Stockholm, 23 April 2001

European Consultative Forum on the Environment and Sustainable Development:
TOWARDS A SUSTAINABLE EUROPE IN A GLOBAL

Measuring sustainability:
From Cardiff to Gothenburg

Domingo Jiménez-Beltrán
Executive Director
European Environment Agency

1. Indicators as a support to policy making

The Swedish Presidency has already achieved a lot in promoting integrated policy making: the discussions at the Stockholm European Council and the large amount of preparatory workshops towards these and next Council meetings reflect a firm line towards integration of policies and transparency and accountability of policy making.  One of the recurring themes is that policies and strategies should go with indicators for judging progress made. It is at this point that the European Environment Agency comes into the picture.

The European Environment Agency (EEA) is a European Community body with the aim of serving the Community and the Member States with information to support policy making for environmental protection in the perspective of sustainable development. We do that by collecting and assessing data on the current and foreseeable state of the environment.
With the development in attention going from ‘environment', to ‘the environmental pillar in sustainable development' to ‘environmentally sustainable development' we are in a constant process of creating clear lines for our clients focusing on the essentials in the overload of environmental and sustainability information.
Our primary clients are policy-making agents and politicians at EU level in the European Commission, in the European Parliament, in the Council and in the Member states. Not only the Swedish Presidency but also others are increasingly aware of the use of and usefulness of indicators in their processes. Indicators can play an important role within the policy preparation and the evaluation stages of the policy cycle (figure 1).

Figure 1:

However, our primary clients are not the only actors driving policies and able to bring along changes. Informed citizens, NGOs, companies, lower levels of governments are our secondary target groups.
Their indicator needs are partly similar to politicians and policy makers as they are also participating in the decision-making process, although in different ways. These groups will use the indicators primarily to make the policy makers accountable for their actions to face environmental challenges. As such they will use "conventional” indicators such as energy efficiency, greenhouse gas emissions, or vehicle kilometres driven. But apart from these, citizens groups ask for indicators that have a more radical character. It is the NGOs that have brought concepts like ecological footprint, foodmiles, green GDP further in attempts to get tools that are able to raise attention not for a single environmental problem, but for the basic processes behind environmental degradation, viz. international trade, specialisation, uncovered external costs.
But, regardless the way the indicators are defined, a few principles seem needed to make them work:

1. Indicators should report progress over time and must go with an assessment of the reasons for their development.
2. They should be few in number, and users should get used to their presentation.
3. They become more powerful when linked with formal targets or informal or indicative (sustainable) reference values. Linked with targets, indicators become tools for management and to make policy makers accountable;
4. With or without targets, using indicators to compare or benchmark individual sectors or countries or companies with each other is another way to make decision makers accountable and to foster progress as both failure and success stories become evident. The question why one sector/country/company is doing better than another is a good entrance to explore still unknown opportunities to do better. At the same time exposing this kind of information to the outside world could lead to ‘peer pressure' to do better (the so-called "name and fame or shame” exercise). Eco-efficiency indicators have proven to be useful communication tools in this respect: a ‘2% eco-efficiency improvement in a given year' is a common language, whatever the economic structure of a country or whatever business sector we are considering.

2. Making the case: the environment in the EU, good and bad news

The European Environment Agency is preparing for the Gothenburg European Council the second edition of its Environmental signals indicator report. This report will confirm some of the findings of the first report and provide some new insights in the development of major environmental issues in the EU:

• Climate change: for all six greenhouse gases under the Kyoto protocol data show a decrease of 2% between 1990 and 1998 for EU15. Latest projections however foresee that the decrease up to 2010 will be only 1%, still far away from the 8% needed according to the Kyoto protocol. Behind the slight decrease in the emissions of all gases stands an expected 3-4% increase in carbon dioxide emissions.
• Waste: Total waste generation in the EU continues to increase: between 1995 and 1998 an estimated 8 to 9 percent.
• Chemicals: The loads of a number of well known hazardous substances in the North- East Atlantic Ocean have decreased between 1990 and 1998, which shows the effects of target setting in OSPAR. An overall indicator on the production of hazardous chemicals in Europe could not be made, because data were not available, which is symptomatic for the information available on hazardous substances.
• Land use and biodiversity: Between 1990 to 1998, 10 hectare of land were used every day for motorway construction in the EU. Permanent grasslands, with their specific flora and fauna, are diminishing by around 11% in the last 25 years. This is because they are ploughed up in intensive agricultural areas and used more intensively here, or they are abandoned in marginal areas.
• Environment and human health: ozone and fine particles remain the major air pollution problems: no trends can yet be seen in their concentrations.

