The Evolution of Voluntary Environmental Instruments in Canada

Voluntary agreements have always been one of several important tools that Environment Canada has used to manage a range of toxic substances or substances of concern. In the 1990s, the department developed programs such as the Accelerated Reduction/Elimination of Toxics (ARET) program (1995-2000) and Memoranda of Understanding (MOUs) with companies and industry associations as a means to achieve beyond-compliance reductions in the release of substances of concern. Although there were numerous successes and benefits associated with these programs, it was clear that if voluntary programs were to obtain broad acceptance as a credible tool in managing toxic substances, more rigour in their design would be required.

In November 1997, a working group known as the New Directions Group, composed of representatives from industry and non-governmental organizations, wrote a paper entitled Criteria and Principles for the Use of Voluntary or Non-regulatory Initiatives to Achieve Environmental Policy Objectives. The paper recommended how to use voluntary initiatives effectively and outlined key principles that should be considered when developing a voluntary agreement.

In the late 1990s, the Commissioner for the Environment and Sustainable Development reviewed Environment Canada's use of voluntary initiatives in managing toxic substances and other substances of concern. The 1999 Report of the Commissioner of the Environment and Sustainable Development to the House of Commons (Office of the Auditor General, 1999) made the following recommendations:

Environment Canada, in consultation with other participating departments, should develop a policy outlining conditions necessary for using voluntary initiatives. Before renewing a voluntary initiative, Environment Canada should evaluate its contribution toward the government policy objectives of pollution prevention and life cycle management.

If Environment Canada chooses to use voluntary initiatives to manage priority substances, including CEPA [Canadian Environmental Protection Act, 1999] toxic substances and others, it should establish rigorous requirements for them. At a minimum, these initiatives should include:

• clearly identified environmental objectives;
• the release levels that exist at the beginning of the agreement;
• measurable targets with timelines;
• release or performance measures;
• clearly defined roles and responsibilities;
• consequences for failing to meet targets and rewards and recognition for achieving them;
• a reporting requirement and provision for credible verification; and
• regular evaluation of the initiative to determine progress and consider whether corrective action is necessary.

If Environment Canada uses voluntary initiatives to manage toxic substances not identified as priorities, it should encourage industry sectors, associations and individual companies to also adopt the same requirements as indicated above.

Environment Canada responded by developing the 2001 Policy Framework for Environmental Performance Agreements. The policy framework now serves as the standard used by Environment Canada for negotiating and developing voluntary initiatives.

The Next Generation of Voluntary Instruments

In June 2001, the Minister of the Environment endorsed the Policy Framework for Environmental Performance Agreements. The policy framework is consistent with the principles outlined in the New Directions Group paper and meets the recommendations made by the Commissioner for the Environment and Sustainable Development. It outlines conditions under which an Environmental Performance Agreement should be considered and establishes the following guiding principles and design criteria for Environment Canada to consider in the negotiation of new Environmental Performance Agreements:

• Principles
  • effectiveness
  • credibility
  • transparency and accountability
  • efficiency
• Design criteria
  • senior-level commitment from participants
  • clear environmental objectives and measurable results
  • clearly defined roles and responsibilities
  • consultation with affected and interested stakeholders
  • public reporting
  • verification of results
  • incentives and consequences
  • continual improvement

Benefits of the Program to the Signatories

The great advantage of these agreements is the flexibility they provide to customize environmental goals.

Environment Canada and other stakeholders use this program to reduce the release of substances of concern to the environment, but its benefits go beyond this. Environmental Performance Agreements encourage industry to strive to develop environmental protection initiatives beyond what is possible through regulation. An agreement can be used as a complement, a precursor, or an alternative to a non-voluntary instrument, such as a regulation.

Industries that sign on can also reduce their regulatory requirements; improve relations with the public, investors, banks, insurers, and the government; keep up with new standards for green procurement and international trade; improve employee job satisfaction; and make gains in production.

Linking Initiatives

Pollution Prevention Planning under the Canadian Environmental Protection Act, 1999

Part 4 of CEPA 1999 authorizes the Minister of the Environment to require the preparation and implementation of pollution prevention plans to manage substances that have been added to the List of Toxic Substances on Schedule 1 of the Act. The Minister will formally make the requirement to prepare and implement pollution prevention plans by publishing notices in the Canada Gazette. Persons subject to such a notice must then comply with the requirements of that notice.

Although pollution prevention planning continues to be an important "stand-alone" risk management instrument for Environment Canada, its flexibility is also proving to be an effective legislative backstop to Environmental Performance Agreements. Applying a requirement under Part 4 of CEPA 1999 to prepare a pollution prevention plan only to non-participants in relevant Environmental Performance Agreements creates added incentive to participate. This authority could also provide an effective mechanism for addressing "free riders" (e.g. companies that have not invested or participated in an agreement, but that will reap the same benefits as those that have made significant efforts). This option is possible under the current provisions in Part 4 of CEPA 1999.

