Document(s) 6 of 15

South Africa in the mid-1990s faces urgent questions: How to address the severe inequalities that developed under apartheid? How to build a stable democracy in the face of enormous unemployment and widespread poverty? How to adjust to the new context of declining tariffs, increased competition and fiscal restraint? How to develop the manufacturing sector in the face of declining mineral wealth? And how—although this question is less often asked—to address the environmental degradation that resulted from apartheid and ensure that the path of development is sustainable from an environmental point of view?

This book sets out to explore the place of the environment in South Africa’s industrial development. The issues we confront are at the confluence of debates on industrial and environmental policy. In the South African context surprisingly little has been written on the environmental management of industry at a macro-level. Work has been done on the management of particular processes, on some of the legal issues, on pollution problems in certain sectors and on (real and imagined) conflicts between environment and development. But relatively little attention has been given to the environmental issues facing the industrial sector as a whole, and to the dilemmas facing policymakers in this regard. We set out to enrich this debate by focusing on the linkages between industry and environment.

In so doing we also want to address the linkages between trade unions and environmental issues. Some debate has taken place on the capacity of South African trade unions to engage in environmental struggles, and the appropriateness of them doing so. We explore this issue further and focus specifically on the linkages between environmental management and health and safety management, as well as the relationship between labour’s economic concerns and environmental development.

This book is the result of a study on labour, industry and environment which was conducted by the Industrial Strategy Project (ISP). The idea for the study arose from earlier work done by the ISP on South African industry. In the early 1990s, the ISP began research on South African industry which resulted in the publication of eight sectoral studies and a synthesis volume tackling the generic and macro-issues in industrial policy. Much was learned during that research, including a conception of how to characterise South Africa’s industrial development and how to begin to address problems, including the balance of payments constraint, low productivity growth, poor technological development and low levels of human resource development. But what became clear during the research is that an analysis of South African industry was incomplete without an understanding of the environmental possibilities and constraints facing it. We, therefore, embarked on this study.

One of our assumptions in this study is the idea that industry is dependent both on natural resources and on the capacity of the environment to accommodate the waste which it generates. The sustained development of industry is, therefore, dependent on the continued existence of these source and sink functions of the natural environment. This analysis was the starting point for considering how industrial strategy could incorporate these concerns into its hitherto narrower focus on economic and industrial growth and development.

Beyond the industrial sector our economy and society as a whole is merely a subset of the larger world ecosystem. The sustainable management, and protection where necessary, of natural resources is, therefore, not only about sustaining the basis for production but also about sustaining our place in the world. The question of the intrinsic value of the existence of environmental resources is an issue which needs to be considered alongside debates about future industrial strategy, and has begun to be raised in this research project.

An environmental characterisation of the economy

The South African economy has been analysed and critiqued in a number of ways: low productivity, poor international competitiveness, unequal distribution of income, overconcentration and other structural problems impeding sustained economic growth and human development. However, there has as yet been no overall analysis of the environmental sustainability of the economy. This is a source of concern—a rough and ready analysis of the economy points to some worrying structural problems in this regard.

From an environmental point of view one could say that three factors characterise the economy:

• it is highly reliant on a number of energy-intensive sectors dependent on low electricity prices;
  
  
• it has a set of old capital stock due to South Africa’s relative absence from the world economy and low levels of foreign investment in the 1980s; and
  
  
• primary non-renewable resource extraction and associated industries, essentially mining and minerals processing, provide a major, albeit declining in parts, proportion of gross domestic product (GDP), exports and employment.

This characterisation is one that has been included in earlier industrial policy analyses, but what does it mean from a sustainable development perspective? Firstly, South Africa’s coal-based electricity generation, in combination with high energy intensity, makes it the third-highest producer of greenhouse gases in the world relative to GDP (Worldwatch Institute 1996). South Africa’s power stations are not fitted with desulphurisation or denitri-fication equipment, leading to high levels of sulphur dioxide (SOj) and nitrogen oxides (NO_x) emissions which contribute to acidic deposition and health risks. At the same time Eskom has committed itself to becoming the world’s lowest-cost electricity producer, with many large-scale industries dependent on a continued supply of cheap electricity.

Old capital stock means that clean technology innovations are not widespread throughout the industrial economy. Production processes with low pollution per output levels and high materials and energy efficiency are not widespread in the manufacturing sector, nor are facilities for waste exchange and recycling. Our levels of waste production are very high, particularly in those same primary and secondary sectors on which the economy is so dependent: gold and coalmining, and minerals and metals processing, as well as in certain other key manufacturing sectors such as chemicals production. Apart from waste production the mining sector generates enormous environmental impacts, particularly in certain regions of the country. Air pollution, destruction of arable land and natural areas, water pollution and huge health and safety impacts are all associated with this sector of the economy.

