Ecological modernization theory is one of the major sociological theories aimed at understanding how modern societies are dealing with environmental reform. Environmental reform encompasses the notion that modern industrial societies can solve environmental problems through intensified development of innovative industrial technology, through modification of processes of production and consumption according to ecological criteria and the application of ecological efficiencies measures, and through green marketing and other strategic environmental management practices (Buttel, 2001; Mol, 1995).
During the early development of ecological modernization theory in the 1980s the emphasis was on the role of technological innovation, especially in the sphere of industrial production. From the late 1980s onward, more attention was given to the institutional and cultural dynamics of ecological modernisation. The emphasis was still very much on national studies regarding West-European countries. From the mid 1990s onward, increasing attention has been paid on the one hand to the global dynamics of ecological modernisation, and on the other hand to national studies in developing countries, Central and East European nation-states, and the USA (Huber, 2000; Mol, 2000, 2001; Spaargaren & Mol, 1992).
Below, three key concepts of ecological modernization theory are presented in more depth, because they are of particular relevance to this study: institutional transformation, environmental rationality and market dynamics.
30 NGOs and the sustainability of SMEs in Peru
2.2.1 Institutional transformation
Ecological modernisation theory recognizes the structural character of environmental problems but nonetheless assumes that existing political, economic, and social institutions can internalize environmental protection. To restructure modern societies on an ecological basis, the institutions of modern society, such as markets, the state and science and technology, need to be radically transformed (Mol, 2000). According to ecological modernization theory institutional transformation means redefinition of roles of the state vis-à-vis market actors and NGOs (Mol, 1995, 2000; Seippel, 2000). This transformation implies furthering ecology into the process of modernization, according to some in a so-called process of hyper-or-superindustrialization (Mol, 1995). It also implies a transition of modernity to a reflexive modernity phase (Spaargaren, 2000) that will be radically different from the simple modernity phase which prevailed during most of the twentieth century. Thus, ecological modernization theory incorporates the idea of reflexive modernization in dealing with the ecological crisis (Mol, 1995; Mol & Spaargaren, 2000).
An important aspect of institutional transformation is the increasing role of non-state actors in environmental policy and the replacement of the old hierarchic state model with new governance styles (Mol & Spaargaren, 2000). Under these new governance styles, the state, businesses and NGOs are identified as companions in environmental struggles rather than enemies (Mol, 2000). Ecological modernization theorists observe that the current environmental movement is shifting from radical opposition to more cooperative stances toward industry, encouraging environment- oriented business practices (Buttle, 2001; Grohmann, 1997; Hallstrom, 2004; Mol, 2000). As a result this change in ideology and strategy seems to provide NGOs with better access to both the general public and the core of policy communities in the environmental field (Mol, 2000).
2.2.2 Environmental rationality
Environmental rationality means focusing on re-directing economic processes according to ecological criteria and towards ecological goals. To institutionalize environmental rationality in production and consumption processes, and thus to redirect economic practices into more ecologically sound ones, the ecological sphere, characterized by ecological rationality, has to be emancipated from the economic dimension of modernity (Mol, 1995; Mol & Spaargaren, 2000; Spaargaren, 2000). The emancipation of ecological rationality is not perceived as a process towards the dominance of ecological rationality or the ecological sphere over or instead of the economic rationality and sphere. Each one has its own goals, realm and legitimacy (Mol, 1995). The social practices of production and consumption should be designed and evaluated according to both environmental and economic rationalities (Mol, 1995). Furthermore, environmental rationality is no longer automatically linked to, nor can it be reduced to, more traditional political, economic, social or other rationalities, or to ideologies such as socialism, conservatism and liberalism (Mol, 2000).
There are two main mechanisms in the re-structuring of economic practices according to principles of ecological rationality. These mechanisms are called ecologizing of economy and economizing of ecology. Ecologizing of economy refers to the development of new and more environment-friendly technologies and processes. It includes several strategies, such as more
2. Analysing changing NGOs-SMEs interactions: theories, concepts and a framework 31
efficient material and energy use, closing of substance cycles and the monitoring of material and energy flows. It also may imply substitution of ecologically maladjusted technical systems and economic sectors. Economizing of ecology refers to placing an economic value on nature and environmental pollution. It include several strategies, such as eco-taxes, environmental liability, insurance for environmental care, technological transformation and change such as cleaner production, ecological sound products on the market, environment as factor in economic competition, environmental audits as precondition for commercial loans and economic investments, and environmental accounting and bookkeeping (Mol, 1995).
The restructuring process should result in the institutionalization of ecology in the social practices and institutions of production and consumption. Through these processes, as ecological modernization posits, it is possible to combine economic prosperity and environmental protection. Environmental protection is no longer seen as a burden upon the economy, but rather as a potential source of future growth (Langhelle, 2000). Thus, a sound environmental performance is a precondition for sound economic performance and, vice versa, that taking care of the environment could mean profitable business (Seippel, 2000).
2.2.3 Market dynamics
Market is a key concept in ecological modernization theory. In the process of ecological modernization, liberal market capitalism is redirected and transformed in such a way that it less and less obstructs, and increasingly contributes to, the preservation of society´s sustenance base (Mol & Spaargaren, 2000). Market dynamics are seen as a social carrier of ecological restructuring and reform (Mol, 2000).
The theory highlights the new role of the market in triggering environmental protection (Mol & Spaargaren, 2000). Not only do the emerging environmental interests open up new markets and create new demands, it also stimulates innovation in methods of production, industrial organization and market supply. Rather than a threat for the system, markets become a vehicle for its innovation (Hajer, 1995). According to Mol and Spaargaren (2000), market forces, innovative entrepreneurs, consumers, insurance companies, creditors and commissioners, among others, will emerge as new important forces in and drivers and social carriers of the ongoing process of socio-ecological transformation. Examples of profitable market activities are the expanding eco- innovations in the chemical industry, the development of environmental technologies and the provision of ecological advice (Mol, 1995).
According to ecological modernization theory, the market is considered to be a more efficient and effective mechanism for coordinating the tackling of environmental problems than the state (Mol, 1995). Being rooted in the principles of a preventive environmental policy and a social market economy (Andersen & Massa, 2000), ecological modernization theory argues for a transfer of certain responsibilities, incentives and tasks from the state to the market. The state provides the necessary conditions and stimulates social self-regulation, either via economic mechanisms or via the public sphere of citizen groups, environmental NGOs and consumer organizations. The shifting traditional role of state worldwide is one of the factors contributing to the shifting roles of NGOs.
32 NGOs and the sustainability of SMEs in Peru