government, business and environmental NGOs, with its main focus being the need to accelerate the decoupling of economic growth from environmental degradation by improving resource productivity.
7.28 Compared to sectors such as education, which generally are more comfortable with less clear delineations of what sustainable development means, the business community appears to need a more definite definition; business leaders and the private sector seem to need to have a firmer grasp of what sustainable development means before they can do substantially more towards becoming more sustainable.
7.29 Such conceptual and, to an extent, cultural, challenges posed by this topic, are coupled with growing recognition of the need to move away from the trade-off approach to the social, economic and environmental pillars of sustainable development, or the arguably false dichotomy of economic growth versus environmental protection and resource-conservation. There is the impression that a culture of sustainability has failed to permeate the private sector, in large because too many problems have been dealt with on a one-problem-one-solution basis. For example, climate change has not been approached as a risk to profitability and there is seemingly a lack of mid and long-term planning in business in general (Haywood, 2005).
7.30 Problems have also been encountered in relating Local Agenda 21 to the supply side of production, particularly with SMEs (Rotheroe, Keenlyside and Coates, 2003). One suggestion has been that investors should accept longer pay-back periods, although this in turn might hamper small and medium scale business creation (Haywood, 2005).
Policy responses
7.31 The consultation document, Taking it on - developing the UK sustainable development strategy together, was launched on 21st April 2004, based on an integrated approach from the ODPM, Defra, the DTI, DfT and other stakeholders. All government departments will have produced a Sustainable Development Action Plan by the end of 2005, which, it is hoped, will offer some progress towards addressing problems of clarity in defining sustainable development for government policy.
7.32 As regards harmonized regulation for the business community, the Environment Agency assesses compliance with its regulations by using a risk-based approach. A key component of risk-based regulation is Operator and Pollution Risk Appraisal (OPRA). This is an Agency tool for assessing the environmental risks of sites that the agency regulates and the competence of site operators. The Compliance Classification Scheme (CCS) is aimed at ensuring consistency across all regulatory regimes. The Monitoring Certification Scheme (MCERTS) aims to improve the quality of monitoring data and assure users of certified instruments and services that they meet performance standards set out in current international standards, EU Directives and relevant national regulations.
7.33 The DTI has been working closely with Defra, DfT and other key stakeholders to implement the Energy White Paper, Our Energy Future - Creating a Low Carbon Economy. This sets out a strategy for delivering sustainable, reliable and affordable energy supplies through competitive markets, which aims to reduce carbon emissions by 60 per cent by 2050, with real progress by 2020, highlighting the need for sufficiently diverse energy sources in the future. Furthermore, in line with Kyoto, the government is also aiming to reduce greenhouse gas emissions by 12.5 per cent from 1990 levels by 2008-12; move towards a 20 per cent reduction in carbon dioxide emissions from 1990 levels by 2010; and increase the proportion of UK electricity produced from renewable energy sources to ten per cent in 2010. This has clear implications for business and enterprise.
7.34 Meanwhile, the DTI is looking to promote corporate responsibility and integrate sustainability into other DTI policy areas and business support. The Advisory Committee on Business and the Environment has published Value, Growth, Success - How Sustainable Is Your Business? (2000) and Realising The Value, Enhancing Business Success (2003).
7.35 Key Treasury aims include making use of the fiscal system, where appropriate, to tackle environmental externalities through developing further existing environmental taxes (such as the recent increases in the standard rate of landfill tax); creating tax incentives for cleaner technologies through enhanced capital allowances; and adding an environmental dimension to transport taxation, for example, through fuel duty differentials to encourage the use of cleaner fuels. Significantly, the Treasury professes a commitment to strong local government, supporting local authorities in their delivery of key public services to all communities, for example through the introduction of the three-year revenue and capital settlements, emphasizing the need for long-term thinking. Whether such a devolved approach to the business community could be adopted, and whether it would lead to longer term thinking, remains an important topic for discussion.