Provincial Programs

Alberta Environment - EnviroVista

In June 2005, Alberta Environment officially launched its new environmental leadership program, EnviroVista. This voluntary program officially recognizes facilities that have a minimum of five years of exemplary emissions performance, a comprehensive, publicly accessible, audited environmental management system, and five years without any enforcement activity under Alberta's Water Act and Environmental Protection and Enhancement Act.

Ten environmentally responsible industrial and municipal facilities in Alberta were the first to be recognized as EnviroVista Leaders, and two others joined the program in October 2005.

Alberta Environment is also working to develop an EnviroVista Champions Tier. The EnviroVista Champions Tier requires commitment to a higher level of environmental performance and looks beyond emission reductions for commitments to other environmental protection initiatives, such as product stewardship, community participation, site remediation, and public nuisance items. To enter the Champions level, a facility will work with its community and public stakeholders and with Alberta Environment to propose commitments to enhanced performance and other stewardship activities. These commitments are incorporated into a Stewardship Agreement. In recognition of the facility's excellent past performance and the "stretch" commitments made in the Stewardship Agreement, Alberta Environment - EnviroVista will provide the facility with incentives, including a "Modified Approval." The Modified Approval provides operational and administrative flexibility and a regulatory backstop to the Stewardship Agreement.

The Stewardship Agreement and the Modified Approval combined will provide for a greater level of environmental enhancement and protection than is possible with typical regulatory approval alone. Work continues with a multi-stakeholder advisory committee on the development of the Champions Tier. For more information on the EnviroVista Program, visit the program's website.

The Champions Tier is analogous to the negotiation process of an Environmental Performance Agreement. There may be opportunities to negotiate a three-party agreement that addresses federal and provincial priorities. Environment Canada and Alberta Environment are continuing to work together to coordinate the two programs as much as possible.

Ontario Ministry of the Environment - Ontario's Environmental Leaders Program

In the fall of 2004, the Ontario Ministry of the Environment launched a new voluntary program - Ontario's Environmental Leaders Program. Ontario's Environmental Leaders Program is a beyond-compliance program aimed at encouraging Ontario's environmental leaders in industry to commit to reductions of priority substances above and beyond what is required by law. In return, program participants are eligible for a specialized suite of incentives from the ministry. These incentives will bring significant benefits to facilities, including increased efficiency in permitting, recognition, and an opportunity to forge a specialized relationship with the ministry, while improving environmental performance.

Prospective participants engage with the ministry to develop beyond-compliance Provincial Priority Reduction Plans that are achieved over a five-year term. Ontario's Environmental Leaders Program was previously known as the "Cooperative Agreement Initiative."

For more information on the Ontario Ministry of the Environment's Ontario's Environmental Leaders Program, please visit the program website.

Although the ultimate objective of Ontario's and Environment Canada's programs are the same - improved environmental protection through proactive industry action - the scope of the two programs is slightly different. Ontario's Environmental Leaders Program has a very specific focus on beyond-compliance release reduction, whereas the focus of an Environmental Performance Agreement can be much broader.

Another significant difference between the two programs is the entrance requirements. Ontario's Environmental Leaders Program has specific requirements for participation - for example, participants are required to have an environmental management system in place. Environmental Performance Agreements do not have specific entrance requirements; rather, agreements are negotiated on a case-by-case basis around the principles and criteria outlined in the Policy Framework for Environmental Performance Agreements.

Environment Canada and the Ontario Ministry of the Environment have had preliminary discussions on how to better link these two complementary initiatives and will continue to explore ways in which the two programs can be linked.

Moving Forward

Lessons Learned

Environment Canada's experience with Environmental Performance Agreements demonstrates that, when well designed and properly applied, such agreements can both protect the environment and improve industry's efficiency, by allowing flexibility in implementing environmental improvements according to individual business circumstances. Environment Canada has already gained some valuable experience in negotiating, developing, and implementing the five current agreements:

• Negotiating agreements with a small number of participants willing to work cooperatively with stakeholders has proven to be very effective - working with a small number of participants allows stakeholders to focus on more specific requirements than what is possible through regulatory channels.
• Partnership with associations willing to work in a voluntary manner with government can provide greater access to member companies.
• As Environment Canada continues to use Environmental Performance Agreements to encourage industry to move beyond compliance, it needs to develop incentives for participating in a voluntary program that are meaningful to industry.

Next Steps

Over the coming years, Environment Canada will use the lessons learned to continue to build stronger linkages with similar provincial programs, such as Alberta's EnviroVista Program and Ontario's Environmental Leaders Program, to ensure a coordinated and cooperative approach for complementary programs with similar goals.

Environment Canada intends to continue to promote and communicate the concept of negotiated performance agreements to other federal departments and agencies. The guiding principles and design criteria outlined in the Policy Framework for Environmental Performance Agreements are applicable to any well-designed negotiated agreement.

Environment Canada will continue to look for new ways in which Environmental Performance Agreements can be used as an effective and efficient option for managing environmental risk. This management option provides flexibility to those industries that are willing to take the concerns of outside stakeholders into consideration and commit themselves to significant and measurable environmental goals. As Environment Canada's experience with Environmental Performance Agreements grows, so will its understanding of how to use these partnerships to improve environmental performance.