INTEGRATION OF ENVIRONMENTAL DISCLOSURE INTO
REGULATORY MANAGEMENT: THE CASE OF AKOBEN
ENVIRONMENTAL RATING PROGRAMME
ALLOTEY, JONATHAN1
SEKYI, RANSFORD1
FAABELUON, LAMBERT1
ERQUAYE-TETTEH, ESI NANA1
AFFULL, HARON HARRISON1
SARFO-AFRIYIE, YAW1
FOROCCO, SAEED1
AFSAH, SHAKEB2
1
AKOBEN Team, Environmental Protection Agency (EPA), P Box M326 Accra,
Ghana ,www.epaghanaakoben.org/
2
Environmental Rating & Disclosure Specialist, Performeks LLC, Bethesda,
Maryland, US,www.performeks.com
SUMMARY
On November 24, 2011 the Government of Ghana’s Environmental
Protection Agency (EPA) launched an environmental rating and disclosure
initiative called the AKOBEN program. This marked a new trend in
environmental transparency and it redefined the regulatory management model at
Ghana’s EPA. Now along with the environmental impact assessment (EIA) law
and the legal compliance system, the AKOBEN program created additional
compliance incentives by leveraging the power of communities and the media
through disclosure of environmental rating of companies. Under the AKOBEN
program, each participating company received a color code—Gold for excellent,
Green for very good, Blue for good, Orange for unsatisfactory and Red for poor.
These colors are then disclosed to the public through a formal media event. In this
paper we describe the evolution of the AKOBEN program and the preliminary
results on how the companies in the mining and manufacturing sectors have
started to improve their environmental performance. The experience of Ghana
shows that the color-code format for evaluating and rating environmental
performance of companies is an effective approach. It is recommended for
consideration and adoption by other countries in Africa.
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INTRODUCTION
Since the fall of totalitarian regimes in the 1990s, a wave of
democratization has swept across the globe. This has been aided by the spread of
information communication technologies which has brought the world closer.
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This resulted to openness, transparency in the governance of nations, institutions
and organizations and also at local, national, regional and global levels. This trend
has resulted with the public demanding accountability and involvement in
governance. The management of the environment has not been left out (Afsah,
Laplante and Wheeler 1996).
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BACKGROUND
In Ghana efforts at environmental regulation begun with the establishment
of the Environmental Protection Council in 1974, two years after the first United
Nations Conference on the Human Environment. This Council was primarily an
advisory and research organization. It had no power to enforce any measure for
improving the environment or preventing damage to the environment.
A first attempt to institute the environmental impact assessment system
was unsuccessful as it was feared that it will slow down development. However
when the Economic Recovery Programme was launched in 1983, the economy
was in decline due to the combined effects of poor weather, institutional rigidities,
inappropriate economic policies and internal and external shocks. The Economic
Recovery Programme resulted in a positive growth but not without social and
environmental cost. This led to a recognition that the sustainability of economic
and social development depends on proper and responsible management of the
natural resource base and the environment.
The Government therefore directed that EIA should be applied to some key
sectors in 1989. Prior to this in March 1988, the Government of Ghana initiated a
major effort to put environmental issues on the priority agenda through the
preparation of the National Environmental Action Plan. The Plan called for the
urgent restructuring of the Environmental Protection Council with necessary
political backing as well as minimum level of enforcement powers to enable it
carry the additional responsibilities. This call led to the transformation of the
Environmental Protection Council to the Environmental Protection Agency (EPA)
in 1994 with regulatory powers.
The EPA put in place an EIA system which required that all new
development activities go through the EIA process and secure environmental
permits before start of operations. Also all existing undertakings were to prepare
environmental management plans. With these instruments in place, it was
incumbent to ensure that the regulations are enforced and complied with. With the
passage of the Environmental Assessment Regulations, LI 1652 in 1999, the EPA
considered environmental disclosure as a possible policy tool. This would make
the EIA system comprehensive with a component to ensure that commitments
made by developers enforceable. However in developing countries strict
enforcing of rules can have serious social and economic costs thus trade-offs have
to be accepted to achieve environmental objectives. These considerations in
addition to the provisions in the National Environment Policy informed the type
of disclosure-with-enforcement regime to adopt. One of the aims of the National
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Environment Policy is to put in place appropriate incentives and sanctions to
ensure compliance and enforcement of regulations. It was also guided by the
following principles of the National Environment Policy:
“Use of the most cost effective means to achieve environmental
objectives, use of incentives in addition to regulatory measures and
public participation in environmental decision-making.”
