Editors Introduction

Summary of papersAs the above notes on the small group discussion highlight, a number of significant challenges face researchers, practitioners and policy makers in defining sustainable management and in designing a set of institutional arrangements which can work together to achieve implementable environmental and risk management solutions. The papers in this Special Issue address some of the problems posed in the small groups. They each offer a set of promising ideas for developing programs and policies for coping with the problems of sustainability and eco-efficiency that Europe faces in the coming years.Gunnar Bengtsson's paper explores the possibility for sustainable development and the underlying value framework for sustainability. He examines these issues in the context of a value framwork suggested for priority setting in health care in Sweden. The principal features of this framework are an emphasis on human dignity, solidarity and cost-effectiveness. Bengtsson points out that one of the most important challenges for governments is to demonstrate that adherence to cost-effectiveness works in tandem with solidarity enhances the possibilities to maintain human dignity and sustainable development.Jürg Spühler's paper discusses the Green Paper on Remedying Environmental Damage which has two key points: (1) the party damaging the environment rectifies the damage caused (the polluter pays principle) and (2) the collective compensation system takes care of those cases where no identifiable agent can be held responsible for environmental damage (the social principle). He pointed out that the key element to integrating these two principles in a manner which promotes effective risk management is the insurability of the resulting risks and the implied role for the insurance industry in risk management. Against this background, the paper explores the requirements for the legal framework to assure a proper role for risk management and the insurance industry and discusses these requirements in the context of the Green Paper.Peter Zweifel's paper examines the impact that Environmental Impairment Liability (EIL) insurance has on five major policy instruments of environmental management - standards, taxes, tradable permits, tort law and capital markets.The paper's findings include the following. Standards specify maximum levels of environmental impairment and thus may help firms market insurance. However, the presence of insurance may (but need not) lower the stringency of standards. Insurance may detract from the effectiveness of internalized environmental taxes. Insurance encourages effectiveness of tradable permits by providing a hedge against price fluctuations and thus encouraging their trade. Experience rated insurance may enhance the effectiveness of tort law system. Insurance may increase the effectiveness of new financial instruments for dealing with catastrophic risks, such as the catastrophic futures options introduced on the Chicago Board of Trade.Peter Hindle's paper, with Mssrs. De Smet, White and Owens, investigates four broad areas of environmental management concern: safety of processes and products ; regulatory compliance ; efficiency and effectiveness of resource use ; and real and perceived needs of society. He describes Proctor and Gamble's (P&G) framework and priorities for these areas of concern and focuses on a set of tools, including life-cycle analysis and internal measurement systems, to implement management's priorities. The P&G framework, in its scope and detail, is a persuasive argument that sustainable management is not only compatible with the traditional economic mission of the firm. Properly integrated with business strategy, sustainable management can be a fundamental driver of business profitability.Dirk Matten's paper addresses the problems of environmental risk management from the perspective of a private company. Matten argues that the tasks of risk management go beyond conventional methods of optimizing outcomes on the basis of probability calculations. Management of environmental risk requires in his view a relationship with all relevant social groups and institutions that play a part in the management process. Based on the framework of institutional economics, Matten designs a risk management programme that integrates organizational, communicative, controlling, and auditing tools as a means of improving safety culture, to develop in-house human resources and to interact with the outside world. These management tools serve as strategies for signaling potential hazards and developing a positive image in the business world as well as in the public at large.Ulrich Müller-Herold's paper introduces a conceptual alternative to risk analysis as the basis of risk management. Risk denotes the combination of probability times magnitude of adverse effects. Conventional management strategies are designed to reduce either one of the two components. Müller-Herold argues that the precautionary principle in environmental policy making requires an approach that implies management steps at an earlier stage. His target is what he calls “endangerment”. Controlling endangerment means controlling the scope and range of the potential for damage. He develops a taxonomy of endangerment that comprises two main factors: spatial extension and persistence over time. These two factors determine the degree of endangerment regardless of their strength of destructive potential. So far the term “endangerment” lacks a well-defined quantitative meaning. Müller-Herold develops a quantitative approach and illustrates this with an example.