| Strengthening
Business Contributions to Sustainable Development in Central and Eastern
Europe.
Country Report. Hungary |
Strengthening Business Contributions to Sustainable Development in
Central and Eastern Europe.
Country Report. Hungary
Dr Vilma Eri, Dr Ferenc Laczo, Dr Ildiko Paphazi - Herczeg (Center for Environmental Studies) and Dr Judit Barta (Economic Research Institute Co.)
The paper was prepared as a part of the project "Strengthening Business Contributions to Sustainable Development in Central and Eastern Europe" supported by the Charles Stewart Mott Foundation, the Rockefeller Family Associates and in-kind contributions of the following institutions:
The survey (including 41 strategic foreign investors (SFIs), 42 environmental business sector (EBS) companies, 122 governmental organizations – within them, 111 local governments, 7 regional environmental agencies and 3 ministries with environmental responsibilities- as well as 11 financial institutions and 7 NGOs, altogether 223 organizations) shows that environmental protection and the image of “environmental friendliness” is gaining importance. Interviewed SFI and EBS companies generally regard themselves as environmentally friendly even when it is obvious that they are not. For instance the manager of a power plant that produces electricity assumed that they are environmentally friendly because electricity is a clean source of energy, therefore it is an environmentally friendly product. A tobacco company's manager also deemed 75 % of the company's products environmentally friendly because of the special filter they use for the cigarettes.
While these anecdotes indicate that the interpretation of environmentally friendly products is quite fuzzy among managers, they also indicate the prestige of being environmentally friendly. Surveyed SFI companies make regular efforts to improve their environmental performance.
Environmental quality in Hungary, on the whole, is moderately improving, at least in regard to traditional pollutants. This improving trend is acknowledged by the surveyed organizations as well. Responding governmental organizations, however, do not agree that businesses, on the whole, contributed a lot to this improvement. Rather, they attribute decreased pollution rather to other factors, like better infrastructure, legal regulations, enforcement of regulations, technological progress, increased awareness and social and foreign pressure. They ranked 'improving environmental performance of businesses' as the least positive factor influencing environmental quality, and more than 20% of them (25 governmental institutions) deemed it a negative factor.
The negative assessment of governmental organizations toward businesses does not relate to the distinguished segments of businesses investigated by the project, namely, strategic foreign investors and environmental businesses. These two groups of businesses are considered to be more environmentally friendly than the rest of industry.
An SFI, as defined for the recent research, is a category that comprises enterprises that are most likely to meet environmental standards. They are large and visible, easy to control both for environmental administration and for the public, and they have resources to deal with environmental issues. Their environmental efforts are appreciated both by environmental administration and EBS companies, organizations that control them and that provide services and products for SFI environmental projects. This relatively good reputation of SFIs, however, derives not only from the environmental projects they implement but also partly from good public relations. SFIs carefully select and filter information they issue about their environmental activities and performance - a fact that also shows the prestige of a good environmental image.
Polluting industries are particularly keen on effective “PR”. They were the first to introduce ISO 14000 or sponsor local environmental actions. These actions do not provide short-term environmental improvement. With voluntary eco-management schemes that require the integration of environmental aspects into all fields of company management and operations, however, these enterprises become prepared to meet challenges.
The challenges SFI environmental management has to meet are not particularly difficult for many of them. They have great reserves and they could perform better in case of more strict regulations.
The prestige of environmental friendliness and the consequent need for environmental services is sometimes misused by some environmental businesses - both foreign and domestic. The number of conflicts between governmental organizations and unreliable environmental businesses is surprisingly high. In theory, environmental businesses could be important cooperative partners for governmental agencies. Nevertheless, governmental organizations do not find contacts with EBS companies very fruitful. Eliminating loopholes in regulations as well as more efficient control by professional associations could speed up the process of identifying reliable companies operating at a high level of professionalism and unreliable businesses based on fraud.
Environmental improvement depends, first of all, on strict regulation and strict enforcement. SFIs and environmental businesses have a great potential to contribute to environmental improvement. All respondents, however, agree that this potential can be utilized only with consequent legislation and strict enforcement.
Enforcement has always been a weak point in environmental management in Hungary. Governmental organizations take their environmental responsibilities very seriously. They see their role as very important and complain about missing competencies. The biggest dichotomy of ambitions and capacities occurs within local governments. To fill this gap, local governments try to form new cooperations and alliances. They improve their relationships with NGOs, as well as businesses.
The survey, however, found that traditional relationships between local governments and other governmental organizations need to be improved as well. While the significance of local government environmental policy is recognized and acknowledged not only by themselves but by businesses (particularly SFIs) regional environmental agencies do not appreciate this role very much. This is probably due to a lack of information and sufficient cooperation. As the competencies of these two types of institutions compliment each other, they are bound to cooperate. Their better cooperation is a key factor to the successful enforcement and strengthening of capacity and professional standards of all related governmental organizations. Therefore, special attention should be given to
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