Hartmann

Question 1

Tragedy Of the Commons

Answer 1

“Every individual has an incentive to consume a resource but at the expense of every other individual - with no way to exclude anyone from consuming”

Question 2

How to escape the Tragedy of the Commons?

Answer 2

1) Centrally Enforced Solutions 2) Privatization 3) Governing the commons

Question 3

1) Centrally Enforced Solutions

Answer 3

Price the externality e.g. access fee total to the externality caused; Set limits on quantities per individual
Require: non-corrupt authority, knowing payoff function, political decision making

Question 4

2) Privatization

Answer 4

Rights with exclusive use BUT might postpone and not solve problem AND some commons (atmosphere, water) are impossible to privatize

Question 5

3) Governing the commons

Answer 5

Clear boundaries, balance of costs and benefits, reliable monitoring of shared resource

Question 6

Regulation and Compliance

Answer 6

Public Policy denotes plan by government officials to achieve some broad purpose

Question 7

Three divisions when Regulations are needed

Answer 7

1) Market Failure 2) Negative Externality 3) Natural Monopoly

Question 8

1) Market Failure

Answer 8

Inability of market to adjust prices to the true costs of a firms behavior e.g. no incentive to spend money on emissions control or build up recycling infrastructure

Question 9

2) Negative Externality

Answer 9

Manufacturer gives rise to unplanned costs borne by consumers, competitors, communities e.g. greenhouse gasses that cause global warming

Question 10

3) Natural Monopoly

Answer 10

Concentration of Market is acquired by a few firms

Question 11

Types of Regulations

Answer 11

1) Environmental Regulation 2) Market-based mechanisms 3) Information Disclosure 4) EU corporate sustainability reporting directive 5) Supply Chain due diligence regulation

Question 12

1) Environmental Regulation

Answer 12

Standards that prescribe allowed levels of pollution - government controls compliance

Question 13

2) Market-based mechanisms

Answer 13

Regulations that use incentives to reduce environmental impacts e.g. taxes, tradable permits, subsidies

Question 14

3) Information Disclosure

Answer 14

Mandates public disclosure such as GHG emissions or wastes - “regulation by embarrassment”

Question 15

4) EU corporate sustainability reporting directives

Answer 15

Non-Financial-Reporting Directive vs Corporate Sustainability Reporting Directive

Question 16

Non-Financial Reporting Directive

Question 17

When will it enter into force?

Answer 17

2018

Question 18

To which firms will it apply?

Answer 18

Large companies of public interest > 500 employees

Question 19

What do firms need to report?

Answer 19

Environment. Protection, Social Responsibility and Treatment of Employees, Respect for Human Rights, Anti-Corruption, Diversity on Company

Question 20

Is there third party assurance?

Answer 20

Non mandatory in most countries

Question 21

How do firms need to report?

Answer 21

Part of annual report - online, PDF

Question 22

Corporate Sustainability Reporting Directive

Question 23

When will it enter to force?

Answer 23

2023

Question 24

To which firms will it apply?

Answer 24

Companies meeting 2of3 criteria: - 250 employees and/or 40M Turnover and/or 20M total Assets

Question 25

What do firms need to report?

Answer 25

Double materiality impact (ON & OF the Firm) process to select material topics for stakeholders, forward looking information and information relating to intangibles, reporting in line with sustainable finance disclosure regulation and EU taxonomy regulation

Question 26

Is there third party assurance?

Answer 26

Mandatory: - Integration in Auditors report, - Involvement in key audit partner, - scope to include EU Taxonomy and process to identify key relevant information

Question 27

How do firms need to report?

Answer 27

Part of management report, Electronic format in accordance with ESEF regulation

Question 28

5) Supply Chain Due diligence regulation

Answer 28

Supply-Chain Due diligence Act (DE) vs Supply Chain Due Diligence Act (EU)

Question 29

Supply Chain Due Diligence Act (DE)

Question 30

When will it enter into force?

Answer 30

2023

Question 31

To which firms will it apply?

Answer 31

Companies with more than 3.000 FTE (full-time-equivalent) 2023, companies with more than 1.000 FTE 2024 ~ 4.500 companies in Germany

Question 32

What do firms need to comply with?

Answer 32

Human rights preservation, Minamata Convention on Mercury, Stockholm convention on persistent organic pollutants, extension to tier-n if necessary

Question 33

What are consequences for non-compliance?

Answer 33

Fines (painful), Exclusion from public tenders

Question 34

Supply Chain Due Diligence Act EU

Question 35

When will it enter into force?

Answer 35

TBD - to be determined

Question 36

To which firms will it apply?

Answer 36

Large EU limited liability companies ~ 500 FTE, smaller l.l.companies operating in high impact sectors (~250FTE) ~17.000 companies in the EU

Question 37

What do firms need to comply with?

Answer 37

Human rights preservation, pollution prevention, alignment with Paris agreement across entire supply chain

Question 38

What are consequences for non-compliance?

Answer 38

Fines, Criminal Liability, Exclusion from public tenders

Question 39

Benefits of Regulations

Answer 39

Emissions of nearly all pollutants dropped since 1970
air, water and health quality improved, jobs were created