7.36 The Business Resource Efficiency and Waste (BREW) Programme is a new initiative from Defra that uses revenue from increases in Landfill Tax to fund a range of free services for businesses and specifically targets waste-minimisation, the diversion of waste from landfill and improvements to resource efficiency (Defra, 2005).
Possible lessons
7.37 KPMG UK has created local Corporate Responsibility forums, seeing local office ownership as key to the initiative. They have undertaken a 'Responsible Consumption Initiative', the aim of which is drawing together all environmental activities to help minimize the consumption of natural resources and attain a targeted cost savings. The intention has been that, if achieved, up to 50% of the savings would be donated to the 2004/05 staff-selected charity, the Children's Trust, which is also being supported through payroll-giving. Financial and environmental targets were set on an office-by-office basis and, in the first six months of the year, improving environmental efficiency saved more than £150,000 (WBCSD, 2005).
7.38 Caerphilly County Borough Council and its partners received a grant to redevelop a semi-derelict industrial site in Rhymney, in which the Community Furniture Enterprise operates, a part of the county which was greatly affected by the pit closures of the 1980s and too far from Newport and Cardiff to establish strong economic links. There are environmental outcomes, with less dumping and landfill, social gains, with good quality goods at affordable prices, and economic benefits, creating jobs and training and more generally meeting the needs of a deprived local community.
7.39 Building on the Department for Work and Pensions 1998 document, A New Contract for Welfare: The Gateway To Work, part of the New Deal for employment is the Environment Task Force (ETF), which includes a purpose to seek'to contribute to the improvement of the local, regional or global environment.' New Deal placements on the ETF option may find themselves in a variety of roles, such as conservation work, graffiti removal, working with a housing association or local training agency.
Scotland
Priorities
7.40 The environment has, arguably, often been seen, not as a source of employment and prosperity, but as a threat or hindrance to job-maintenance and creation. However, there are signs that this has started to change through 'environmental modernisation' (Birley, 2001). The green jobs strategy (Scottish Executive, 2005g) exemplifies this.
7.41 The key drivers for the creation of green jobs are regulatory and economic instruments, with the latter being increasingly preferred. Other priorities for a sustainable Scottish economy include the need to address its peripherality from national, European and global markets and the below average level of entrepreneurial activity in Scotland (Scottish Executive, 2001a).
7.42 In the past, Executive guidance to the Enterprise Networks had been criticised as weak (Birley, 2001). However, the Executive's 2005 green jobs strategy has now provided the networks with far clearer guidance on what sustainable development means for them and includes a commitment to review the way in which it supports resource efficiency initiatives (underway at the time of writing). This will include the market for environmental technologies, energy technologies and waste management, which should aim to provide jobs and training opportunities.
7.43 The benefits of more efficient resource-use have often not been apparent to, or fully appreciated by, business, as the strategy itself acknowledges. It contains several commitments aimed at improving companies' understanding of the benefits of resource-efficiency. Environmental Management Systems (EMS) are sometimes used as one method of securing more efficient resource use, but research from Australia and US has demonstrated that full-scale EMS is particularly problematic for SMEs (Gunningham, 2002). This has considerable implications for Scotland, where SMEs are such a substantial and significant component of the economy.
7.44 The green job opportunities offered by renewable energy projects are often touted. Investment in sustainable industries can provide effective ways of creating long-term, high-value jobs - for instance, wind energy in Denmark and Spain; photovoltaics in Germany and Japan; and fuel cells in the US and Canada. Significant growth opportunities have been identified in renewables, waste management and recyclates and cleaner technologies, with opportunities in wave and tidal technologies being particularly promising in the longer term, not least because of Scotland's experience with the oil and gas, and indeed aquaculture, industries (for example, Avayl Engineering and Hutt and Johnstone, 2005). However, there is concern that current legislative arrangements (in the Renewables Obligation (Scotland) Order 2005 and its predecessors) are promoting onshore wind energy projects at the expense of developing other sources of renewables (Scottish Executive, 2005h).
