ENVIRONMENT

The business sector continues to be faced with lack of predictability concerning the legal and institutional framework on environmental issues, despite continued efforts to engage with public officials on environmental legislation and institutional topics. This has been felt most strongly in the waste management sector, where the disproportionate regulation and enforcement of the waste management rules against private companies as opposed to entities responsible for municipal waste collection have led to significant instability in the market.

Despite calls by the business sector and other relevant actors for reform of the entire waste management system, the authorities continue to take only limited and delayed actions to solve the critical, systemic problems of the waste packaging management system. In this context, the problems arising from the lack of effective separate collection of municipal waste by public authorities continue to disproportionally affect the business sector, as it makes meeting waste collection, recycling and overall recovery targets almost impossible. This is coupled with problem that the burden for most costs remains with producers/ importers as part of the extended producer’s responsibility. 

FIC members are committed to continuing to build stakeholder trust and simultaneously improving their business performance in a sustainable way and call on public authorities to engage in the process from the earliest stages of the decision-making process.

The environmental legal and institutional framework continues to raise difficulties for the business sector.

The FIC is concerned about the lack of impact assessments, which are so urgently needed to enable new legislation to be enacted and implemented, and about the authorities' lack of swift reaction to regulatory needs.

Furthermore, commercial entities are also exposed to difficulties in implementing the permitting framework due to the lack of correlation of the environmental permitting procedures with the existing substantive legislation, as well as the different interpretations of the same regulatory requirements given by environmental protection agencies, reservoir administrations and environmental control authorities (the National Environmental Guard and its local units). The new permitting procedure, anticipated in particular after the enactment of Law No. 278/2013 on industrial emissions in December 2013, has yet to be submitted for public debate. Furthermore, the new legislation extending indefinitely the term of the (integrated) environmental authorisations conditional on annual endorsement contains provisions susceptible to different interpretations, is burdensome, and includes penalties which are disproportionate. All these issues raise the risk of incorrect application in practice.

Despite the position papers submitted by the FIC in public debates calling for more clarity on regulation and providing suggestions as to how to deal with the root causes of existing environmental problems, as perceived by FIC members, the new legislation fails to provide business and society with the clarity and predictability needed for environmental protection and sustainable business practices.

Moreover, legislation often lacks sufficient transitional terms before the application of new requirements with significant impact (e.g., the accreditation of technical experts who may carry out the studies and prepare the reports required by the legislation on contaminated sites), while such transitional terms as do exist are often insufficient to avoid negative impacts on business and society.

Secondary legislation, which is most important for the correct understanding and application of primary legislation, is adopted only after significant delays (e.g., the new methodology for the calculation of the contributions to the Environmental Fund should have been introduced in 2019 but has not yet been adopted). This has a negative impact on business.

Furthermore, there is an urgent need for consistency in terms of interpretation of legislative provisions by all public authorities at central level and local level and in engagement in effective dialogue on new regulations from the earliest stages of the decision-making process.

Apart from developments of various regulations, delegated acts and guidelines for implementation of the so called the EU ETS post 2020 Directive (Directive (EU) 2018/410), some of which are still being drafted, a central element of the policy framework for future years is the so called “Green Deal” presented in December 2019 as the plan to make the EU's economy sustainable.

As part of the Green Deal (which aims to boost the efficient use of resources by moving to a clean, circular economy, restore biodiversity and cut pollution) a Climate Law was proposed in March 2020 to ensure a climate neutral European Union by 2050. This law is currently in debate between the European Commission, European Parliament and European Council.

Reaching this ambitious target will require actions by all sectors of the economy, including

• Investing in environmentally-friendly technologies.
• Giving industry support to innovate.
• Rolling out cleaner, cheaper and healthier forms of private and public transport.

• Decarbonising the energy sector.
• Ensuring buildings are more energy efficient.
• Working with international partners to improve global environmental standards.