In several other areas improvements can be seen as a result of many years environmental policy, such as in the emissions of main air pollutants, in the concentration of phosphorus in rivers (but not for nitrogen), and in urban waste water treatment.

My perception on the general situation is that we are not yet where we would like to be and we can still repeat some old (1999) messages:

• In spite of the relative success of environment policies particularly at EU level, there has not been a general improvement of environmental quality and little progress towards sustainable development.
• From now on, the progress towards sustainable development and even on environmental quality will not come directly from environmental policies, but from socio-economic policies, guided by sustainability paradigms and reinforced environment policies.

The responsibility of the sectors
But the prospects are better as many initiatives are focusing on the development of societal sectors:
Environmental signals 2001 concludes:
"The challenge thus lies in the evolving patterns and scale of consumption and production: transport is constantly increasing, in particular those modes that are least sustainable (road and air); transport is a core activity of the tourism sector that is rapidly growing as the first service sector in the European economy; a growing number of households makes up new consumerism expenditures, shifting from basic to less basic needs (transport, fuel, recreation); agriculture, though no longer expanding, remains largely intensive in its changing production processes."

Make sectoral policies more sustainable and we will get substantial improvements in environment quality and in progress towards more sustainable development. This is supported by a wealth of statistics highlighting the causing factors of these developments:

• Total energy demand in the EU grew by an average of 1.3 % per year between 1980 and 1998
• There has been a steady fall in domestic electricity prices -- about 1 % per year in real terms between 1985 and 1996, with electricity consumption per household growing by 0.9 % per year between 1990 and 1997
• The demand for transport fuels is growing faster than overall energy demand.
• EU average price of road fuel in 2000 was lower than in the first half of the 1980s
• Householdexpenditure is nearly twice what it was in 1980, with a marked increase on recreation, transport (+14% over last 20 years --only +3% on public transport) and tourism (+16% between 1990 and 1997).
• Prices in tourism industry are continually decreasing resulting in more customer-friendly deals and more trips per capita
• There has been less progress in improving eco-efficiency in agriculture than in other sectors. The consumption of fertilisers and pesticides has been reduced, but problems of nutrient surplus persist

For facing the mentioned challenges and dealing with sectoral policies the prospects in the European Union are brighter than at any moment in the past. A more efficient framework for policy action and timely review of progress is emerging:

• the Amsterdam Treaty makes sustainability a goal for the European Union (Articles 2 and 6);
• the 1998 Cardiff Initiative (see below) building on Prime Minister Göran Persson's proposal at the Luxembourg summit in December 1997 stimulated the integration of environment and other policies and as such put the integration process and sustainability thinking in a faster track;
• the Helsinki summit discussed the first sectoral integration strategies, and placed these in the framework of the development of an overall sustainability strategy and the development of the 6^th Environmental Action Programme. At the same time it set out a cycle for regularly revisiting progress in sectoral integration on the European Council level.
• The Stockholm summit in March 2001 signalled the need for joining the Lisbon Strategy (on innovation, economic growth and social inclusion) with the sustainable development strategy and expressed the intention to review progress in all dimensions of sustainable development in the context of the Annual Spring European Council.
• And the Gothenburg summit should take stock of all this and make concrete proposals for merging this ‘sustainability' agenda (mostly environmental) with the Lisbon ‘socio-economic' agenda and for the indicators to be used in the single Spring report (the first one in Barcelona in 2002).

It is important to use these opportunities now and provide a clear way forward.

