Private Environmental Governance
Authors:
Vandenbergh, Michael P. / Light, Sarah E. / Salzman, James
Edition:
1st
Copyright Date:
2024
12 chapters
have results for environment
Chapter 5 The Legal Rules of the Road 6 results (showing 5 best matches)
- Different aspects of corporate and business law can impose legal obligations on business firms to take the environment into account. The clearest example of such a mandate exists in securities
- One option for private environmental governance to address this tragedy of the commons is for all of the business firms that participate in the fishery to get together to set limits on their catch. They could also enter into an agreement to limit the number of new “outsiders” that would be allowed to fish as well. They could raise prices for the remaining catch to ensure that their profit levels are not harmed by this long-term focused behavior. Indeed, Elinor Ostrom’s work, which we referenced in Chapter 2, highlights “insider solutions” like these to address the tragedy of the commons. And the goal of such an agreement would be to promote conservation of the fish within the fishery—in other words, putting the environment first.
- Imagine that you are the Chief Executive Officer of a publicly traded firm that sells consumer products. Your Board of Directors has agreed with your assessment that it is in the firm’s best interest to make a public pledge both to achieve “net zero” emissions in the firm’s operations and its supply chain by 2050, and to reduce the firm’s other environmental impacts. And you also agree that it is the right thing to do for the environment. Some of the key ingredients for the firm’s best selling products are under stress from extreme weather events and droughts, so you know it is time to be forward-thinking about protecting the inputs to the firm’s products. You believe, based on research, that consumers are likely to be willing to pay a “green premium” for some of these more environmentally friendly products. And you know that your employees will be happy with this change, as they have signed petitions seeking a more environmentally conscious path for the firm.
- sets the rules governing how business firms interact within the marketplace. We might applaud a firm for including provisions requiring carbon emissions reductions in its contracts with suppliers, or two firms getting together to agree on catch limits within a fishery and taking steps to exclude others to conserve the fish population. These steps would potentially protect the environment, but under certain conditions they also might violate antitrust law. And finally, the law may provide incentives or disincentives to engage in private environmental governance.
- ...generally considered to be part of environmental law. But antitrust law has significant implications for private environmental governance because it structures the permissible forms of interaction among firms within the marketplace. Certain forms of agreements between or among firms—even with good faith intentions to protect the environment—may run afoul of antitrust law’s prohibitions. For example, firms in the consumer products industry might want to agree that they should stop selling large boxes or bottles of detergent in favor of smaller, more concentrated formula, but fear being the “first mover” to sell what appears to be less product. Major automakers might desire to agree to sell vehicles that emit fewer particulates from their tailpipes, but fear being the “first mover” in their industry to sell a car that might have a higher sticker price to account for the new technology. Antitrust law in the United States would prohibit these firms from getting together to agree to...
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Supplemental Reading 3 results
An Introduction to Private Environmental Governance 7 results (showing 5 best matches)
- It is worth noting that many business leaders have begun to take a different approach in recent years—one that focuses on promoting long-term value for all stakeholders (including employees, customers, the local community, and the environment), not just profits for shareholders. We will examine these objections and this debate over corporate purpose in more detail in Chapter 5.
- Just over 50 years ago, a flurry of laws launched the modern era of environmental protection. The Clean Air Act, Clean Water Act, Endangered Species Act, and other innovative statutes created a powerful set of tools to clean up and protect the nation’s environment. This dynamic period, though, was brief. By the 1990s, increased partisanship had set in; environmental initiatives in Congress had slowed to a dribble. Yet public concern over environmental protection remained strong as new kinds of environmental threats took center stage—from climate change and microplastics pollution to agricultural runoff and toxic chemicals.
- adopted and new bodies created such as the UN Environment Program. If you wanted to understand environmental law and policy, government was the place to look.
