I spent nearly twenty years in senior roles in the Victorian Environment Protection Authority in Australia.
Wherever you are in the world, regulation is typically about rules and minimum standards. It certainly was for us at EPA Victoria.
Then we decided that regulation was also going to be about innovation.
In Victoria, regulation would help businesses to innovate. Regulation would help businesses make money. Lots of it.
Why?
Well, simply because minimum environmental standards don’t create a sustainable society. They don’t go anywhere near doing so. They certainly weren’t going to create a sustainable Victoria.
Compliance with minimum standards is important. It generates a basic level of environment protection and, in particular, it fixes specific local environmental problems especially nuisance issues such as noise and odour which are awful problems for local communities.
But it’s innovation, and in particular, business innovation that is needed to create a sustainable society. And the only innovative ideas that businesses implement in a sustained way are ones that make them money.
So, in Victoria, we turned regulation “on its head”. Most environmental regulations set a minimum environmental performance standard as the compliance test. In developing resource efficiency regulations, we didn’t used an environmental compliance test at all.
Instead, we used an economic test. We established regulations in which the sole compliance criterion was a three-year payback test. Under the regulations, companies had to conduct an energy audit and implement any actions with a three year or better payback. If the audit showed no such opportunities, they needed to take no further action. The audit had shown they were already being efficient with the State’s energy resources.
The end result was the 100 companies in the programme reduced their carbon emissions by over one million tonnes and saved in excess of £25million. Annually.
This is sustainability in action - measurable reductions in emissions and measurable increases in profits.
It’s not fine sustainability words or pretty sustainability pictures – it’s hard environmental and financial numbers.
This is why our own sustainability performance at WSP is so important to our business growth.
The market opportunities for advisory firms to assist clients to generate this type of real sustainability success is enormous. The advisory firms that can achieve genuine sustainability gains in their own performance will be best placed to advise clients on how to generate the sort of numbers I cited earlier.
Terry A’Hearn
Global Director
Regulatory Innovation, Climate Change & Sustainability Services
WSP Environment & Energy
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