Within this law, the binding target of 2030 for reducing EU global emissions by at least 40%, compared to 1990 levels has been revisited and the current targets proposed are “at least 55%” (European Commission – Sep. 2020) and “60%” (European Parliament – Oct 2020). To achieve these proposed new goals an action plan has been set at European level for the next few years for the revision of the EU-ETS Directive, the Energy Efficiency Directive, and the Renewable Directive, as well as for the definition and implementation of a Renovation Wave and a Carbon Border Adjustment mechanism.

Financial support and technical assistance will also be given to smoothen the transition to a Net Zero and green economy. As well as the Modernisation Fund and the Innovation Fund, which were already envisaged in the post 2020 EU-ETS directive, the Green Deal also brings the “Just Transition Mechanism,” which will help mobilise at least 100 billion euros over the period 2021-2027 in the most affected regions.

The FIC appreciates the efforts and transparency demonstrated by Ministry of Environment and National Environmental Policy Act (NEPA) representatives during the transposition and implementation of post 2020 revised EU-ETS legislation (which suffered a long delay at European level but which had to be implemented at national level within very tight timelines, requiring a significant effort) and also the cooperation with other ministries on implementation at national level (at the end of 2019) of  Commission Communication 2012/C158/04 on compensation of indirect emissions for 2013 – 2020, even though this was only for the 2013 – 2020 phase of the EU ETS.

The FIC hopes that cooperation between the authorities and the business sector will continue for the full definition and implementation of the post EU-ETS directive and the Green Deal action plan.

The Waste Management Framework Directive and Packaging and Packaging Waste Directive were partially transposed into Romanian legislation through Law No. 211/2011 on waste, as further amended and Law No. 249/2015, as further amended. The waste management framework is characterised by a large amount of legislation regulating waste management generally or relating to specific types of waste. Although later than initially planned, at the end of 2017 the Government finalised the National Waste Management Plan for 2014 – 2020 but its implementation and monitoring has suffered serious delays. Some of the Romanian counties and Bucharest municipality have adopted county and local waste plans as stipulated in the NWMP, but the adoption of many county waste plans is still pending.

The waste management system and legislation were reshuffled in 2018 and 2019, providing a clearer framework of functioning, roles and responsibilities for all waste management value chain actors. However, there is still a lack of clarity for the unitary enforcement of legislation. Some of the secondary legislation still needs to be harmonised with the primary legislation.

The National Waste Committee, formed in September 2018, by representatives of the main central public institutions with responsibilities in policy making, regulation and control in this area, has the role of promoting sustainable waste management investments and implementing governance measures in the National Waste Management Plan. Until now, the Committee has not carried out its duties nor the role for which it was established.

According to public information and statements from Environment Ministry officials, Romania recycles only around 14% of the municipal waste generated and will not achieve the 50% target for preparing this waste for reuse and recycling. In May 2020, the European Commission issued a final warning for Romania to solve the problem of illegal landfill closure. Failure to comply will generate the risk of another infringement procedure being opened.

In December 2015, the European Commission issued the Circular Economy Package, which includes proposals for amending Directives on waste; packaging waste; waste landfill, etc. Most of these proposals were adopted in May 2018 and set more stringent targets than the previous ones. The amendments to the Waste Framework Directive imposed targets for preparing for re-use and recycling of municipal waste of 55% by 2025, 60% by 2030 and 65% by 2035.  Full transposition of the Circular Economy Package is still pending.

In May 2019, the European Commission adopted the Single Use Plastic Directive banning ten single-use plastic items and imposing a new obligation for producers with regard to higher collection targets, recycled content of PET packaging and closures of beverage containers. The transposition deadline is July 2021.

In 2020 the European Commission launched the ambitious European Green Deal, viewing it as a high political priority. The Romanian Government was one of the first EU Governments to commit to the principles of the Green Deal as political priorities in the post-COVID recovery period.

Romania has one of the lowest rates for recycling and landfill diversion. Although the latest official data available from Eurostat shows that Romania has met recovery and recycling targets for packaging waste up to now, it is hard to believe that the targets for 2020 onwards will be achieved. According to the modification made to the Packaging and Packaging Waste Directive in 2018, from 2021 the measurement point for recycling will be considered as the entry of the waste into the recycling installation. This makes it difficult to believe that the targets established by the new provisions which entered into force in Romania (60% for recycling and 65% for recovery) can be met in the next few years, under present conditions, because it is still difficult to recover packaging waste from households.