Building on the principles of public participation mandated by the National
Environmental Policy, Ghana’s EPA created the AKOBEN programme, an
environmental performance rating and disclosure. The history of EPA’s effort to
launch an environmental disclosure is shown below.
Figure 1: Implementation History of AKOBEN Program
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ORIGIN OF THE AKOBEN PROGRAM
The name of the environmental rating program—AKOBEN—has its roots
in Ghana’s tradition of Adinkra symbols and it stands for vigilance and
wariness—a set of behavior that is pertinent for the issue of environmental
conservation. AKOBEN also signifies alertness and readiness to serve a good
cause.
AKOBEN program has strong Ghanaian roots and its rating methodology
is tailored to reflect Ghana’s environmental values. It is for this reason that the
AKOBEN program encompasses both physical and human environment in the
rating methodology.
AKOBEN program recognizes that the environmental rating and
disclosure initiative was first introduced in 1995 in Indonesia through its
PROPER program—Program for Pollution Control Evaluation and Rating (World
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Bank 1995). But AKOBEN program’s rating methodology for the mining and
manufacturing sectors have many unique elements, and it reflects the state-of-theart in corporate social responsibility assessment. For this reason AKOBEN
program is an important contribution to the ongoing international effort in the
field of environmental rating and public disclosure.
The AKOBEN rating methodology incorporates the national regulatory
performance goals as well as the traditional community relationship aspects that
are unique to Ghana. At the same time, it also incorporates the practically feasible
aspects of environmental and social performance guidelines of the various
international organizations including the World Bank and the IFC (IFC.org),
Global Reporting Initiative (GRI) (GlobalReporting.org), PROPER-Indonesia,
Australian and World Health Organizations guidelines.
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CONCEPTUAL FRAMEWORK OF THE AKOBEN RATING
METHODOLOGY
Traditionally an analysis of environmental performance is limited to the
assessment of whether or not a quantitative value of an environmental parameter
has exceeded its numerical standards. At other times, regulators check if a
business site has followed the procedural requirements related to permits and
reporting. These approaches are useful but they fail to adequately capture some of
the new concepts of environmental performance that include corporate social
responsibility, voluntary over-compliance and other non-regulatory environmental
objectives. In short, a simple “In Compliance/Not in Compliance” type of
assessment is too limited to provide a comprehensive picture of the complex
environmental and ecological conditions one typically finds at mining and
manufacturing sites.
Therefore, the AKOBEN rating methodology uses an approach that
reflects the modern concepts of corporate environmental and social performance
including ideas such as community relationships, public participation, conflict
resolution and continual improvement. AKOBEN’s rating methodology maps
environmental performance of companies into five color codes that is easy to
communicate to the general public. Further, this rating methodology uses
quantitative, qualitative and visual information to comprehensively evaluate the
environmental performance of each company.
AKOBEN aims to strengthen both transparency and public awareness. It
also aims to address one of the difficult and most challenging areas of impact
assessment—the issue of follow-up and monitoring when projects become
operational after the completion of environmental impact assessment (EIA).
Therefore, AKOBEN would serve as the key connector between EIAs and
operational environmental performance.
AKOBEN’s approach to environmental performance measurement is
designed to be practical, and it also aims to minimize the use of controversial or
vague indicators. Though the existing literature on environmental and social
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performance measurement is filled with innumerable ideas and concepts,
AKOBEN’s rating system has narrowed it down to only those performance
indicators that can be measured, verified and validated by a third party. Further,
the focus of the rating system is on environmental outcomes that indicate various
levels of environmental and health risks, the probability of restoration of
environmental conditions in the long-term, and the quality of corporate
commitment to social issues.
Using these principles, the AKOBEN rating system maps the
environmental performance of companies using a five-color rating scheme. These
color categories represent five specific levels of environmental performance as
described in Table 1. BLUE, ORANGE and RED ratings pertain to regulatory
compliance only, and accordingly these colors indicate the performance of a
company relative to the mandatory national regulatory requirements related to
environmental issues and the reclamation bond (applies to mining companies
only). In comparison, the GOLD and the GREEN ratings indicate performance on
non-regulatory aspects including the quality of social and community actions
undertaken by companies to further enhance its environmental and social
performance (Afsah and Damayanti.