3. Towards a new way of policy making and the role of sustainability indicators

The development of the Cardiff initiative through the Helsinki European Council, to be continued in Gothenburg provides an example of integrated thinking in policy development. The so-called Lisbon process, starting with the March 2000 European summit on employment, economic reform and social cohesion was the start of a equally intensive process for integrating social and economic aspects of development. In the end, of course, both processes from Cardiff to Gothenburg and from Lisbon to Stockholm have to lead to some ‘joined up thinking' on all aspects of sustainable development at European Council level and repeated every year at the spring summit. Keywords in both processes are and will have to be transparency and accountability.

What happened precisely in these processes, and how far have we come?
From Cardiff to Gothenburg:
The Cardiff European Council formed the starting point of a process stimulating sector councils (energy, transport, etc.) to come up with strategies for integrating environmental concerns in their policies and to propose mechanisms based on indicators to report on progress. The Helsinki Summit reviewed for the first time progress and concluded:

• The Council is asked to bring all of this work (strategies on agriculture, transport, energy -- already agreed -- and on internal market, development, industry, general affairs, ECOFIN, fisheries) to a conclusion and submit to the Gothenburg summit comprehensive strategies with the possibility of including a timetable for measures and a set of indicators for these sectors.
• The strategies should be immediately implemented. Regular evaluation, follow-up and monitoring must be undertaken; the EC and Council to develop instruments and data.
• The EC is asked to prepare a proposal for a 6th Environmental Action Programme (end of 2000) and a long-term strategy dovetailing policies for economically, socially and ecologically sustainable development to be presented to the Gothenburg summit (also as an input for the Rio+10 review).

From these conclusions we can see a process emerging (figure 2).

Figure 2:

In this model the EU sustainability strategy forms the chapeau for two parallel lines of policy development: (1) The environmental issues and environmental policies in a narrow sense are covered by the development of the 6EAP and the envisaged thematic plans. (2) The integration process is carried out in the development, implementation and follow-up of sector environment integration strategies.
Transparency is achieved by developing in two interlinked "corridors” sectoral strategies and the 6^th Environmental Action Programme, which should outline a clear long-term vision for policy making. Accountability is enhanced because behind each of the strategies indicators and reporting mechanisms are foreseen to regularly report on progress or lack of progress in the reaching of the aims and targets of the strategies.
Overall monitoring of progress made in both policy ‘corridors' using a selected number of, so called, headline indicators, completes the policy cycle.

From Lisbon to Stockholm
The Lisbon summit in March 2000 on employment, economic reform and social cohesion (a Europe based on innovation and knowledge) was the next step in making sustainable development more concrete. Some spin offs:

• In March in the European Parliament President Prodi made a call for an integrated approach including economic and social aspects. The Parliament called for a single report on the economic and social situation. The environmental dimension was still overseen here, however.
• In September 2000 the Commission adopted its Communication on Structural Indicators. It includes a set (27, and 11 to be developed) of socio-economic indicators around the themes Employment, Innovation, Economic reform, and Social cohesion. Energy efficiency is included, but no other aspects of the environment.
• The aim of these would be to progress of the EU "… capable of sustainable economic growth with more and better jobs and greater social cohesion” A first report will be delivered to the Stockholm summit before Gothenburg.
• Commissioner Solbes mentioned in a speech "the indicators provide an instrument for monitoring, benchmarking and peer pressure which are vital elements of the Lisbon follow-up strategy”. His technical arguments for the choice are in line with the "state of art” rules for using information in policy processes: comprehensiveness -- discipline - continuity -- learning by doing in an ongoing process.
• As was mentioned before, at the Stockholm European Council the intention was expressed to join the Lisbon process with the Sustainability Strategy.

From an operational point of view the merging of the economic and social dimensions with the environmental dimension brings us to a hypothetical "three corridors” model (fig. 3):

Figure 3:

If this model is implemented it may help not only to reduce the inconsistency between environment and economic and sectoral policy but also between those polices themselves (such as between energy, transport, agriculture and fiscality), and it could show that the environmental sustainability part is the area which is maybe the most advanced in terms of accountability.

From Stockholm to Gothenburg
The European Council in its meeting on 23-24 March in Stockholm concluded: "Lisbon has successfully integrated economic and social matters. The sustainable development strategy, including the environmental dimension, to be adopted at the Göteborg European Council in June will complete and build on the political commitment under the Lisbon strategy. All dimensions of sustainable development should be reviewed in the context of the annual Spring European Council.
The European Council will accordingly review at its Spring meeting in 2002:

• progress in integrating the sustainable development aims into the Lisbon strategy;
• the contribution that the environment technology sector can make to promoting growth and employment.”

