Companies’ ‘green tape’ fear exaggerated

New research from the OECD suggests stricter environmental policies do not hold back economic growth, and that governments and companies are often wrong to claim that measures to tackle environmental threats will damage economic competitiveness through imposing a burden of ‘green tape’.

The research, released late last year, looks at the relationship between strict environmental legislation and its effect on productivity. The researchers drew up a set of indices – one index calculated the price of ‘green’ policies, another ranked the strictness of such policies, and a final index calculated the administrative burden of complying with ‘green’ policies.
The findings, which support earlier research and claims by NGOs, suggest that some companies in fact do better under stricter environmental policies because they are forced to invest in better technology that improves the efficiency of their operations. More specifically, they suggest that companies that are already productive benefit from environmental policies, while those that have lower productivity suffer.
The research shows that the Nordic countries and the Netherlands are among the strictest in their environmental legislation while Greece and Italy are among the most lax. It also warns against assuming that the impact of a law or policy on a company is the same as the impact on the economy as a whole, and that in many cases a ‘green’ rule may be a burden for a company but not adversely affect the overall economy.
Meanwhile, the ChemSec NGO has set out a number of examples of where industry has exaggerated the cost of environmental laws.
In its Cry Wolf report, ChemSec says claims were made about the likely costs of introducing catalytic converters and low-sulphur fuel which have proved to be considerable overestimates. It also criticises the British pesticide industry for saying the EU’s 2009 pesticide regulation would effectively ban 15% of pesticides when virtually none have been banned, and it says the French chemicals industry argued that the ‘Reach’ regulation would cost France around €28 billion over 10 years, when the actual cost has been about a tenth of that.