TABLE 1: Description of AKOBEN Colors
Rating Level
Guiding Principles for AKOBEN Rating
GOLD
GREEN + company follows its corporate social
responsibility policies
GREEN
BLUE + adopts voluntary initiatives and is responsive to
public complaints
BLUE
Adequate compliance with environmental standards and
reclamation bond criteria (for mining only)
ORANGE
Exceedance of regulatory standards for non-toxics, weak
environmental monitoring, and incomplete fulfillment of
reclamation bond criteria.
RED
Failed to follow environmental regulations (LI 1652),
shows pattern of chronic exceedance, and creates risks
from toxics and hazardous wastes mismanagement and
discharges.
The highest level of performance—a GOLD rating—goes beyond the
requirements of formal regulations and it signifies that a company applies
international best practices and properly follows its corporate social responsibility
policies. In contrast, the worst possible rating a company could get is a RED
rating which is assigned to those businesses that do not have a valid permit or
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certificate as per an environmental management plan as outlined in the
Environmental Assessment Regulation LI 1652, which is Ghana’s principal
environmental assessment law. A company could also get a RED rating if its
discharges and waste management practices cause serious risk to physical or
human environments.
The three intermediate rating categories are GREEN, BLUE and
ORANGE. The GREEN rating signifies that a site has excellent environmental
compliance, it applies best practices and is responsive to public complaints, but
there is room for improvement regarding the implementation of its environment
and social responsibility policies. A BLUE rating is also sign of good
environmental performance showing that a company has complied with the
mandatory environmental regulatory requirements and fulfilled the conditions of
the reclamation bond. Failures to meet the operational regulatory requirements
related to environmental emissions and ambient quality, and the reclamation bond
(applies to mining only) could demote a company to an ORANGE—an
unsatisfactory rating. And if the violations are severe and create a credible risk of
damage to the environment or the human health, the environmental performance
of a company could be downgraded to a RED level, which indicates a poor
environmental performance.
4.1
How does AKOBEN Handle the Issue of Environmental Complaints
Environmental related complaints, as described solely for the AKOBEN
Program, include the following complaints that:
1. are operation related and do hamper the welfare of the communities in the
proximity of the project area.
2. affect water resources of the communities in the catchment area of the
project.
3. affect the ambient air quality due to dust and noise.
Non-environmental complaints are those that may be related to crop
compensation, land ownership issues among others, and other resettlement related
issues specifically for mining companies.
Environmental complaints are integral part of the concept of community
monitoring of mining and manufacturing operations, and it complements EPA’s
regulatory inspections in important ways (Dasgupta and Wheeler 1997). Since it
is not feasible for EPA to continually monitor on-site environmental discharges
and emissions, local communities are important sources of information for
regulators. AKOBEN’s rating methodology therefore assigns considerable
importance to environmental complaints received from the public, and views this
channel for equalizing a situation of asymmetric information between companies
and regulators.
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However, AKOBEN’s rating methodology also recognizes that
environmental complaints are not always automatically valid. Given the
complexities of the relationship between companies and its neighboring
communities, it is important to screen out frivolous complaints from the genuine
ones. For this reason, the management of environmental complaints is a complex
matter that needs to be handled with care. Otherwise it is possible that a normally
manageable complaint can easily escalate into a costly confrontation between
communities and companies. AKOBEN’s rating methodology aims to discourage
such a situation from occurring, but at the same time it gives due credence to
legitimate environmental complaints.
A company needs a good overall complaints management policy and
tracking system to effectively manage the environmental complaints it receives.
Accordingly, AKOBEN assesses the overall commitment and the policy of a
company towards community complaints. But AKOBEN methodology recognizes
that it is not sufficient to just have Standard Operating Procedure (SOP) for
complaints management because the final outcome depends on how well the
written policies are implemented.
