Sir John opened the discussion by saying that he believed that economic activity will ultimately be affected by ecological constraints, pointing to the fact that economies throughout history have always been faced with limits through lack of natural resources. However whilst in the past this occurred mainly at a local/regional level (exhaustion of local forests, over-grazing), it is only in recent times that this has impacted upon the global economy through climate change. He stated that the UK's economic standing would increasingly depend on resource efficiency, however he believed that that transition wasn't yet happening quickly enough. Although the EU's Lisbon Agenda does mention the problems and opportunities of resource efficiency, he believed that it was still purely growth driven, and in the UK, whilst the Prime Minister and the Chancellor had discussed the issue, in reality Britain hadn't done as well as it should have done to encourage more efficient usage of resource.

Arguing that in the UK, the social/ environmental agenda is often see by business as a regulatory burden, he said that some statements from organisations such as the CBI seem to be rooted in the business environment of 20 years ago, seeing environmental regulation simply as a hindrance and a barrier to doing business, and not seeing it as an opportunity. This was replicated in other EU countries, where increasingly businesses and trade bodies were becoming concerned about competition from developing nations such as China and India where environmental standards and regulations were low or non-existent, and in conjunction with the increasing social burden (eg pensions) leading to those organisations beginning to question the affordability of EU environmental standards. On the government side, burgeoning social expenditure is squeezing other spending, making it averse to introducing measures which might be seen to reduce short term economic growth and tax revenues.

However, Sir John made the case that good environmental regulation does not harm competitiveness; he pointed to a study by the World Bank in 1994 that showed that higher environmental standards in industrialised countries have not tended to lower their international competitiveness, and a further report from the World Resources Institute that found no evidence that industries affected by regulatory costs do poorly in international markets. In fact, he said that the situation was quite the opposite;- that there was a strong correlation between the competitiveness of nations and their environmental regulatory regimes, and a further strong link between levels of economic development and environmental performance.

He stated that industry estimates of the cost of environmental protection are consistently overestimated- pointing to the CBI's claim that the EU's Environmental Liabilities Directive would cost UK business £1.8bn; yet final costs were under £50m.

Harman highlighted that good eco-efficiency is good business for the individual firm- an Environment Agency review of 60 recent studies of companies, sectors and pension funds found a link between environmental and financial performance in 51 of them, and a further study by The Climate Group found total savings of €6billion by 5 major international companies undertaking active greenhouse gas reduction policies. He also stated that the benefits are often unaccounted for- it is thought that the value of eco-system services in Scotland is around €22billion- about ¼ of Scottish GDP, and the Climate Change Programme Review estimates that recent energy efficiency interventions in the UK have had a Net Present Value (NPV) benefit of £80billion.

Harman admitted however that bad regulation did exist, and that this was in a large part the fault of regulators (including the Environment Agency) because of the layering of new regulations; new regulation being introduced on top of old, leading in many cases to a confusing amalgamation which could lead to negative impact upon businesses. He stated that the main driver for regulators must be measuring performance and outcomes, and that whilst the original purpose of environmental regulation was to protect humans from the worst excesses of pollution, in today's economy a new purpose must be added; that of shaping economic development along the path of resource efficiency. He said that government, regulators and industry must embrace environmental regulation not just as a tool to protect the environment but to ensure economic growth and long-term prosperity.

Michael Roberts argued that the CBI strongly supported environmental regulation, and said that the organisation had been explicit in stating that, for a number of reasons, both economic and ecological. However he said that there were two ways of looking environmental regulation- as a source of cost for business, and as a source of opportunity, and there were challenges related to both which had to be addressed. Although estimating the annual cost to UK business of environmental regulation to be £3-4billion, Roberts said that this was in fact lower than the equivalent figure in other EU countries such as France and Holland, and to date, this had led to a comprehensive competitive advantage for British firms. However increasingly in those countries the share of national wealth spent on environmental regulation had been falling, something that was not replicated in the UK, resulting in erosion of the previously enjoyed advantage.

Pointing to the opportunities created by good regulation, he stated that the global market for environmental goods and services was worth $500billion, however currently British firms had only a 5% share of that market, and that this was much lower than France and Germany. Providing a business environment that is conducive to growing the UK's share by focussing on minimising cost, and maximising opportunity whilst ensuring that ecological protection should be the priority for government and regulators. Roberts highlighted three main problem areas that he said CBI members encountered; the design of legislation, transposition from EU to UK law, and issues of enforcement. On design of environmental legislation, he stated that the picture was mixed; but there had been good news on this recently, particularly with the Environmental Liabilities directive; the UK had been instrumental in achieving an outcome that had been widely welcomed by most sectors. With transposition, he said that there was a major problem when transposing European legislation into UK law;- particularly evident with the issue of the WEEE legislation. He stated that the delays and short timescale that seem to occur regularly doesn't provide an atmosphere which encourages good legislation and effective implementation. Finally, the issue of enforcement is something that concerns the CBI; he stated that they wish to see more effective enforcement and penalties for those organisations that do not comply with environmental regulation and regularly break the rules, something that at the moment seems to be applied somewhat arbitrarily.

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