2016 and 2017 were years with a major negative impact on producers of packaged goods, which had to pay a heavy penalty to the Environmental Fund of Lei 2 /kg (approx. 450 eur/t) for not meeting their recovery obligations, mainly due to:

• Lack of proper infrastructure for municipal waste management and separate collection of waste from the household population. Even though the situation of functional ADIs and SMIDs has improved, the quantities generated by local municipalities are still low and the framework of cooperation with OIREPs makes it difficult for PROs to contract quantities. 
• An inadequate institutional framework and lack of enforcement of current legislation that requires the separate collection of waste, bans the mixing of waste and bans the landfilling of separately collected waste etc.

Although the above-mentioned faults are not the producers’ responsibility, they have been the only ones penalised, thus leading to the collapse of the system of collective organisation and also to unfair market conditions and speculative leverages by other actors in the value chain.

The new EU legislative package provides more ambitious overall recycling targets for packaging: 65% by 2025 and 70% by 2030 and higher materials-specific targets, such as 90% collection by 2030 for PET.

National legislation has introduced major new obligations on packaging and packaging waste management. Government Emergency Ordinance (GEO) No. 74/2018 was issued on 17 July 2018 to amend the Waste Law (No. 211/2011), the Packaging Waste Law (No. 249/2015) and Environmental Fund Emergency Ordinance No. 196/2005 (“GEO 74/2018”). Among other provisions, GEO 74/2018 includes the following:

• Changes related to the implementation of the “producer extended responsibility” principle.
• Amendments with regard to the implementation of the circular economy principles, by replacement of the landfill tax with a contribution for the circular economy to be paid by owners or administrators of municipal landfills. Compared with the former landfill tax, the amount of the contribution was reduced to Lei 30/tonne for 2019, but was increased to Lei 80/tonne, from 2020.
• Changes to the reusable packaging regime, as well as a timeframe for regulating the guarantee - return system for non-reusable primary packaging materials.

• New rules on reusable packaging materials, including regulating an exchange system and a minimum amount for the guarantee, as well as setting the requirement for organising the taking-over of reusable packaging so that, as from 2019, at least 80% of the packaging would be taken over and the phrase “reusable packaging” used on the primary packaging or the product label.
• A requirement for all retailers introducing packaged goods on to the national market to use an annual average of at least 5% reusable packaging out of their total packaging managed as from 1 January 2020. That percentage must increase annually by 5% by 2025.
• An increase in the recovery / recycling targets for packaging waste, both in total and for each type of material target, starting from 1 January 2019, as follows: cardboard and paper – 70%; plastics – 45%; glass – 65%; steel - 70 %; aluminium – 30 %; wood – 50%. The total recovery target was increased to 65% and the total recycling target to 60%.
• A modification in the manner in which the recovery / recycling targets for packaging waste are met, starting from 1 January 2019: (i) individually - only by managing the producer’s own packaging materials placed on the national market, under certain conditions, or (ii) through an organisation which specialises in implementing the extended producer responsibility.

• Establishment of new penalties and increases in the fines imposed for non-compliance with the obligations of the parties involved in the management of packaging and packaging waste, as well as the setting out of certain definitions of these offences for the Environmental Fund Administration.
• The full and unequivocal transfer of the financial responsibility for the management of waste to producers, where the extended producer responsibility is implemented (not only for packaging, but also WEEE, and batteries). Municipalities are now required to ask producers or the collective schemes for reimbursement of the costs of collection, transport, and sorting.
• The creation of a single commission for the authorisation of the collective schemes for all waste flows (packaging, WEEE, batteries, waste tyres).
• Changes to the conditions for licensing of the collective schemes for packaging. These should be joint stock companies with the producers of packaged goods as shareholders. They should take responsibility for a minimum of 10 000 tonnes and submit a guarantee in favour of the Environmental Fund.