It is now up to the Gothenburg meeting to put flesh on the bones of the sustainability strategy. At Gothenburg objectives should be set out for sustainable development. Unsustainable trends like in transport and energy use and land use, that can endanger the long-term perspective of a competitive, knowledge-based and inclusive society, should be identified and tackled. Ageing populations will challenge social protection and healthcare systems and may reduce the room for manoeuvre in budgetary policy. Synergies in creating a safe and sustainable living environment should be identified. The same holds for food safety and agriculture. A potential widening of the income gap in knowledge economies might be counteracted by enhancing environmentally friendly jobs. The strategy may want to put forward typically environmental policy instruments like taxation - aimed at getting prices right to reflect better the costs of environmental degradation and offer incentives for change.

Also a "three corridors model” for policy making for sustainable development must be accompanied by interlinked indicators. As the main policy activities are happening within each of the corridors, the most logical approach would be to derive part of the overall EU sustainability (headline) indicators from the existing initiatives, and then accompany them with some crosscutting ones.

4. Clear structures are needed for making indicators work

Assuming that policy developers in the EU aim at a rational and efficient set of policies we may expect that under the sustainable development strategy a number of interlinked and mutually supporting policies emerge.
Speaking from the side of those who provide information to support policy making, I would like to sketch how we see progress reporting and assessment of such an integrated set of policies developing.

Clear structures are needed to communicate to policy makers how the information that we provide is related to policy processes and to make clear what type of information serves which process.

Complementary to the ‘corridors' in strategic policy making, clusters of environmental indicators are being developed (fig. 4).

Figure 4:

The sectoral integration strategies (sectoral sustainability) need to be monitored using indicators for the integration of environment and sectoral policies. The Transport and Environment Reporting Mechanism as developed by the EEA with support of Eurostat and the Commission is a good example for these (see box 1). The EEA is now, together with its partners, developing similar reports for Energy and Agriculture. Within the limited capacities of the EEA our focus for the coming years will be on these three sectors, whereby the analysis progressively will include more economic and social elements. However, attention is needed for a good co-ordination between all sectoral reporting mechanisms, developed either by others or by the EEA with additional support. The recently published proposal for indicators for enterprises, for example, is out of scope with the whole system. An EEA publication providing a common framework for reporting on the conventional sectors is in preparation^[1].

Similar to the ‘environmental headline indicators (see below) a limited set of main indicators should be selected from the currently around 30 integration indicators per sector.

The 6th environmental action programme and envisaged specific action plans to achieve environmental sustainability need to be monitored using sets of selected issue indicators. The EC Communication (COM(2001)31) which includes the 6^th Environmental Action Programme and a proposal for a Council decision, tries to establish not only the environmental sustainability pillar of an upcoming EU sustainable development strategy, but also pays attention to the necessary monitoring and reporting. The EEA is currently developing proposals for indicators on the environmental issues in the 6^th EAP, which will find their way into our publications. EEA's Environmental signals report series will develop into the main indicator report on environmental sustainability.

While it is still open how the Decision will define finally the system to monitor progress and implementation of the 6^th EAP, we can identify what can be the EEA contributions based on the EEA ongoing information and reporting system (see Box 2).

The European Commission together with the EEA, Eurostat and the member states will soon publish the first report on environmental headline indicators (see Box 3). This is a very limited set of ten indicators for main EU environmental problems.
Publication of the first report has been delayed due to political discussions within the Commission, which makes me propose for next editions a stricter division between the publication of ‘main' indicators by the EEA (together with Eurostat, at a time when the data and the assessment become available) followed by a publication by the Commission of the ‘Headline indicators' in their political context of developing strategies and implementation plans.