- You may notice that this definition does not consider intent. As we shall see throughout the book, there are many reasons private actors may protect the environment. PEG may arise from efforts at branding (“We are the green company!”) or risk management. It may be in response to social media pressure or demands from employees. Or it may stem from the fact that it is no longer sufficient for a company, university, or other organization to have a legal license to operate. These organizations now need a social license to operate. Or it may be a combination of all of these and others. The key question is whether it leads to improved environmental protection.
- In the deeply contested policy environment (a recent poll concluded that climate change is the most polarized issue in the U.S.), PEG potentially offers private sector solutions that bypass partisan gridlock and solution aversion. To take one example, because of powerful agricultural lobbying efforts, most environmental laws contain exemptions for farming activities. This makes it difficult to regulate agricultural nutrient and pesticide runoff. PEG requirements are beginning to emerge, though. These efforts take advantage of the fact that retailers and food processors are sensitive to their reputations among consumers and investors and can play a role in improving the practices of farmers. PEG initiatives also can bypass concerns about government intrusion into households and reduce energy use from the household sector.
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Chapter 2 Perspectives on Environmental Governance 12 results (showing 5 best matches)
- Once we have identified the misaligned incentives of free riders, externalities, polarization and other barriers to environmental protection, we still need to decide what we are managing for. We are managing for a cleaner environment, of course, but environmental protection inevitably requires trade-offs. How can we know which trade-offs to accept?
- of the firm as well. Other stakeholders can include the firm’s employees and customers, the local community, and even the environment itself.
- In contrast, a stakeholder-based view of corporate purpose leaves a great deal more discretion to managers to take into account not only the short-term cost of the sustainable materials, but also the longer-term benefits to all of the firm’s stakeholders, not just those who own shares. For example, the environment and local community may benefit greatly if the firm chooses to use fewer toxic chemicals. Empirical studies have demonstrated that employees of corporations ...prioritize the environment—report greater job satisfaction. And numerous studies have demonstrated that customers report a willingness to pay higher prices for more sustainable goods. If managers may take these stakeholder interests into account in their decisionmaking, that is likely to create more favorable conditions to choose the more sustainable path. The key distinction between the more nuanced shareholder value approach and a stakeholder approach is that even if the action is not going to be profitable in the...
- drivers of the problems are the same. Protecting the environment is hard for everyone. This Chapter explains why.
- Misaligned incentives underlie most environmental problems. While protecting the environment often provides a net benefit to
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Chapter 6 Critical Perspectives on Private Environmental Governance: Greenwashing and Anti-ESG Laws 3 results
- This example raises an important issue about what evidence might be required to substantiate an environmental marketing claim. If a firm wants to claim that its product is “better” for the environment, should it be required to conduct a full lifecycle analysis? As you can see from this example, some cases of misleadingness or deception may be easier to police than others.
- products are therefore CFC-free. But a consumer who isn’t up to speed on the details of the Montreal Protocol on Ozone-Depleting Substances (i.e., almost all consumers) might not know this fact. She might assume that of two competing products on the shelf, the one that says it is “CFC-free” is better for the environment. She might therefore choose to purchase that product, even paying a price premium when, in fact, the two products are identical along this dimension.
- ...is the issue of whether electric hand driers or paper towels in restrooms are better for the environment. The environmental comparison is actually quite complicated. When a manufacturer of electric hand driers claims that its product is environmentally preferable because it “generates no paper waste,” the fact that it does not generate such waste is technically a true statement. However, the factors that must be compared are not just about paper waste—they also include the upstream environmental impacts of the manufacture of the electric drier versus the upstream environmental impacts of quantity of paper towels it might replace over its useful life, as well as the emissions generated from the electricity needed to power the electric drier. These emissions may depend upon whether the power generated locally relies on fossil fuels or on renewable sources. So an advertisement that focuses only on one aspect of this environmental comparison may be misleading or deceptive if...
