WOJCIECH STODULSKI

Institute for Sustainable Development, ul. Kryzwickiego 9, 02078 Warsaw, Poland

This paper presents conclusions from the surveys on the environmental context of ownership transformations carried out in Institute for Sustainable Development in 1992.

1 INTRODUCTION

The environment in Poland and in other East and Central European countries is highly polluted. Economies of that countries are being transformed into market oriented base. That means deep changes in ownership changes, creation of property rights for many people, freedom for policy-making and business doing individuals; simultaneously this means growing up responsibilities of new owners for the economic and environmental status of former state-owned enterprises.

Restructuring and privatization are extremely strong tools of market-oriented transformations - they give into hands of policy-makers and representatives of administration great opportunities to stop environmental degradation and to perform the environmental recovery of high contaminated sites and areas.

In introducing the economic reforms and privatization processes have been engaged institutions,organizations and individuals followed by their own interest. They are also under pressure of current situations and economic and social conditions. Ecological aims are very often postponed and treated as second-rate.

2 PRIVATIZATION IN POLAND

The persons involved in privatization procedures perpetually solve the same dilemma: "Which way should be divided scanty funds among different aims?, What is more important: economic short-term effectiveness or ecological healthy sustainable long-term development?". They represent different point of view on aims and methods of restructuring of economy; there are also distinctions in their political standpoints and in professional skills or experiences themselves. It is quite difficult to focus all these people on the single target: proecological recovery of the economy performed through restructuring, privatization and liquidations non-effective state enterprises. It is needed for that:

• foreign financial and organizational support,

• highly qualified people,

• new technologies and management,

• clear internal industrial policy,

• transparent environmental policy principles,

• flexible and educated administration,

• fair business-doing investors,

• active self-governments, non-governmental ecological organizations, public opinion, mass media.

Poland has two years experience in introducing and performing of privatization and liquidations into economy. We assume that it is higher time to try to make first assessment of the environ- mental results of ownership transformation undertakings. Our goal was also to estimate effectiveness of current legal and economic system as a tool for enforcing environmental restructuring of Polish economy.

It was interested for us to fix level of environmental consciousness of policy-makers, representatives of administration, investors, representatives of self-governments, NGO's, mass media and the way and the extent articulation of its in practical undertakings in the course of ownership transformation processes.

We have tried in the paper to identify :

• placement of non-governmental ecological organizations in concentration of public opinion on reaching ecological recovery aims in the privatization processes,

• main targets to be achieved by the organizations,

• necessary conditions to be met so as the activities could finish with success.

Our considerations have been performed on a base of experiences that we have gathered in the course of surveying real situations and conditions of ownership transformation processes in Poland in 1991 - 1992.

Institute for Sustainable Development is the one and only of 167 non-governmental ecological organizations in Poland which has started regular monitoring of environmental context of privatization and liquidation of former state-owned enterprises.

We have not only allowed for catching spectacular ecological positive or negative cases but first of all for disclosure of weak points of the organizational, institutional and legal environment for privatization processes which have badly resulted in ecological recovery of the economy.

The financial and economic concerns of privatized or liquidated former state-owned enterprises have been included in our scope of interest. Nobody can imagine successful ecological recovery of the enterprises without financial sources. One of the strategic aims of privatization is appealing of external financial sources to improve effectiveness of production by using advanced technologies and higher organizational methods. But that means introducing of clean technologies and energy or natural sources saving methods.

It is assumed that foreign investors would be able to come up to expectations of the Polish government in the field of pure economic development as well to contribute to environmental improvement within new and old sources of pollution.

We want to focus on methodological and organizational context of our surveys rather than on the results of the research. We try to describe the sources of information used and to assess them from point of view of work of non-governmental ecological organizations.

In the course of our surveys on the environmental impact of privatization we try by occasion to answer some additional questions :

• what is the role of non-governmental ecological organizations in supporting of ownership changes ?

• to what extent the non-governmental ecological organizations are ready to be engaged into supervising of environmental impact of ownership changes ?