As has been mentioned before the Commission has made a proposal (COM(2000)594) for the structural indicators that have been used in the synthesis report for the Stockholm Council (COM(2001)97/2 Volume II).
It proposes 27 key indicators, which is considered small enough to focus the policy debate and be manageable, but sufficiently large to offer a balanced picture.
No decision has been taken yet on the details of the regular reporting for future Spring councils incorporating all aspects of sustainability, which was announced at the Stockholm summit. Regarding the social and economic indicators a proposal for a short list is given in council report 6999/01 (see box 4, for this list including a proposal for adding the environmental dimension).
As there is no institution in the Communities that is able to cover all three aspects of sustainable development, the creation of a consortium will be necessary for the organisation of the Spring Council reporting. In accordance with its current remit and tasks, the EEA can cover the indicator assessment for the environmental dimension, including sectoral integration. Eurostat, as main data-source is the logical provider of the 12 economic and societal indicators, while the JRC could provide assistance in the integral assessment (which is currently lacking from the synthesis report).

Consistency and discipline
In regular indicator based reporting for whatever purpose or target group consistency and discipline should be strived for. Consistency is needed in choosing indicators to report on thematic action programs making sure that sectoral contributions can be identified. Consistency is needed in the sector-environment reporting mechanisms to allow for comparing progress between sectors and to be able to analyse and compare progress in the use of ‘integration' instruments. Consistency is also needed in the further development of the ‘headline'-indicators and the development of a merger between the structural indicators, the environmental headline indicators and the eventual sectoral headline indicators.

However, there are still some open questions in the implementation of the whole system:
Regarding the sector integration pillar:

• Will all the sector-economic policies dare to agree on a package of (consistent) indicators?
• To what extent will sector reporting mechanisms have to include all dimensions of sustainable development?
• Will the sectors allow for external/independent assessment of progress and benchmarking?
• Will the sectors dare to fix/accept targets on time (for different indicators)? Either on the strategies or in related follow-up plans?

Regarding the environmental issues/6EAP pillar?

• Will the 6th EAP during the coming discussions develop into the reference frame for the environmental sustainability pillar? And will it become stronger on targets and indicators to measure progress?

Regarding the socio-economic pillar:

• Will there be a real integration between the "Cardiff initiative” (towards Gothenburg) and the Lisbon -- Feira process (towards Stockholm)?

And in relation to this: will the EC proposal on a sustainability strategy set the model and the process for the three pillars of sustainable development (social -- economic -- environment)? And what will be the institutional setting for the development of (independent) reporting to the Spring Council?

An even more important question for the implementation is:

• Will countries also develop a similar transparent structure for monitoring progress in policies? Up to now the experience with headline and sectoral indicators shows that a majority of countries is at least hesitant to follow these developments, although some countries made progress in using overall sustainability indicators.

Implementing indicators -- an opportunity or just another burden?
Countries are hesitant to implement monitoring systems based on indicators for several reasons. Two of the most important are the perceived additional costs involved with data collection and the feeling that resulting indicators and assessments could be used as a "stick” by the Commission against countries for non-compliance with legislation. The latter is particularly relevant for indicators linked to policy targets.

It is true that for many of the more "interesting” indicators, data collection systems do not yet exist in Member States. This is not because of lack of will in countries, rather the perceptions that the burden is ever-growing being added to and never reduced, that little use is made of the information already reported to EU institutions.

These perceptions, whether correct or incorrect, present a challenge to all of us involved with using environmental information in the EU. To overcome these negative, though justified perceptions, I believe we should consider doing the following positive steps:

• Firstly, move away from the legalistic approach between the EU and Member States to data gathering, assessment and reporting towards a system, using indicators and their assessment, which focuses on the effect and effectiveness of policies and measures.
• Streamline current data collection and reporting systems in Member States and the EU to reflect the shift above. Work with the Commission to establish a final strategy in this respect is ongoing. It will take into account the needs regarding implementation of Community legislation, but also the supply of information under international conventions. Policy objectives and information needs will be more explicitly stated so as to identify and remove current redundancies, and assign clear institutional responsibilities (see example suggested at top of page 14) so that duplication of effort is avoided.
• Encourage Member States to use saved resources to fill some of the gaps in data needs identified for indicators.
• Make use of EU financial instruments and research framework programmes to fund development and implementation of more interesting indicators and methodologies, so enhancing burden sharing between the Community and Member States.

