Managing Environmental Issues

2. Chapter 12 Managing Environmental Issues Role of Government Environmental Regulations in Malaysia Business Approaches to Environmental Pollution Environmental Management as a Competitive Advantage

3. Role of Government • Government is actively involved in regulating business activities in order to protect the environment. • Business firms have little incentives to minimize pollution : • Since this would incur extra costs • If the competitors do not also take steps to minimize pollution, the firm might not be able to compete effectively. This may affect the firm’s profitability. • This problem is eliminated when the government, by setting a common standard for all firms, can take the cost of pollution control out of competition.

4. Role of Government (Con’t) • In Malaysia, the government of Malaysia (GOM) controls pollution through the mechanism of licenses issued by the Department of Environment. • The licenses are mandatory for discharging and emitting wastes exceeding acceptable conditions into the atmosphere, noise pollution, polluting or causing the pollution of any soil or surface of any land and emitting or discharging wastes, oil in excess of acceptable conditions into Malaysian waters. • The GOM also enforces pollution laws through fines. For e.g. the maximum fine of RM500,000 and a jail term of 5 years for any environmental offenders.

5. Major areas of environmental regulation Air pollution • Occurs when more pollutants are emitted into the atmosphere than can safely be absorbed and diluted by natural processes. • Most pollution today results from human activity such as industrial processes and motor vehicle emissions. • Causes of air pollution in Malaysia: • Industrial zones • Increased amount of cars in Malaysia • Open air burning

6. Major areas of environmental regulation Water pollution • Occurs when more wastes are dumped into waterways than can be naturally diluted and carried away. • Water can be polluted by organic wastes (untreated sewage), chemical by-products of industrial processes and the disposal of nonbiodegradable products (which do not naturally decay). • Case in Malaysia: • Many forests surrounding lake/river areas have been chopped down because these lake/river areas have become tourist attractions.

7. Major areas of environmental regulation Land pollution • The contamination of land by both solid and hazardous waste. • Cases in Malaysia: • Land pollution affects mainly the wildlife. • Causes of land pollution include: -large scale farming which have caused thousands of acres of forest land to be ploughed and the habitat of thousands of wildlife destroyed. - Pesticides used in agriculture. - Logging.

8. Malaysia’s Approach in Environmental Pollution • The need for better environmental management was endorsed in the Third Malaysian Plan (1976-1980). • Among the many efforts to sustain both economic and environmental soundness were actions to minimise the impact of human activities related to deforestation, urbanisation and tourism; emphasising prevention through conservation instead of curative measures; and incorporate environmental planning in development projects. • The landmark legislative initiative to protect and maintain the environment is the Environmental Quality Act 1974.

9. Malaysia’s Approach in Environmental Pollution (con’t) • Malaysia’s overall environmental policy is to balance socio-economic development, keeping in mind sound environmental conditions. • The Malaysian government states that “adequate attention will be given to the protection of the environment and ecology so as to maintain the long term sustainability of the country development.” [National Development Policy of the Second Outline Perspective Plan (1991-2000)] • Malaysia bases its environmental management on the National Environmental Policy.

10. National Environmental Policy of Malaysia • The guiding principles for environmental policy objectives which form the basis for development planning are to: • Maintain a clean and healthy environment; • Minimize the quality of the environment relative to the needs of the growing population; • Minimize the impact of the growing population and human activities relating to mineral exploration, deforestation, agriculture, urbanization, tourism, and development of other resources, on the environment;

11. National Environmental Policy of Malaysia (con’t) • Balance the goals of socioeconomic development and the need to bring the benefits of development to a wide spectrum of population against the maintenance of sound environmental constitution. • Place more emphasis on prevention through conservation rather than through curative measures; • Incorporate an environmental dimension in project planning and implementation through the conduct of Environmental Impact assessment Studies; and • Promote greater cooperation and increased coordination among relevant Federal and state authorities as well as among the ASEAN governments.

12. Department of Environment (DOE) • In Malaysia, environmental management at the federal level is conducted by the Department of Environment (DOE), a department under the Ministry of Science, Technology and Environment. • The DOE primarily deals with matter involving air and water quality, industrial wastes, noise levels and environmental impact assessments. • The DOE is headed by the Director-General of Environmental Quality.

13. Department of Environment (DOE) (con’t) • The Director-General establishes, liaises and cooperates with state authorities in relation to issues of environmental protection, pollution control and waste management. • The DOE deals with matters involving air and water quality, industrial wastes, noise levels and environmental impact assessments. • Issues like forestry, wetlands and marine conservation do not fall within the DOE mandate. These areas rests primarily with the respective state authorities.

14. Department of Environment (DOE) (con’t) • Inorder to achieve the national environmental objectives, the Department on Environment (DOE) has adopted a strategy based on pollution control and prevention. • The pollution control and strategy or remedial approach is implemented through the enforcement of the Environmental Quality Act, 1974.