AKOBEN also recognizes that companies that are responsive to public
complaints may attract more complaints compared to those that are comparatively
less responsive. Therefore, the focus of evaluation for AKOBEN would be on the
level of responsiveness and successful closure of complaints rather than just the
volume of complaints. The evaluation would also take into consideration the longterm trend of company behavior. And finally, specific incidents of unusual public
complaints would be evaluated on a case specific basis by the AKOBEN team.
Evaluation of environmental complaints also includes the process of
authentication by EPA inspectors. The verification process would include field
visits, discussions with communities and companies, and if deemed necessary
even samples would be collected for technical review and analysis.
To enable the EPA inspectors to conduct a proper review of environmental
complaints, companies are required to maintain a comprehensive record of all
complaints and their responses. This information would be checked during the
AKOBEN audit of companies.
4.2
Assessment of Corporate Social Responsibility Actions of Companies
AKOBEN rating methodology encompasses the concept of social
performance of companies also. However, unlike environmental performance that
can be quantified through technical and scientific measurements, social
performance cannot be measured and expressed in such numerical terms. It is a
real challenge to evaluate the quality of social performance of companies because
there are no quantitative regulatory standards for social performance.
Nevertheless, social performance is the highest ranking rating criteria in the
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AKOBEN program as it ultimately determines whether or not a company would
get a GOLD rating.
To evaluate the social responsibility actions of companies, AKOBEN
rating methodology does not impose any mandatory performance standards on
companies. Instead it has selected to assess performance of companies solely on
the basis of how well each company implements its own corporate social
responsibility policy. In other words, each company would be held accountable
only on the basis of the policies its corporate headquarters has mandated.
Accordingly, the assessment of social performance of a company would include
three aspects. These are (1) intent of the company towards social issues, (2)
expression of intent through a comprehensive social policy, and (3) the actions it
undertakes in accordance with its CSR policy.
To conduct this evaluation the AKOBEN team of EPA would collect each
company’s corporate social responsibility policy and review it to develop a
checklist of resource commitments, and community development projects and
activities that its policy recommends and has implemented during the year of
AKOBEN review. Each company’s checklist would be evaluated against the
actual community development activities observed at the site of business
operations. Based on this evaluation, AKOBEN team would assess the
qualifications for a GOLD rating. Since such an evaluation is expected to be very
detailed and labor intensive, only those companies that have cleared the criteria
for the GREEN rating would be subjected to the GOLD level review.
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DATA COLLECTION AND QUALITY ISSUES
AKOBEN rating methodology is a data intensive system, and therefore
complete and reliable data are critical requirements. There are three sources of
data for AKOBEN rating. First, the bulk of the data would be compiled from the
monthly monitoring reports that each company is required to regularly submit to
EPA. Second, the data collected through site-level inspections would also be used
for ratings analysis. And finally, AKOBEN team would conduct field audits to
collect the information that are not reported in the regular monthly reports.
The quantitative information on environmental parameters would be analyzed by
a computer model that uses various statistical tools to check the accuracy,
completeness and trends in the data, and compute the level of compliance at the
site of business operations. All the qualitative information would be converted
into a score and supported by proper documentation to justify the evaluation.
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APPLICABLE STANDARDS FOR WATER AND AIR QUALITY
For the purposes of the rating, AKOBEN would apply EPA’s Sector
Specific Effluent Quality and Air Quality Guidelines, and where appropriate,
guidelines from international institutions (e.g. WHO,WB/IFC) would also be
applied.
Furthermore the standards and or guidelines will apply to sampling
locations that are specified in each company’s Environmental Management Plan
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Therefore, it is critical that each Plan specify all the monitoring points, its
appropriate category (compliance, surveillance or reference point) and the
applicable regulation and standards. On a case specific basis, other standards
could also be applied.
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AKOBEN RATING REPORTS
An important goal of the AKOBEN program is to create incentive for
environmental improvement through information. One aspect of this
informational incentive is the improved understanding of environmental
performance that the AKOBEN program is expected to create for companies. As
part of the AKOBEN program, each company would receive a comprehensive
ratings report from EPA. This report would clearly show where performance is
strong and where there are gaps. The ratings report would also provide clear
guidance on where a company needs to make improvements in the future.