• are there in reality conditions that the opinion of non-governmental ecological organizations may be taken into consideration by decision-makers and policy-makers in privatization and liquidation processes ?

• what kind of conditions should be met so as representatives of non-governmental ecological organizations could take part in policy-, decision- or opinion-making bodies ?

• is it possible that any information on single privatization or liquidation cases might be revealed to representatives of non-governmental ecological organization to prepare and present opinion on the environmental impact to administration?

• is there any cooperation between self-governments, NGO-s and a public to prevent negative ecological results of ownership transformations ?

Those and many other question were discussed in the course of our surveys. Not all questions have been answered; some were only partly cleared up.

3 ROLE OF NGO'S IN THE PRIVATIZATION PROCESS

There are some restrictions for activities of non-governmental ecological organizations in the field of monitoring of restructuring, privatization and liquidation processes in Poland. The restriction have resulted from external:

• disturbances in access to information on environmental status of single privatized or liquidated former state-owned enterprises

• documentation on either economic or environmental issues is confidential in the course of negotiations and afterwards, - lack of up-to-dated information about current environmental status of enterprises either on new sources of emissions or on old contaminations, resulted from passed economic activities,

• difficulties in gathering information on current ecological status of transformed enterprises resulted from very speed and complicated splitting real assets and changes in property rights take-overs; administration is not able to catch up with transfers of environmental liabilities from former state-owned enterprises to new owners,

• inflexibility of administration in passing over information needed to make right decisions in adequate time to privatize or liquidate state-owned enterprise, - using lower priority for ecological criteria in decision on privatization or liquidation, and internal reasons :

• the surveys are very time-consuming and expensive,

• the surveys require highly experienced specialists with deep professional knowledge in economy, legal system, consciousness of environmental effects of business activities, legal and technology context of the environmental protection,

• the surveys require long and very intensive engagement of people involved (that is not always the case within non-profitable ecological organizations),

• the surveys require public relations skills, particularly in contacts with representatives of administration and world of business,

• it is difficult to set up an interdisciplinary team of professionals to be able to get adequate information on ecological concerns in restructuring, privatization or liquidations and to assess them objectively.

The external and internal restrictions create serious obstacles for non-governmental, non-profit ecological organizations to be involved in opinion-making processes in advisory capacity on administrative decisions. Some of the restrictions are objective ones - lack of up-to-dated information and obstacles to get those information from primary sources, other restrictions are subjective ones - unwillingness of administration to admit the representatives of non-governmental ecological organizations to take part in decision-making processes.

However, there is a field of interest which is available to activities of non-governmental ecological organizations : assessment of adequacy of current economic and environmental law provisions to the needs of effective execution of environmental commitments and environmental liabilities in transition period to market economy.

Now we try to present and explain our point of view on the topic. It has resulted from our experiences gathered in the course of surveys on the environmental context of privatization and liquidation processes in Poland in 1990-1992.

4 POSSIBILITIES FOR NGO'S IN POLAND

Scope of interest has been tailored to the current possibilities and requirements :

1. Compliance with fair ecological behavior of new owners of former state-owned enterprises :

• rational using of natural resources,

• compliance with current emission standards,

• conducting of identifications of sources of emissions and measurement of their intensity,

• keeping in proper status the facilities of environmental infrastructure,

• using of clean technologies,

• maintaining of protection zone around enterprises,

• environmental recovery of degraded sites and industrial areas,

• improvement the environmental security of products.

2. Addressing of ecological criteria in privatization and liquidation decision-making :

• preparatory phase of privatization/liquidation procedure,

• negotiation phase - environmental part of contract/agreement provisions,

• transition phase after signature of contract/agreement,

• follow up phase when the new owner has started his business activity.

3. Environmental liabilities transfer in the course of restructuring (splitting, acquisitions and mergers) and privatization or liquidations of enterprises :

• collections of outstanding and ongoing environmental fees and fines,

• compliance with current environmental standards,

• environmental recovery and environmental clean-up of old contaminations.

