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Business and the Natural Environment > Regulating the Environment > Flashcards

Regulating the Environment Flashcards

1
Q

How is Patagonia a case of CE?

A

Not just waste management as trying to change the industry by sharing their practices. They take customer’s old clothes – not just dealing with their own waste.

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2
Q

What are the two types of enforcement?

A

Command and control (hard law) = use of process or technology specified by the regulatory, explicit performance requirements, state regulation

Market/Incentive Based (soft law) = allowing the regulated entity to determine the best way to reduce pollution

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3
Q

What are the principles of environmental hard law?

A

Polluter pays principle

Precautionary pays principle

Proximity Principle

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4
Q

What is the polluter pays principle?

A

Those who produce pollution should bear the costs of managing it to prevent damage to the environment and human health

Responsibility for safe disposal of by-products

Underpins most regulation of air, land and water pollution

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5
Q

What is the precautionary principle?

A

Preventative action where scientific understanding is incomplete

Shouldn’t adopt technology until we know what the negative impacts are

E.g GMOs, AI

Typical in EU regulation

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6
Q

What is the Proximity Principle?

A

Waste should be treated + if possible eliminated at the source

To minimise extra environmental impacts asa result of waste management

Waste should not be exported (host countries gradually declining trade of toxic waste)

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7
Q

What is the case for and against exporting waste?

A

FOR

  • Minimising the cost of treatment/disposal
  • Promote trade - economic opportunties with exporting waste
  • Investment opportunities
  • Creation of jobs - economic growth

AGAINST

  • Corruption in receiving country
  • Ignoring unsustainable consumption
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8
Q

What are examples of command and control regulation?

A

WEEE directive - waste electric and electronic equipment directive

RoHS Directive - restriction of hazardous substances regulation

Environmental Protection Act (1990) national laws

The registration, evaluation and authorization of chemicals (REACH) regulation

New South Wales GHG Abatement Scheme (2003) - criticised by Center for Energy snd Environmental Markets (CREEM) due to lack of impact

Clean Air Act (1993) regarding smoke

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9
Q

How have views on command and control regulation changed?

A

Command and control popular until early 80s. New narrative towards running economies in 70s – market liberalisation.

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10
Q

What is market based regulation?

A

Neo-liberal Econ models: promoting shrinking of the state and transfer of economic, social and environmental responsibility to the private sector

Market can self-regulate

Can maximise benefits from design and implementing tools that address the market’s needs.

Not compulsory

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11
Q

What are examples of market based regulation?

A
  • ISO14001
  • Fair trade
  • GRI
  • Green Tourism
  • EMAS
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12
Q

What are marketable pollution permits as an example of market based regulation?

A

Permits which give the firm the right to emit a specific amount of pollution

Polluters are free to buy and sell the right to pollute

Can help achieve desired level of pollution emissions

Assigns global initial levels (very good because we can control them globally) by setting maximum initial levels for companies.

Dependent on sector

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13
Q

What are the positives of command and control?

A
  • Easier to enforce and administer; clear requirements and sanctions
  • Impossible to cheat - either implement or do not
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14
Q

What are the negatives of command and control?

A

More expensive for the regulated community: state involved, numerous parties involved, increase red tape, bureaucracy

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15
Q

What are the positives of incentive regulation?

A

Much cheaper for the regulated community

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16
Q

What are the negatives for incentive regulation?

A
  • Difficult to administer and enforce
  • Incentive to cheat - cheaper to implement symbolically than substantially
  • UN Global Compact
  • ISO 14001 certified may emit just as much air pollution
  • Cheaper to fake. no sanctions
17
Q

Are command and control and market based regulation truly adversaries?

A

Porter hypothesis - strict environmental regulations can induce efficiency and encourage innovations that help improve commercial competitiveness

Strict regulation complements self regulation by triggering adoption of voluntary self-regulatory tools for environmental protection

Enhances private sector approach

18
Q

What is the argument against Porter’s 1991 hypothesis of regulation adversaries?

A

The adoption of self-regulatory tools as a shift from “government” to “governance” where non-state actors increase their participation in the regulatory actions

But, significant drawbacks of self regulation

Conceptualised as adversaries or substitutes

19
Q

What is indirect state regulation?

A

Tax

20
Q

What is in house self regulation?

A

Comply with all requirements of these tools without adopting external certification

21
Q

How is self and state regulation paradoxical?

A

Good to have a logo to demonstrate certification to society – how would we know what they are doing? Information signalling.

22
Q

What is the issue with in house implicit regulation?

A

Adopting compliance without a logo, performance demonstrates commitment - doesn’t overcome info asymmetries - stakeholders expect credible signals, positive reaction to logos

Research often doesn’t differentiate between in-house and externally certified forms

23
Q

What is the issue with the adversary debate?

A

Little attention is given to understanding how + which types of environmental regulation can stimulate voluntary self-regulatory approaches to corporate environmental protection, and which cannot - crucial in a globalized business environment

24
Q

Why is certification used?

A

As a solution to information asymmetries and collective action problems stemming from “naming and shaming” activist initiatives and in attempt to regulate global supply chains and correct market failures

Crucial role in corporate environmental performance

25
Q

Where is a more detailed focus needed?

A

Focus on two important dimensions of an environmental regulatory regime:
A) Direct instruments (i.e environmental regulations)
B) The stringency of environmental policies

26
Q

What is the role of direct instruments in terms of environmental regulations and in-house adoption of self regulation?

A

Existing argument - firms use self reg tools to avoid sanctions stemming from direct instruments

Direct regulation is seen as an enabler and a moulding force for the formation of corporate environmental governance regimes + thus a driver for self regulation

27
Q

What did an analysis of more than 2000 UK firms show in terms of self/inhouse regulation?

A

In heavily regulated environments, firms might not need to certify their approach to regulation

Abide by laws

Less to gain from certification, less significant

Self regulation promotes continuous improvement above state regulation

28
Q

How is in house adoption of regulation more effective in ensuring improvements in environmental performance?

A
  • Less regulatory relief to certified firms
  • Wise thing to do – complements state regulation
  • Substitutes for certification
29
Q

How does the private sector respond to self regulatory tools in political/economic instability?

A

Feel they must demonstrate they are credible

Weakening of regulatory environment leads to an increase in certifications

30
Q

Why would we expect regulation to deter certification?

A
  • High certification cost
  • Benefits might be negligible
  • Little added value when there is urgency
  • Opt for alternative compliance
31
Q

How does stringency of environmental regulation relate to in house adoption?

A

“explicit/implict policy induced price of environmental externalities”

More stringent = self regulation of higher value to firm to control impact and reduce risk of non compliance

UK confirms this for in house adoption

32
Q

How does Nigeria demonstrate that state regulation complements certification?

A

Weakly regulated Nigeria wants to export to Canada where there is heavy regulation

Crucial to emit credible signal

Allows climbing up of competition ladder

33
Q

How does stringency of environmental regulation relate to certified adoption?

A

In the absence of clear regulatory criteria, externally certified forms of self-regulation fill the void and help the firm gain legitimacy and transmit information to external stakeholders

Business and the Natural Environment (10 decks)

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