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Chapter 10 Toxics and Waste Management 5 results
- , which raised widespread public concerns about the toxicity of DDT to humans and the environment. Over the following ten years, the government enforced a gradual transition away from DDT before a final ban became effective in 1972. Although DDT has been removed from the market in the United States, thousands of other toxic and potentially toxic substances are still produced, included in consumer products, and released into the environment. One category that has garnered a great deal of attention in recent years includes per- and polyfluororalkul substances (PFAS), also known as “forever chemicals,” because they persist in the environment and the human body, and do not easily break down. As a class, these substances have been used in stain- and water-resistant fabrics, as well as fire-fighting foam, Teflon (non-stick) cookware, and even in dental floss. They were invented and entered into widespread use because of their effectiveness in consumer and industrial products; however, in...
- Environment: Science and Policy for Sustainable Development
- clause requires that the signatories, including rural or agricultural land holders, create and follow a pest management plan that “limits the use of pesticide and other interventions to levels that are economically and ecologically justified and minimises risks to human health and the environment.”
- unequivocally cause a direct harm, toxic substance releases may increase the probability that a harm will occur. The probability that the harm will occur and whether responsibility can be assigned to a specific toxic substance depends on complex assessments of its fate in the environment, how humans or other organisms are exposed to it, and how they respond when exposed. Returning to our DDT example, unlike the sickness that immediately arises from water contaminated by typhoid or cholera bacteria, toxics like DDT often increase the chronic, long-term risk of cancer or other diseases. Thus, regulation of toxics often rests on assessments of the probability that harms will occur. This creates difficult challenges for regulators—whether public or private—because determining the precise probability that a given exposure will cause a given harm is difficult.
- ...nonstick cookware or fire retardant fabric), even in the face of environmental and health concerns, and consumer or other pressure to avoid these chemicals. Two additional complicating factors of PEG toxics initiatives are their inability to apply to all sources within any one nation on the one hand and their global reach across national boundaries on the other. Toxic substances are sold in national and global markets, and are found in many different environments around the world. National governments have numerous regulatory tools that they can apply to all of the companies within their boundaries, and governments can use civil and criminal enforcement tools to motivate compliance. This ability to impose regulatory requirements on all companies within a nation’s boundaries is not matched by PEG initiatives, which lack the broad reach and coercive tools of government agencies. This PEG limitation—which applies to many types of PEG, not just PEG initiatives directed at toxics—...
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- The United Nations Framework Convention on Climate Change maintains a database of private sector adaptation initiatives, and the United Nations Environment Program and other organizations have identified private sector adaptation efforts. Examples of these efforts include the following:
- As with many other PEG energy and climate initiatives at the global level, the Equator Principles are largely driven by the private sector, but they have public-private hybrid features. The formation of the Equator Principles occurred with support from several quasi-public institutions such as the World Bank, and for projects in non-OECD countries, the standards incorporate compliance with IFC lending standards. The Equator Principles also buttress the activities of the United Nations’ Principles for Responsible Banking and with the United Nations Environment Program’s Finance Initiative, which has focused on assessment and disclosure of the Scope 3 emissions from lending and investment portfolios.
- ..., and manufacturing to fashion. They currently include well-known companies such as IKEA, Google, Apple, and General Motors. The large energy demand and size of RE100’s membership send signals to markets and governments about private sector demand for renewable power. RE100 provides a platform for companies to make public commitments to using 100% renewable power, to follow widely-adopted standards for assessing how much renewable power they should purchase and what types of power qualify, to create incentives for other companies to make similar commitments and to push for governments to improve the regulatory environment for renewable power. To participate in RE100, companies are required to match 100% of the electricity they use across their global operations with electricity produced from a range of renewable sources (such as contracts with electricity suppliers or renewable energy credits). By focusing on private commitments for renewable power around the globe, RE100...
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Chapter 8 Climate Change Mitigation 2 results
- are risks posed by rapid decarbonisation of the world economy, rather than the underlying changes to the natural environment.