4. Involvement of central and regional (voivodship) environmental administration in privatization and liquidation decision making :

• cooperation of the Ministry of Ownership Transformations with the Ministry of Environmental Protection, Natural Resources and Forestry and the State Inspectorate of Environmental Protection,

• cooperation of regional level administration in preparing and conducting of privatization and liquidation decisions.

5. Economic and financial development of privatized or liquidated enterprises in the course of transformation processes.

6. Legal base of conducted transformation procedures.

7. Procedures used in reality in the course of restructuring and ownership transformations by founding bodies and the representatives of State Treasury with special emphasis on environmental concerns.

8. Compliance of the procedures used with environmental guidelines presented in :

• the National Environmental Policy by the Ministry of Environmental Protection, Natural Resources and Forestry,

• the State Industrial Policy by the Ministry of Industry and Trade.

9. Environmental context in the sector restructuring programs prepared mutually by the Ministry of Ownership Transformations and the Ministry of Industry and Trade.

10. Environmental context of contracts signed by the Ministry of Ownership Transformations and the foreign investors.

11. Role of non-governmental ecological organizations in opinion making on privatization and liquidation issues.

12. Opportunities and threatens resulted from ownership transformations of former state-owned enterprises to the environment in Poland.
Directly after beginning of the surveys we have understood that primarily fixed scope of work has to be shortened because of problems with getting up proper information. The preliminary recommendations were as follow :

get knowledge on legal framework of privatization and liquidation of enterprises and corporate restructuring,

survey legal base of procedures used by administration,

research the organizational and institutional environment of privatization and liquidation,

realize that environmental context of privatization and liquidation is hardly recognized because the environmental criteria are of second priority for majority of people involved,

understand that the access to environmental information in single cases is limited and depends on current local situation there is a psychological barrier by the administration not to reveal any information in the course of transformation procedure,

there are objective causes for not to get the environmental information on voivodship level - lack of fund to collect information and to maintain computer information system,

fix substitute sources of information on environmental status of enterprises transformed - direct contact with enterprises,

research single cases only as illustrations of broader problems of environmental context of transformations - not as spectacular environmentally positive or negative undertakings,

use rather personally direct contacts with the representatives of administration or with managers in enterprises; it gives you occasion to explain aims of the research and to limit doubts not to reveal information,

prepare short lecture on transferring environmental liabilities and the environmental impact of ownership transformation to be ready to explanation and discussion on the topic.

Our opinion on information sources accessible to non-govern- mental ecological organizations is as follow :

1. It is possible to get reliable information on environmental status of transformed enterprises from local environmental administration or in enterprises themselves. The closest possible cooperation is condition for that.

2. The very valuable source of information on legal and procedural transformation framework are the Ministry of Ownership Transformations and other central and regional (voivodships) founding bodies. But it is only general information referred to common principles used in single paths of privatization or liquidation.

3. The best source of information available to a public are newspapers referred to legal, economic and common issues.
   In a press were discussed general conceptions and conditions of ownership transformations,legal and organizational procedural principles, spectacular cases of privatization and liquidation, economic and legal obstacles and results of transformations.

In newspapers were published privatization prospectus on economic, technical and organizational status of enterprises referred to capital privatization; there have been also published announcements on bidding procedures for sales or lending of real estates or land using of former state-owned enterprises.

4. Some difficulties arose with getting contact with consulting firms which generally were unwilling to reveal any information referred to started or finished privatization procedures. Our intention was to assess to what extent the environmental criteria have been taken into consideration by advisory teams.

5. Another problem deserving our attention was to specify role of banks and other financial institutions in supporting (if any) of proecological restructuring undertakings of privatized former state-owned enterprises. The problem is open to further surveys because it has passed short time since the majority of privatization procedures have been finished.

6. All legal acts and laws referred to regulations of privatization, liquidation or restructuring procedures were scrutinized by us to identify weak points in enforcement environmental compliance with procedures used in practice.