GEO 74/2018 also stated that a Government Decision should be issued by 1 January 2021 to establish a DRS for non-reusable primary packaging of glass, plastic or metal, with volumes ranging from 0.1 l to 3 l inclusive, used to bottle beer, beer mixes, alcoholic beverages, cider, other fermented beverages, juices, nectars, soft drinks, mineral waters and drinking water of any kind, as well as wines and spirits.
In 2019, through GEO 50, the Government brought more clarity to packaging waste management, amending the legislative framework to enable better cooperation between all actors involved. The main changes were:    

•  New recycling targets for 2019-2022:
  •  60% for overall recycling.
  • 22,5% for plastics. 
  • 60% for paper.
  • 60% for glass.
  • 50% for metal.
  • 20% for aluminium.
  • 15% for wood. 
• A 2% contribution to the Environmental Fund for selling any type of waste.
• A 2 RON/kg fine for collectors and recyclers which declare higher quantities than those identified by an Environmental Fund Authority audit. 
• Introduction of an electronic system for packaging waste traceability – IT system for ensuring the traceability of waste (SIATD). 
• A 50 RON/ton fine for local authorities which fail to meet the targets. For those which have not delegated the sanitation system for separate waste collection the fine will be calculated according to PNGD. 

In 2020, through modification of secondary legislation, the Ministry of the Environment brought some clarity to the relationship between local municipalities and OIREPS. The Ministry also engaged in a project with Jaspers to assess the functionality of the waste management system and proposed measures to improve it, such as the implementation of clearing-houses for packaging waste and for WEEE. However, better enforcement of the legislation is required.  
Under current waste management legislation, the Ministry of the Environment has proposed the implementation of a Deposit Return System for packaging waste, to be implemented starting from 2022. 

RECYCLING RATE OF MUNICIPAL WASTE (%) 2017 

In 2020, the European Council agreed to introduce a levy on non-recycled plastic packaging waste from 1 January 2021, as part of the deal struck on the EU budget for 2021-27 (Multiannual Financial Framework) and the Recovery Plan from Covid-19.
As per the conclusions of the European Council: “a new own resource will be introduced and apply as of 1 January 2021 composed of a share of revenues from a national contribution calculated on the weight of nonrecycled plastic packaging waste with a call rate of EUR 0.80 per kilogram with a mechanism to avoid excessively regressive impact on national contributions.”
 

Since 2003, with the publication of Directive 2002/96/EC, which introduces important changes to support the EU's efforts, the Member States have managed waste through the principle of extended producer responsibility, ensuring that producers meet their targets, individually or collectively.

The new Directive 2012/19 / EU introduces significant changes to support the EU's efforts, including redefining the target for Member States from 4 kg / capita, to a defined percentage for each Member State. This new Directive required the establishment of a methodology to calculate the weight of EEE placed on the national market and a methodology for calculating the weight of WEEE generated.

Currently, in Romania, the management of waste electrical and electronic equipment is regulated by Government Emergency Ordinance no.5/2015 on waste electrical and electronic equipment.

Romania, like many other EU Member States, is facing challenges in achieving WEEE collection targets set by legislation.

Romania has registered poor results in terms of WEEE collection, given the existence of a wide network of informal collection, especially due to “street corner collectors”. This system was developed due to the lack of a municipal WEEE collection service and the inefficiency of local waste management.

Another burden in reaching the WEEE collection target is the lack of enough waste on the Romanian market, due both to cultural behaviour (old equipment is given to relatives in the countryside, or moved to vacation houses) and the fact that many are making their first purchases of electrical equipment (like dishwashers, AC units, and food processors).

Following the agreement of the European Parliament on 16 December 2020, the EU Council adopted the regulation on the new Multiannual Financial Framework (MFF) 2021-2027 and the Next Generation EU economic recovery package (NGEU).

Under the next multiannual financial framework, EU funding will be geared towards new and reinforced priorities across the EU's policy areas, including green and digital transitions. The EU will have an overall target of at least 30% of the total amount of the EU budget and Next Generation EU expenditure supporting climate objectives. EU expenditure will also be consistent with the Paris Agreement objectives and the 'do no harm' principle of the European Green Deal.