At the same time South Africa is dependent on renewable resource sector production for employment and subsistence farming. This makes the country dependent on soil and water quality and on sustainable natural resource management, and highly vulnerable to shocks to these resources or to declines in their quality.

Associated with these structural problems are a weak regulatory framework for environmental control and management, with inadequately resourced and empowered environmental regulatory institutions. There is also evidence of weak social and economic pressures for a greater emphasis on environmentally sustainable development. There seem to be weak market incentives for improved environmental performance, with relatively low levels of consumer awareness and activism. Civil society and trade union actions have had some significant impacts, but generally on a very localised scale. And during the apartheid years, South Africa’s relative isolation temporarily shielded the industrial sector from some of the international pressures for environmental improvement.

Although the details of South Africa’s environmental problems are specific to our country, the problems are not unique. The challenge of Agenda 21, the manifesto arising from the United Nations Conference on Environment and Development (1992), “to improve production systems through technologies and processes that utilize resources more efficiently and at the same time produce less wastes—achieving more with less...”, is a challenge facing the world’s developed and developing economies.

The challenge of sustainable development

For a number of decades there have been warnings that the scale of human activity could exceed the capacity of the earth’s natural systems to sustain them. These warnings initially came from academics and researchers, but now are being raised by far broader sectors of our society. As Postel (1994) points out, this may well be because signs of environmental constraints are now pervasive. In South Africa grasslands have been overgrazed and fisheries overexploited. Water resources are overstretched and polluted, and South Africans are having to extend further and further afield for future supplies. Similar problems apply to our soil resources and to atmospheric conditions.

It is, therefore, necessary to consider the changes needed to avoid crashing into these environmental barriers. Ultimately, our economy will have to fit within its natural limits and be constructed in such a way as to be automatically constrained by those limits. Given that this is a medium to long-term challenge to the world economy, more immediate ways need to be found to “lighten the load” (Postel 1994) on the earth so as to provide some time for this change, at the same time as paving the way for it. Postel refers to World Bank economist Herman Daly’s analogy of the Plimsoll line on a ship. As the ship is more and more heavily loaded it will settle lower into the water, which will eventually reach the level of this line. The Plimsoll line indicates the point at which the ship becomes dangerously overloaded. Indications are that the environmental resources of the world may be nearing this critical mark.

The South African playwright and comedian Pieter-Dirk Uys described the desperate manoeuvres of the government in the dying days of apartheid as “rearranging the deck-chairs on the Titanic”. The same can be said about Daly’s example—moving the items around on the ship will not help either; what needs to be found are strategies to lighten the burden. This “lightening of the load” is the broad immediate challenge to the global economy and is the context for our approach in this book. There are a number of major issues in this regard, including inequitable distribution of income, rapid population growth and resource-consuming economic expansion.

In the South African context, the first of these challenges is a cornerstone of the government’s economic and development policy, and the second is also receiving attention. It is the third challenge that is inadequately understood and to which we hope to direct economic and industrial policymakers’ attention.

The challenge of resource-consuming economic expansion cannot be met in South Africa by an opposition to economic growth per se. Growth is clearly a prerequisite for the reconstruction and development of post-apartheid South Africa. Rather, we need to focus attention on the nature of this economic expansion. We need to build an approach to human and economic development which includes a more deeply considered and appropriate use of technology, and which has environmental and natural resource issues as a cornerstone.

Such an approach must be supported by an improved system of environmental management—integrating company-level management, government regulation and new partnerships with labour and civil society into an effective system. As the chapters of this book show, changing the approach to economic development in South Africa, and the environmental management of it, will be a complex and difficult process. It is possibly a more manageable challenge if one sees it as a process with an end-point of sustainable development rather than an immediate and wholesale about-turn.

The broad medium-term elements of this process will probably include defining methods for internalising the environmental costs of production, building indicators of progress towards sustainable development into both firm-level and national-level accounts and developing new and innovative approaches to industrial production (such as closed-cycle processes). In the long-term, however, changed attitudes to consumption, consumerism and lifestyles must be seen as part of a longer-term reorientation of economic patterns.

A sustainable development path for South African industry?

The central issue that we confront in this volume is how to shift industry onto a more sustainable path of development. Such a path would take greater account of the use of natural resources which either serve as inputs to industry or receive its waste. The key question is what kinds of public policies would encourage industries to take greater account of their short and long-term effects on the environment and to constantly improve their environmental performance, and how to accomplish this in the context sketched above of relatively weak pressures from the local consumer market and public groups.