7. We tried to get into the work other non-governmental ecological organizations. Generally our intention felt not because of lack of interest, but lack of time and financial support. The organizations were not helpful to us as a source of information. Also the question: "How should the environmentally accepted pattern of privatized contract look like?" was not answered by them.

The sine qua non condition to be involved into opinion-making processes on environmental issues of privatization and liquidation of former state-owned enterprises is acquiring of reliable, complete and up-to-dated information, generally speaking on :

• planned privatization /liquidation undertakings,

• environmental status of enterprises before, in the course and after finishing procedure.

What a role can play non-governmental ecological organizations in ownership transformation processes in Central and Eastern Europe :

1. in execution of environmental law,

2. in balancing of social and environmental context of privatization and liquidation,

3. in tracking environmentally undesirable undertakings,

4. in enforcement of principle of sustainable development in business activity of new private companies.

We can propose some organization measures to make possible involving of non-governmental ecological organizations in opinionmaking processes of privatization or liquidation :

The NGO-s should be more active in the field of monitoring of environmental impact of ownership transformation of former state-owned enterprises. They should focus their efforts

on tracking of activities of administration and investors in the field of compliance with principles presented in the National Environmental Policy (prepared by the Ministry of Environmental Protection, Natural Resources and Forestry in 1991) and the State Industrial Policy (prepared by the Ministry of Industry and Trade in June 1992). We suggest besides that in the field of interest of professionally experienced environmentalists should be :

• compliance with environmental law,

• environmental clean-up of old contaminations,

• fair environmental behavior from part of investors, new owners of former state-owned enterprises. Indispensable for that is close co-operation with administration, businessmen, self-governments, individuals: lawyers, economists, engineers and s.o. It is also necessary to co-operate with foreign NGO-s in other countries of the region and the NGO-s in high developed countries in Western Europe and the United States to get information on environmental profile of active investors in Central and Eastern Europe. In situation of great financial, technological, organizational prevailing of western investing firms, the environmental impact of investment undertakings depends more on their fair attitude towards the environment, than on our legal environmental or administrative regulations and execution measures.

5 REQUIREMENTS FOR COOPERATION

In the course of our research program we have expressed some requirements towards administration; that may have been significant for NGO-s in other countries to make their work more effective in transition period to market economy.

Firstly, we hope the restructuring, privatization and liquidation processes could be performed in more decentralized manner. But decreasing in central administration involvement simultaneously means increasing responsibility of local authorities, self-governments and a local societies in managing of ownership transformation in compliance with principles of sustainable development. Broader involvement of a public into supervising and monitoring of ownership transformation processes may create sustainable assurance against violation of environmental law or fair behavior towards the environment. We do not expect that it can be executed without any obstacles caused by distrust from part of administration. The NGO-s should prepare themselves to be reliable partner irresponsible co-operation with administration, self-governments and businessmen.

Secondly, the administration should be more open to take into consideration opinion of the representatives of NGO-s on environmental impact of ownership transformations. Independent

individuals scientists, professionals and experienced environmentalists can be in any cases more objective and more sensitive for local or regional environmental problems than administration. The mutual contacts should have to be more systematic. They have to be preceded by changing of adequate information to make possible working out independent opinion on the topic.

Thirdly, the administration should enforce the least possible requirements in the ownership transformations procedures :

• any privatization or liquidation process could not have finished until the environmental liabilities had been satisfied,

• it can be impossible to start any privatization or liquidation processes of former state-owned enterprises that rated to the greatest polluters without performing of ecological review,

• all legal successors of former state-owned enterprises under ownership transformation should be precisely fixed to make possible execution of environmental liabilities,

• introducing in the environmental law and in other legal regulations any provisions to make ownership transformation processes harmless to the environment, Fourthly, administration should reveal any information on environmental status of privatized or liquidated former state-owned enterprises to a public and to NGO-s to make possible to work out an independent opinion.

It seems to be to much, but our requirements create safety system for the environment in the transition period to market economy. It is minimum to make effective control by a public over transformation processes and to prevent possible negative (if any) impact on the environment in the future.