The European Green Deal is a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there will be no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the EU's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts.

The Recovery and Resilience Facility is the centrepiece of NextGenerationEU. Its aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.

Member States need to prepare recovery and resilience plans that set out a coherent package of reforms and public investment projects. To benefit from the support of the Facility, these reforms and investments should be implemented by 2026. A minimum of 37% of expenditure in each recovery and resilience plan must be related to climate. Progress towards other environmental objectives is important and in line with the European Green Deal.

The FIC welcomes the authorities’ initiative to “incentivise” actions to promote environmental improvements. Positive developments include the First Reforestation programme (offering first year aid of Euro 6000 for each hectare to be planted, followed by annual financial support of Euro 2700/ha for an average of 12 years), the “Energy Efficient House" programme (through which individuals, owners or co-owners of houses built in Romania can access up to EUR 15,000 for energy efficiency improvements), and the “Casa Verde Fotovoltaice” programme (which offers individuals financing for the installation of photovoltaic panels of up to RON 20,000,. However, the FIC strongly recommends the incorporation of more incentives into Romanian legislation to promote environmentally friendly behaviour by companies, the authorities, as well as by individuals.

Sustainability involves economic development which respects long term environmental and social well-being and Corporate Social Responsibility (CSR) involves companies, as well as the authorities, developing sustainably and supporting the wider community. The adoption of the 2030 Agenda for Sustainable Development and the related 17 Sustainable Development Goals (SDG) by all 193 United Nations (UN) member states during the summit in New York (25 – 27 September 2015) was a strong signal that cooperative action is needed to address some of the world’s most pressing issues (e.g., climate change, extreme poverty, inequality, etc.), providing an essential window of opportunity to rethink approaches to sustainability and a common language for governments, business, and others for addressing systemic interconnected development challenges.

In August 2018, the Romanian authorities published the draft of the National Plan for Implementing the 2030 Agenda for Sustainable Development which translates each target of the SDGs into action plans and also presents the current stage of development in Romania on the road to achieving the SDGs.

Since 2018, Romania has become a regional hub for Sustainable Development, and has committed to  ensuring a sustainable future and the opening of national and international partnerships in order to implement the UN Agenda 2030. Consequently, when Romania held the EU Presidency in 2019, one of the country’s main priorities was the implementation of the UN Agenda 2030 in the European Union. The Romanian Parliament hosted several EU parliamentary meetings on the Agenda for 2030 during 2019. There have been several positive initiatives in Romania in relation to sustainability, such as the National Sustainable Development Strategy (NSDS) for 2013-2020-2030, the National Strategy on Climate Change and Low Carbon Economic Growth 2016 -2020 and the National Action Plan on Climate Change. Given the importance of sustainability, Romania should increase its focus on achieving the objectives set out in these documents.

In November 2018, a new strategy for the Sustainable Development of Romania 2030 was approved by the Government. The 17 objectives of the Sustainable Development Strategy include three main pillars: economic development, social equity and the environment. Steps taken so far as part of this strategy have been the establishment of an institutional framework including the Interdepartmental Committee for Sustainable Development, the creation of centres for sustainable development in each relevant institution, the setting up of the Consultative Council for Sustainable Development formed by specialists, as well as the formation of a coalition for sustainable development formed of representatives of civil society.

The Interdepartmental Committee on Sustainable Development (ICSD), set up by Government Decision no. 272/2019, is one of the key institutions for policy coherence and comprises ministers headed by the Prime Minister.

At the level of central public authorities, the Sustainable Development Hubs are being set up by experts in the field of activity specific to their institution. They also act as liaisons between their institutions, the Department for Sustainable Development and the National Institute of Statistics.

Monitoring of progress is carried out by the Consultative Council on Sustainable Development (CCSD). The work of the 34 members of the Council also supports the effort to deliver a National Action Plan soon. The CCSD was established recently by Government Decision no. 114/2020.