The approach we take is one of recognising that there are a number of important factors in industrial environmental management which need to be harmonised. The first set of questions this raises concerns the proper approach to regulation by public authorities. How do public authorities provide the right context for industry? How do they act in a determined yet innovative way? Can they cooperate with industry and take a partnership approach but still, where necessary, wield a big stick?

The second important question is the role of domestic and international markets in providing the incentives for environmental innovation and continuous upgrading. Linked to the market is the role of civil society, environmental groups, trade unions, political parties and consumer movements in shaping what the market demands. The third question concerns the critical role of industrial managers who control the very processes of industrial production. They make the key decisions on environmental investments, on techniques of production and on waste disposal. They know their workplaces better than anyone else and are the most likely source of innovation if they are sufficiently interested in their environmental impact. At stake for industrial managers as a group is the acceptability of their products to the market, their risk of liability, their public image, the long-term sustainability of the resources on which they depend and the quality of their environment. Linked to this is the role of workers and their trade unions. Workers are intimately involved in production, in the disposal of waste and in the transport of hazardous substances. At stake for them is their health, the security of their jobs, the environment in which their communities live and the development of the local economy.

How can these factors be knitted together by public policy? How can the law be laid down effectively to provide a baseline of protection for the environment, the public and the health of workers? How do we move beyond the legal and regulatory approach towards an effective partnership with industry? How do we inspire managers and provide incentives for them to continuously improve the environmental impact of the activities they control? How do we empower workers and their unions to protect their own health effectively and become “champions for the environment”? (Whyte 1995: 27)

How does this volume begin to answer these questions?

This book is an attempt to begin to answer these questions. It starts out by exploring macro-level issues that affect all industries and then moves on to case study material. The more generic issues covered are environmental legislation, energy supply, the environmental aspects of trade and environmental information systems. We then look at the role of organised labour in environmental management and at case studies in the chemical industry and the small and medium-sized sector. We conclude with a discussion of the implications of this work for environmental policy in South Africa.

Chapter 1 sets out the current legislative and regulatory framework which governs industry’s environmental impact. In this piece Lazarus, Currie and Short argue that there are a number of key problems with environmental legislation. The environmental legislation which governs industry should achieve two key outcomes: it should protect the environment in an ongoing manner and it should facilitate investment where that investment is environmentally appropriate. At present the lack of suitable legislation and regulatory capacity leads to the worst of both worlds—in many cases investment is impeded by uncertainty and conflict over environmental impact and, yet, in many others, the environment is inadequately protected. Legislative change is required, including a proper framework for incorporating environmental impact assessments into the process of industrial planning. Greater regulatory capacity is also needed, and this is addressed here and in a number of other chapters.

Chapter 2 is a condensed version of a longer study written for the ISP. In the study Van Horen argues that while South Africa’s extremely low electricity price is a key source of comparative advantage for sections of industry, the price does not accurately reflect the social and environmental costs that are incurred in its production. In the dominant, coal-fired segment of electricity supply, externalities include injuries and mortalities in coalmining, the local health effects of particulate and other emissions and the global effects of carbon and other greenhouse gases. Using an internationally established methodology, Van Horen estimates these costs and calculates their potential impact on the electricity price. In so doing, he argues that it may not be appropriate to try to realise all of these costs in the electricity price itself, but that the hidden costs need to be understood, calculated and, where possible, ameliorated.

Chapters 3 and 4 address aspects of trade and environment. In Chapter 3, Bethlehem argues that international environmental pressures are beginning to be felt by South African exporters. Most of these pressures are market-based and are ultimately driven by consumer concerns and activism in the North. Others arise from environmental regulations and international environmental agreements. So far, most exporters seem able to adapt to the new requirements but there are cases where companies lack the investment capital and/or the information required to respond appropriately to international pressures. In Chapter 4 Gibson and Van Seventer make a case for a locally led programme of environmental reform. Using a dynamic general equilibrium model they calculate the overall costs to the economy that would be incurred if South Africa were forced by outside pressure to suddenly reduce emissions of certain substances. The modelling exercise shows that if, in order to achieve these reductions, the economy would be forced to contract in key industries where such emissions were produced, there would be a strong negative impact on output, employment and exports. Although Bethlehem concludes that current international pressures are not likely to result in strong, sudden target-based pressures being applied to South Africa in the short-term, and although elements of their modelling exercise are hypothetical, the lessons of Gibson and Van Seventer’s modelling exercise are nevertheless profound. Variables, which can be adjusted in the model, cannot easily be adjusted in the real world. For example, an absolute reduction in carbon dioxide (CO₂) emissions in the electricity sector would require a shift away from coal, which is unviable in the foreseeable future. Despite the hypothetical nature of the exercise, it is useful because it paints conceptual scenarios and begins to integrate environmental and economic data. In particular, the work underscores the need for locally led, long-term programmes of improvement in industry’s environmental performance and for macro-level tracking of the effects of environmental pressures on the economy.

