Chapter 9 - Corporations and Market Forces Flashcards
What are two reasons why Corporate Law is viewed more environmentally friendly?
- Protects shareholders from liability
- Mandates that corporates operate in their own best interests.
In what four circumstances does the corporate veil not protect against environmental liability?
- Personal liability for officers and directors
- Vicarious liability for acts of employees
- Parent corporations liability for acts of a subsidiary
Define Vicarious Liability:
The legal responsibility of one party for actions of another.
Define Subsidiary:
A corporation whose controlling interest is owned by the parent company
Define Corporate Mandate:
The statutory requirement that corporations operate in their own best interests.
Define Externalities:
Public costs of environmental degradation
What are Fixed-price measures?
Tax and subsidy incentives to reduce pollution
What are the two types of Fixed-Price Measures?
- Emission Taxes
- Subsidies
What is a criticism of Fixed-price measures?
They do not provide for a limit or cap on the total amount of pollution discharged
What are tradable emission rights?
AKA Cap and Trade; rights representing specified quantities of emissions that are issued to polluters and that may be traded.
What is a criticism of traceable emission rights (aka cap and trade)?
The baseline is often set too high, thereby redistributing pollution but not reducing it.
The amount of tax or subsidy is fixed by the ____________ per unit of pollution.
government
What are Economic Instruments?
Fiscal and other economic incentives and disincentives designed to encourage companies to absorb at least some of the environmental costs of doing business.
Define Cap and Trade:
A policy and legal tool for controlling emissions from a group of sources; a maximum limit on emissions is set, and emitters covered by the program are authorized to emit based on the emission allowance of the cap; emitters must meet reduction requirements, and may sell or purchase allowances to do so.
___________ are taxes charged on units of contaminants released into the environment.
Emission taxes
Provide an example of an emission tax:
Carbon Tax
Define Subsidies:
Grants, loans or tax breaks provided to polluters for reducing discharge, with the size of the subsidy based on the amount of the reduction
Define “Baseline” in terms of environmental emissions:
An aggregate cap on allowable emissions
Economic instruments are based on the classic economics assumptions of ______________
rational choice
Define Behavioural Economics:
A method of economic analysis that incorporates psychological, sociological, and neuroscience insights into human behaviour.
What does “nudging” mean?
Consumer influences and social norms that promote positive (environmental) behaviour
In the 1990s, a variety of non-regulatory instruments were introduced through ____________ - ____________ cooperation.
government, industry
True or false: Non-regulatory instruments are sometimes used as supplements to regulation.
True
What are the most important types of non-regulatory instruments?
- Eco-labelling Programs
- Green Consumer Education Programs
- Industry Association Performance Obligations
- Organizational Operations
- Pollution Reduction Agreements
- Profit from Pollution Prevention Programs
- Sectoral Abatement Challenges
What does it mean to have “Organizational Operations”?
Companies may adapt their organizational operations—through energy use, production processes, and so on—to conform to an environmental manage-ment system.
What are Pollution Reduction Agreements?
Agreements to reduce pollution may be negotiated between governments and either industries or industrial sectors.
Explain what “Industry Association Performance Obligations” are:
Agreements to reduce pollution may be negotiated between governments and either industries or industrial sectors.
True or false: Non-regulatory instruments are often called “voluntary”, which is technically incorrect.
True, they do not involvement direct regulatory obligations.
Provide some ways that show the interconnectedness between voluntary initiatives and law:
- Voluntary codes may elaborate or refine legal requirements
- Voluntary codes may be used in private legal actions
- Voluntary compliance may train firms & their employees in quantification and reporting techniques in advance of legal requirement
Why are the two reasons as to why we are likely to see increasing use of non-regulatory instruments?
- Regulatory initiates are not enough
- Pressure form public interest groups has grown
What are some drivers of change associated with environmental regulations and non-regulatory instruments?
- Reduce costs
- Desire to avoid or delay
- Fear of damage to public
- Demands of suppliers and consumers
- Pressure from staff
- Personal commitment of corporate leaders
True or false: Corporate law does not protect against environmental liability in certain circumstances.
True
True or false: Legal corporate mandates do not prevent corporations from acting environmentally responsibly.
True
_______________ have been used to achieve environmental objectives and hold potential for the future
Economic instruments
A __________________ is the most common form of business organization.
Canadian Corporation
What kind of law generally governs the forms of business organization?
Provincial Law
A ________________ is a separate legal entity, distinct from its shareholders and management, that can hold property, carry on business and incur contractual and legal obligations
corporation
A corporation can be __________ or ___________
private, public
What is a non-offering corporation also known as?
Private Corporation
What type of corporations are subject to restrictions on the transfer of shares>
Private Corporations
Corporations wishing to carry on business in more than one province or in foreign countries may prefer to incorporate under ______________.
federal law
What kind of law permits the corporation to use its corporate name in every province in Canada?
Federal Law
Who is responsible for a corporation?
A Canadian Corporation acts through its board of directors and officers
What happens is boards of directors and officers neglect their duties?
They may be subject to personal liabilities
_________ typically appoint ____________ and delegate some of their powers who conduct the day-to-day management
Directors, officers
How is a corporation capitalized?
Through shares, dept financing and borrowing
What is a share?
A share represents a portion of corporate capital and typically entitles the holder to a proportional right to corporate assets on dissolution
What are the basic procedures governing shareholder participation?
- Shareholder meetings
- Written resolutions
______________ protects shareholders from liability for torts committed by a corporation.
Corporate law
Under what four circumstances does corporate law not protect against environmental liability?
- Personal liability for officers and directors
- Vicarious liability for acts of employees
- Parent corporation’s liability for acts of a subsidiary
- Owner’s liability for a contaminated site
Where is corporate mandate legislated?
In the Canada Business Corporations Act
What is the international guideline for corporations activities abroad?
Guiding Principles on Business and Human Rights
What can project an environmental friendly image to consumers and customers?
Corporate Social Responsibility
What is the CSR?
Corporate Social Responsibility
What is an Ombudsperson?
An independent official who investigates complaints and works to resolve issues.
What does the Canadian Ombudsperson for Responsible Enterprise do?
They review complaints about possible human rights abuses by Canadian companies when those companies work outside Canada in the garment, mining, and oil and gas sectors
Who was Berta Caceres?
A honduran activist who was assassinated for advocating and opposing an extractives development in her community.
In what two ways can public costs be reduced?
- Regulating an activity causing damage
- Imposing penalties or fines for non-compliance
Behavioural “__________” can promote support for environmentally sustainable policies and action
nudging
What are the three voluntary aspects of non-regulatory instruments?
- Non-regulatory instruments are more effective with an implicit threat of more stringent and less
flexible regulation - Industry associations may push members to improve performance beyond regulatory requirements
- Indirect pressures (concerns about liability) may encourage compliance with non-regulatory instruments
What are some advantages of Non-regulatory Instruments?
- Flexible
- May raise environmental performance at a lower cost
- Can be easier to implement
What are some disadvantages of Non-regulatory instruments?
- Less well-defined
- More difficult to test for adequacy and effectiveness
- Less open to public scrutiny
- Less evenly applied
What are the the three pillars of non-regulatory instruments?
- State: to protect
- Corporation: to respect
- To remedy