Civil society has also supported the Coalition for Sustainable Development (CSD) which seeks to act as an NGO which advocates for the national SDGs.

The CSD is supported by representatives of youth groups, non-governmental organisations, the private sector, local authorities, unions, employers’ associations, R&D institutions, the academic community, mass media, religious denominations, farmers, the elderly and families.

Sustainable Development in Romania is also harmonised with international efforts. On 25 September 2019, at the SDGs Summit in New York, the Governments of Romania and Colombia, in cooperation with the OECD and UNDP, launched the Global Hub on Governance for SDGs in a high-level side event. The Global Hub is a joint OECD-UNDP initiative which aims to strengthen the capacity of governments worldwide to implement the SDGs.

The Department of Sustainable Development (DSD) in the Romanian Prime Minister’s Office – the national coordinating institution- is carrying out consultations with representatives of each ministry to create the national network of sectoral hubs of sustainable development and to prepare the National Action Plan for Romania’s Sustainable Development Strategy 2030.

The DSD is contributing to the preparation of the Operational Programme (OP) for Sustainable Development and the other OPs from the architecture of programmes that support the Cohesion Policy 2021 – 2027 as well as Romanian policies and strategies including Romania’s Sustainable Development Strategy 2030.

FIC members are investing in building stakeholder trust while also improving their business performance and enabling opportunities for long term value creation. FIC members encourage transparency in all sectors.

An important step made in 2016 was the early transposition of the provisions of Directive 2014/95/EU amending Directive 2013/34/EU on disclosure of non-financial information by certain large undertakings and groups, as well as by the appropriate national authorities (i.e., the Ministry of Finance, the National Bank of Romania, and the Financial Supervisory Authority). Even though the initial partial transposition of the Directive did not impose any additional requirements except those stated in the Directive, in 2018 the Ministry of Finance adopted a new Order (Order No. 3456/2018) which clarifies the meaning of entities required to disclose non-financial information. Consequently, entities with over 500 employees are required to disclose information on policies, risks and outcomes related to environmental matters, social and employee-related issues, respect for human rights, anti-corruption and bribery issues, as well as diversity starting from the 2019 reporting year. The required non-financial information can be disclosed either as a distinct report or as a “non-financial statement”. The financial auditor is required to verify that the non-financial statement or the separate report has been provided, and not the compliance with the requirements of the law.

Consequently, entities with over 500 employees are required to disclose information on policies, risks and outcomes related to environmental matters, social and employee-related issues, respect for human rights, anti-corruption and bribery issues, as well as diversity starting from the 2019 reporting year. The required non-financial information can be disclosed either as a distinct report or as a “non-financial statement”. The financial auditor is required to verify that the non-financial statement or the separate report has been provided, and not the compliance with the requirements of the law.

However, currently, only a relatively small number of companies publish non-financial reports/statements. Consequently, improvements are needed to the legislation such as introducing more significant penalties for not publishing a report/statement, complemented by penalties for non-compliance with the legislation. Moreover, a public institution should be set up to monitor and enforce compliance.

The lack of non-financial information in the public sphere to demonstrate the level of performance of companies could lead to the loss of development opportunities.

For example, companies which fail to disclose this information could find it harder to attract investors, who might be unable to estimate adequately the risks and opportunities related to:

• The sustainability or social and environmental impact of their investments.
• Whether their investments are orientated towards companies that meet the objectives of sustainable development.
• Whether their shareholders will be confident that investments are directed towards companies which take responsibility for the impact of their activity on society and the environment.

In future, the publication of non-financial statements and the adjustment of business strategies to go beyond merely the limits of legal obligations will be increasingly expected by the national and international context of sustainability. Competitors will publish this information, while customers and the general public will be increasingly concerned with social responsibility and environmental protection. Moreover, national and international bodies will require this information, and increasingly employees and providers of finance will want to see it too. The Directive states that reporting entities can use any local, European or internationally recognised non-financial reporting standards/guidelines, and this recommendation is repeated in the Romanian regulations which transpose the Directive.