5. Putting indicators to work

The main envisaged roles for the indicators build on the experience of the use of GDP and also of the EMU convergence parameters, that you can only:

• manage what you measure (indicators)
• respond and be rewarded/penalised for those things which you can be held accountable (benchmarking), and
• achieve what has been agreed (targets).

Critics may say that indicators and targets are a far too simplistic response to complex issues, but in reality they are the top of an iceberg of information and more important: they seem to work!

5.1 Using scorecards, peer pressure, benchmarking and best experiences
Score cards are overviews of the progress of countries, cities, companies or other entities based on a number of well-selected variables. Sometimes scorecards are based on an index aggregating many different indicators. Their use for comparing the progress made by countries allows for "naming and faming” for those who achieved a lot, with the potential for the others to learn from the experiences, and for "naming and shaming” of those that failed to achieve progress.
In a still basic form the EEA developed such a scorecard based on its indicator report Environmental signals 2000 (figure 5)

Figure 5:

Apart from encouraging countries (or the other entities compared) to do better, this information provides the entry point for a benchmarking exercise. In this example (figure 5) the situation and policies in the countries at the right side should be explored in detail to see which factors and which levers were responsible for the good performance. Policy effectiveness indicators are useful tools for this. Successful measures and policies (the success stories) should be considered for adaptation and use by others. Ultimately any collection of indicators should go together with a system for sharing ‘best experiences'. The EEA is developing the ‘Envirowindows' tool^[2] as a mechanism for decentralised collection and sharing of this information by and for environmental managers.

5.2 Using convergence criteria
Identifying indicators is a first step towards agreeing on targets.
As the EMU convergence criteria were able to move EU member states quickly in the direction of Euroland, sustainability targets should be able to move societies towards a general improvement of sustainability. What we need now are sustainability convergence criteria!

The first principle for developing such sustainability convergence criteria is summarised in the statement: "For every complex problem there is a simple answer and it is always wrong”.
Sometimes scientists consider with horror the easy with which policy makers push a solution for a complex issue. However, when policy makers are able to agree on simple approximations, then they often work and lead to faster progress compared to more balanced approaches. Apart from the EMU convergence criteria, we have seen examples in the use of the Kyoto target for emissions of a basket of six greenhouse gas, the negotiations in the framework of the Convention on Long Range Transboundary Air Pollution using no exceedance of critical deposition loads as starting point. We should not be afraid to develop some bold measures and accompanying bold targets.

Secondly use of the sustainable convergence criteria ask for simplicity, in other words the answer to the question "what is really important and at stake”. The indicators mentioned in box 4 (the Spring reporting set) provide a first answer to this question and invite policy makers to be as specific as possible on the objectives and targets in each of the areas.

Of course, while this core of indicators and related targets serves to monitor and benchmark overall progress, nothing stops us to develop some specific thematic monitoring systems, if required, when some priority issues are identified politically. This seems to be the case for the emerging EU Sustainable Development Strategy and for the 6^th Environmental Action Programme (climate change and clean energy -- management of natural resources -- mobility -- land use and territorial management -- public health -- poverty and social exclusion -- demography and ageing).

The business sector has been especially keen on answering the question ‘What is really important', to be able to use environment like other criteria in business management. As many of the "new” approaches such as benchmarking, steering by indicators, etc. stem from business management and financial accounting, it is no wonder that the business sector has applied these tools also for environmental and sustainability issues. Few people are aware of this progress and government administrations certainly can learn from the companies. This interaction between companies and government could even lead to a re-inforced co-operation in the field of the environment and sustainability.
Companies at the forefront of sustainability thinking have joined together in the World Business Council for Sustainable Development, wouldn't it be an idea for national states to join in a similar club of Member States for sustainability?

Progressive parts of the business sector are now formulating sustainability convergence criteria to have a clear target for their companies, to be able to benchmark and the monitor progress (Figure 6). It is now up to national governments and the EU to develop their sustainability strategies in a similar clear and transparent process, to achieve the progress needed with the involvement of all stakeholders.

Figure 6: WBCSD sustainability convergence criteria

^[1] Common framework for indicator based reporting on sector-environment integration. Technical report EEA.
^[2] via the EEA homepage http://www.eea.europa.eu under services.