15. Environmental Quality Act (1974) • Created to prevent, control and abate pollution and further enhancing the quality of environment in Malaysia. • Although Malaysia has had environmentally-related legislations since the early 1920s, the legislation was limited in scope and inadequate for handling environmental problems which were more complex. • Through the EQA 1974, a more comprehensive form of legislation to control pollution was established. • The Department of Environment has been entrusted to administer this legislation

16. Environmental Quality Act (1974) (con’t) • The EQA marked the beginning of the government's commitment to preventing pollution and degradation of natural resource and this legislation is the main framework for environmental legislation in Malaysia. • This Act regulates air, noise, and water pollution; degradation of land; and oil pollution. • In 1996, an amendment was made to the EQA to introduce detailed provisions on environmental impact assessments. • In 2001, further amendments were made to the act to include provisions on open burning and industrial wastes.

17. Environmental Quality Act (1974) (con’t) • Control of Motor Vehicle Emissions · Environment Quality (Control of lead concentration in Malaysia): Regulations 1985 · Environmental Quality (Motor vehicle Noise): Regulation 1987 · Environmental Quality (Control of emission for diesel engine): Regulations 1996 · Environmental Quality (Control of emission for petrol engine): Regulation 1996 • Control of Toxic and Hazardous Wastes · Environmental Quality (Schedule wastes): Regulation 1989 · Environmental Quality (Prescribed Premises) (Schedule waste treatment and disposal facilities): Order 1989 · Environmental Quality (Prescribed Premises) (Schedule waste treatment and disposal facilities): Regulation 1989

18. Environmental Quality Act (1974) (con’t) • Integration of Environment and Development · Environmental Quality (Prescribed Activities) (Environmental Impact Assessment): Order 1987 • Control of Substances That Deplete the Ozone Layer · Environmental Quality (Prohibition on the use of Chlorofluorocarbons and other gas propellants and blowing agents): Order 1993

19. Environmental Quality Act (1974) (con’t) • Control of Agro based Water pollution · Environmental Quality (licensing): Regulation 1977 · Environmental Quality (Prescribed Premises): (Crude Palm Oil) Order 1977 · Environmental Quality (Prescribed Premises): (Raw Natural Rubber) regulations 1978 • Control of Municipal and Industrial Waste water pollution · Environmental Quality (Sewage and Industrial Effluents): Regulations 1979 · Environment Quality (Prohibition on the used of control Substance in soap, synthetic detergent and other cleaning agent): Order 1995 • Control of Industrial Emissions · Environment Quality (Clean Air): Regulation 1978 · Environment Quality (Compounding of offences): Rules 1978

20. Other Leading Malaysian Environmental Protection Laws • National Forestry Act (1984) Enacted to conserve and manage the nation’s forest based on the principles of sustainable management. • Pesticide Act (1974) Provides guiding principles for the registration, production, management and application of pesticides in Malaysia. • Land Conservation Act (1960) An act to consolidate the law relating to the conservation of hill land and the protection of soil from erosion.

21. Alternative policy approaches Environmental standards Standard allowable levels of various pollutants are established by legislation or regulatory action. • Environmental-quality standard • Emission standard Market-based mechanisms Based on the idea that the market is a better control than extensive standards that specify precisely what companies must do. • Allow businesses to buy and sell the right to pollute. • Emissions charges or fees • Government incentives

22. Alternative policy approaches (continued) Information disclosure • Regulation by publicity • The government encourages companies to pollute less by publishing information about the amount of pollutants individual companies emit each year. Civil and criminal enforcement • The threat of prison can be an effective deterrent to corporate outlaws who would otherwise degrade the environment.

23. Figure 12.2a Advantages and disadvantages of alternative policy approaches to reducing pollution

24. Figure 12.2b Advantages and disadvantages of alternative policy approaches to reducing pollution

25. Stages of corporate environmental responsibility Clean technology Businesses develop innovative, new technologies that support sustainability. Product stewardship Managers focus on all environmental impacts associated with the full life-cycle of a product. Pollution prevention Focuses on minimizing or eliminating waste before it is created.

26. Business Approaches to Environmental Pollution • The Ecologically Sustainable Organization (ESO) • Is a business that operates in a way that is consistent with the principle of sustainable development as learnt in Chapter 11. • Such businesses would not use up the natural resources faster that these resources can be replenished or substituted. • Practices in ESOs include: • Make and transport products efficiently; • Design products that are recyclable & last a long time;; • Would not product waste faster than can be absorbed and dispersed by the natural ecosystem; and • Work with NGOs and government to protect the environment

27. Business Approaches to Environmental Pollution • Environmental Partnerships • Many businesses have formed voluntary collaborative partnerships with environmental organizations to improve environmental quality or to conserve resources.

28. Environmental management in practice Proactive green companies share the following elements: • Top management involvement to sustainability • Line manager involvement • Codes of environmental conduct • Cross-functional teams • Rewards and incentives

29. Environmental management as a competitive advantage Cost savings Companies that reduce pollution and hazardous waste, reuse or recycle materials, and operate with greater energy efficiency can reap significant cost savings. Product differentiation Companies that develop a reputation for environmental excellence and that produce and deliver products and services with concern for their sustainability can attract environmentally aware customers. Technological innovation Technological innovation can lead to imaginative new methods for reducing pollution and increasing efficiency. Strategic planning Companies that cultivate a vision of sustainability must adopt sophisticated strategic planning techniques.