Chapter 5 examines the question of environmental information. Goldblatt shows that a number of countries trace industrial emissions to the environment by establishing pollution registers or similar listings of emissions. Regulations require that companies submit information on their emissions of listed substances and these are recorded in a publicly available inventory. This information makes the management of pollution more manageable and empowers communities by allowing them to trace what substances are being released into their local environments. This allows for better interventions to planning, health care and a number of other public processes. Goldblatt explores the possibilities and implications of establishing such a system in South Africa and argues for its consideration by the environmental authorities.

Chapter 6 looks at the environmental management of small, medium and micro-sized enterprises (SMMEs). Coleman notes that South Africa’s new government is strongly encouraging the development of this sector and is providing various forms of support for emerging business. One problem with this is that SMMEs are generally poorly equipped to manage their environmental impact. They often lack the knowledge, skills, equipment and management systems that are required to control their environmental impact in general and their waste in particular. They are also, generally, under far less public pressure than the large companies, and they get less attention from regulatory authorities. Yet, the growth of this sector is critical to the expansion of employment and to considerations of equity and innovation. How, then, can the public authorities assist small businesses to upgrade their environmental capacities and to regulate their impact effectively? In considering these questions Coleman looks at SMMEs in the Western Cape that are involved in automotive servicing. She traces their difficulties with various environmental problems, including the disposal of hazardous waste and the protection of workers’ health. She concludes with a number of suggestions which can be taken up by government, including the provision of collective waste management facilities, improvements to regulatory frameworks and environmental capacity support for managers in small firms.

Chapters 7 and 8 deal with the process of environmental management at the workplace and, particularly, with the role of trade unions. Chapter 7 examines the role of trade unions directly. Magane, Miller, Goldblatt and Bethlehem start off by evaluating the role that progressive trade unions have played in influencing health and safety policy and practices and, more recently, environmental concerns. They argue that the unions have had an important influence on the direction of health and safety legislation and policy, but that their capacity to help implement better policies in the factories is uneven. Some unions have played a strong role in health and safety management, and this has been especially so in the mining and chemical sectors. Many other unions have, however, lacked this capacity and most unions are limited in their ability to make detailed, technical interventions on the factory floor. Where unions enjoy this capacity it is often strongest on the safety side rather than on the longer-term and less obvious health impacts. On the environmental side, unions’ involvement has grown in recent years. Various unions have played an important role in local struggles, as well as in the national policy debates. However, environmental issues are less squarely on union agendas than health and safety ones, and the links are not always obvious. While it is not appropriate for South African unions to try to make environmental issues their raison d’etre, there is important work to be done to strengthen their environmental capacity and, especially, to empower shop stewards to represent members’ health, safety and environmental rights.

Chapter 8 traces the history of the environmental conflict at Thor Chemicals, a company based in KwaZulu-Natal. This case study was chosen because of the high profile it has acquired in environmental debates and because of the lessons it can teach us about environmental regulation. Butler sets out to ask why such a dramatic violation of environmental and health and safety protection was able to occur. What is it about South Africa’s environmental regulatory system that allowed a situation to develop which ultimately resulted in workers losing their lives, and in severe damage to the water and soil resources in the area? And what about South Africa’s legislation resulted in such small fines being paid by the company once the case had been tried? The study also raises important questions about the place of trade unions in the management of health, safety and environment, and their role in environmental alliances. The lessons that Butler draws include the need to improve the role of regulatory officers in the civil service and to re-examine the judicial capacity to enforce environmental legislation.

In the Conclusion we focus on the policy changes that are suggested in this volume. We argue that there are indications that important aspects of South Africa’s industrial path are unsustainable and that our development imperatives call for a shift in the environmental management of industry. The important question is: what are the levers that can be used to shift industry and improve its performance? Here we focus on the question of appropriate forms of regulation as well as active environmental partnerships between business, government and trade unions. We look at various mechanisms including legislative change, sectoral target-setting, more integrated forms of environmental inspection, more proactive reporting requirements and ways of supporting environmental innovation. We conclude with some specific recommendations.

References

Postel, S., “Carrying capacity: earth’s bottom line”, in Brown, L. et al (eds), State of the World 1994, Worldwatch Institute, Earthscan, London, 1994.

Whyte, A. (ed.), The environment, reconstruction and development in South Africa, International Development Research Centre, Ottawa, 1995.

Worldwatch Institute, cited in The Sunday Independent, 14 January 1996.

United Nations Conference on Environment and Development, Agenda 21, United Nations, Rio de Janeiro, 1992.

Document(s) 6 of 15