Policy responses
7.45 In terms of helping to provide direction and support, in relation to sustainability, to the private sector, A Smart, Successful Scotland: Ambitions for the Enterprise Networks, first launched by the Executive four years ago and refreshed in 2004 (Scottish Executive, 2001a, 2004d), provides ministerial guidance to the Enterprise Networks. While it does prioritises an increase in entrepreneurial activity, e-business, digital and other connectivity and the promotion of global success in key areas. In its current form, it emphasises that sustainability should be at the heart of Scottish enterprise and competitiveness and partly set the scene for the subsequent green jobs strategy.
7.46 Going for Green: a green jobs strategy for Scotland (Scottish Executive, 2005g) provides additional guidance for the Enterprise Networks. Its key priorities are more efficient use of resources and capitalising on the opportunities offered, particularly, by renewable energy and waste management. The focus of the strategy is not on a single business sector but across the board and it envisages an enhanced role for the Scottish Enterprise Network Business Gateway Service in advising on resource efficiency issues. The strategy document covers information, awareness-raising and the delivery of specialist advice, identifying a plethora of sources; access to finance to exploit opportunities; and the government's role in creating a market and skills.
7.47 Narrowing the gap in economic opportunities and promoting equal opportunities for all of Scotland's people has been expressed as a cross-cutting Executive priority in the strategy, Closing the Opportunity Gap, and the green jobs strategy has a role to play. One concern about limits on its potential contribution has been that, because of the technical nature of the energy industry, most jobs will be at the skilled craft or technician level or above (Avayl Engineering, Hutt and Johnstone, 2005). Although there is the potential for semi-skilled jobs in the construction of energy projects and in the production, supply and manufacture of biomass and bio-fuels, there has been little evidence of the potential for the creation of entry-level jobs in and it has also been pointed out that job-creation in the renewables sector is very much dependent on government intervention (ibid). It is intended that the proposed Employability Framework for Scotland, expected by the end of 2005, will further seek to improve chances for the vulnerable and disadvantaged, generally with the purpose of enhancing the number of economically active citizens. However, it is clear from the discussion above, that the opportunities offered by green jobs may be fairly limited.
7.48 There are a number of organisations providing sources of advice for business on resource efficiency and which try to provide examples of best practice, including the Carbon Trust and Envirowise, and lesser players such as the Business Environment Partnership and Forward Scotland. Implementation of the green jobs strategy will be reliant to quite an extent on the role of such bodies in addition to the Enterprise Networks. There are practicable promotion mechanisms such as the Sustainable Action Fund; Regional Selective Assistance and the Forum for Renewable Energy Development in Scotland. However, the current arrangements have been criticised as a somewhat "incoherent array" (Birley, 2001).
7.49 At another level of interaction between the economy, employment and sustainability, the implementation of a range of EU Directives provides indirect legislative mechanisms relevant to business and job-creation. Examples are found in the obligation to use Best Available Techniques in legislation implementing the IPPC Directive (the Pollution Prevention and Control (Scotland) Regulations 2000); and the biodegradable municipal waste landfill reduction obligations from the Landfill Directive (in the Landfill (Scotland) Regulations 2003.
7.50 The Renewables Obligation (Scotland) Order 2002 and subsequent Orders include binding targets on generators to supply electricity generated by renewable sources. As noted above, this regime has been criticised for only encouraging onshore wind energy projects and is currently being reviewed with a view, partly at least, to examine ways in which other renewables can be developed.
Possible lessons
7.51 Social Inclusion Partnership Areas: an example is Renfrewshire Council's involvement in Going for Green's Sustainable Communities initiative, based around the principles of LA21, providing funding for three Social Inclusion Partnership areas, complemented by grants from the Executive.
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