- how information is structured, how it is prepared, and what broad topics are covered. SASB standards provide specific, detailed, and replicable requirements for what should be reported for each topic. For instance, for the petroleum refining sector, SASB includes broad language identifying areas for disclosure as well specific requirements for disclosure of “risk to reputation due to [an] entity’s stance and actions related to the legal and regulatory environment. . . and risk of misalignment with the expectations of customers, investors, and other stakeholders.” SASB standards also recommend disclosure of business strategies for emissions reduction. For instance, the SASB oil and gas exploration and production standards require disclosure of “how price and demand for coal and/or climate regulation influence the capital expenditure strategy for exploration, acquisition, and development of assets.”
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Chapter 12 Water Resources 2 results
- article put it, TNC was “using the Airbnb model to protect the environment.” The result was BirdReturns and this is how it works.
- The strategy of payments for ecosystem services (PES) worked well for TNC with water funds and Vittel for ensuring water quality. In each case, landowners were paid to manage their environment for improved service provision. It proved a better investment for the beneficiaries to pay for “green infrastructure” than for “grey infrastructure” such as water treatment plants. What do you think are the most important factors to ensure successful watershed PES? Can you think of situations where PES would likely be an ineffective strategy?
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- “We encourage our suppliers to implement systems that are designed to minimize the impact on the environment through their supply chain, the production process, and the products themselves . . . . Where implemented, such systems must track and document the environmental impact, including the use of energy, air emissions, waste, water, pollution, hazardous materials, and recycling. We encourage suppliers to use insights from these systems to pursue initiatives that minimize energy, water waste, and greenhouse gas emissions, and seek ways to use renewable sources of energy. . . . Whole Foods Market expects that suppliers adopt a management system to drive continuous improvement and ensure compliance with applicable laws and this Supplier Code.”
- Nevertheless, retailers like Whole Foods and Albertsons are using these procurement policies to send messages about their expectations to agricultural product suppliers, and in competitive markets suppliers may worry that not meeting these expectations will reduce their chances of contracting with the retailers. In addition, in many cases these retailers’ policies are pushing for more than just compliance with government requirements. For instance, Whole Foods’ direction to suppliers to “minimize the impact on the environment” of their activities is a requirement not found in environmental laws that apply to agriculture in the United States. Whole Foods’ requirement that its suppliers adopt environmental management systems is also well beyond what any federal environmental laws require in the United States, and research suggests that companies with environmental management systems are better environmental performers than those without them.
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- . As we noted in Chapter 2, while protecting the environment often provides a net benefit to society, the economic interests of individual parties involved often can encourage harmful activities. Whether society’s interest is in the existence of clean air, the ability of the globe to produce a stable climate, or the environmental services that ecosystems provide, public goods are often over-exploited and are subject to negative externalities like pollution. When governments respond to environmental problems they often do so by trying to get the incentives right, such as by pricing greenhouse gas emissions and other negative externalities. PEG initiatives do the same, creating incentives for individuals and private sector organizations to act in ways that benefit society, rather than only themselves.
- Assessing the effects of PEG is a difficult task. Greenwashing is a major concern because companies often have incentives to announce that they are taking steps to protect the environment even if they are not making meaningful changes. But government gridlock on climate change and many other environmental issues is also a concern. Thus when asking whether PEG “works,” we also have to ask, “compared to what?” Although it can be difficult to evaluate which PEG initiatives are having desirable effects, it is important to keep several core ideas in mind before we dive into greenwashing issues in greater depth in Chapter 6.
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- Publication Date: December 7th, 2023
- ISBN: 9781636596945
- Subject: Environmental Law
- Series: Concepts and Insights
- Type: Hornbook Treatises
- Description: In the last decade, private environmental governance has exploded in response to public demands for corporate action that helps the planet and over frustration with government gridlock. Private environmental governance is now an accepted and powerful environmental policy tool, from corporate sustainability and ESG goals to seafood and forest certification systems, from net zero emissions to land trusts. This book provides the first user-friendly and comprehensive guide to these innovative new approaches that go farther than government regulation. If you want to understand the future of environmental policy in the 21st century, you need to understand the actors, strategies, and challenges central to private environmental governance.