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DISCLOSURE OF RESULTSAKOBEN would follow a twostep procedure for disclosing the results of AKOBEN rating to the public and the
media. As a first step, AKOBEN would privately share the results of the ratings
with companies. If there is any disputable issue, the company should inform the
AKOBEN team in writing. Upon receiving the feedback, AKOBEN would review
the ratings and resend the results to the company. The final ratings would be
disclosed to the public on World Environment Day every year.
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DISPUTE RESOLUTIONAKOBEN program is aimed to be a
collaborative effort between EPA and companies. While EPA would strictly apply
the regulatory standards to evaluate the ratings of mining and manufacturing
companies, it would also recognize their social and community development
efforts. With such an approach, EPA aims to strengthen the environmental and
social performance incentives for companies, and at the same time improve public
awareness.
But AKOBEN’s rating system is a complex process which requires multidimensional data and information, and it is likely that sometimes there could be a
difference of opinion with companies. Therefore, AKOBEN’s disclosure strategy
follows a two-step procedure that would allow for any differences to be discussed
and resolved. If required, EPA would conduct fresh data collection and field
visits, and also provide documentary and analytical evidence to explain the basis
of its evaluation.
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AKOBEN LAUNCH AND RESULT
The AKOBEN program was successfully launched and inaugurated by the
Office of the Vice President of the Government of Ghana and the Minister of
Environment, Science and Technology. Speaking at the function, Hon. Sherry
Ayittey, Minister for the Environment, Science and Technology, said the
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AKOBEN initiative symbolizes government’s resolve to tackle the challenges of
environmental degradation and natural resource management through
transparency, disclosure, public awareness creation and community participation.
In the first round of ratings, eleven mining companies and 49
manufacturing enterprises were rated. No company received a BLUE or better
rating, showing that all the companies had at least one or more compliance
violations. As shown in Figure 2, nearly two thirds of the sixty companies from
mining and manufacturing sector had serious environmental violations as
measured by the RED rating. Why is figure 3 first on the page?
Additional analysis showed that regarding the compliance with legal
requirements, mining companies had better baseline performance compared to
their peers in the manufacturing (Figure 3).I DO NOT UNDERSTAND THIS
73% for mining is not better than 63% for manufacturing???
Figure 3: Ratings of Companies
Figure 2: Compliance with Legal Requirements
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In the area of environmental best practices, the mining sector
outperformed the manufacturing sector (Figure 4). However, in the area of
hazardous waste management, the mining sector clearly lags behind the
manufacturing sector, highlighting the challenge of toxics and hazardous waste
management at mining sites (Figure 5).
The AKOBEN program has also had measurable improvements on the site
level monitoring. As shown in Figure 6, both the mining and manufacturing
sectors show a trend of continual improvement in their effort to sample, test and
report monthly monitoring results to the EPA.
Figure 4: Best Practices Adoption
Figure 5: Hazardous waste Management
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Figure 6: Environmental Monitoring and Reporting Trend
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CONCLUSIONS
This paper describes the implementation history of Ghana’s AKOBEN
environmental rating and disclosure program. It shows that it took more than ten
years to fully develop this environmental transparency initiative starting from just
an idea in 1999, to pilot tests and ultimately to a full-fledged regulatory program
in 2011. Initial results and feedback from companies show that disclosure is an
effective environmental enforcement tool. It works outside the formal court
system through reputational incentives and community and media pressure to
motivate firms to comply with environmental regulations. Additionally, the
experience of Ghana shows that the color-code format for evaluating and rating
environmental performance of companies is an effective approach. It is
recommended for consideration and adoption by other countries in Africa.
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BIBLIOGRAPHY
Afsah, S., Laplante, B. and Wheeler, D., 1997 “Regulation in the Information
Age: Indonesia’s Program for Environmental Management”, World Bank
Dasgupta, S, and Wheeler, D., 1997, “Citizen Complaints as Environmental
Indicators: Evidence from China”, Policy Research Working Paper # 1704, World
Bank
GRI Guidelines,
http://www.globalreporting.org/ReportingFramework/G31Guidelines/
IFC/World Bank Guidelines,
http://www.ifc.org/ifcext/sustainability.nsf/Content/EHSGuidelines
PROPER Program Indonesia,
http://www.menlh.go.id/proper/proper%20baru/Eng-Index.html
World Bank, 1995, “What is PROPER? Reputational Incentives for Pollution
Control”, Technical Documentation
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