1PREPARED BY SAY PUNNAREAY, MBA

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NATIONAL UNIVERSITY OF MANAGEMENT

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ENVIRONMENT BUSINESS MANAGEMENT

CHAPTER VIIENVIRONMENTAL POLITICS

Creating the Conditions for the Completion of the Product Cycle

1. SOCIAL INFRASTRUCTURE

Reasons why businesses need to participate in social infrastructure

Policy instruments

Main Actors

- Government: international, national- Non-governmental Organizations- Industry associations and other third parties- Public-private agreements

2. REASONS WHY BUSINESSES NEED TO PARTICIPATE IN SOCIAL INFRASTRUCTURE

Compliance with regulations, policies and other pressures Information acquisitionCost and risk sharingCredibility

3. CORPORATE CONCERNS IN SOCIAL INFRASTRUCTURE DEVELOPMENT

Implementation and enforcement of polluter pays principle (fairness or maintaining first mover advantages).

Cost efficiency Technology and product development freedom Time (and resources) to develop responses Social acceptance (local, national, international)

4. TRANSACTION COSTS

Cost efficiency and competition Information, Searching for partners, Monitoring and enforcing performance, Compliance needs, Opportunism.

5. GOVERNANCE: TWO BASIC TYPESBINDING OR LEGAL GOVERNANCE

GUIDANCE

Forms of governance

- Moral persuasion (guidelines, principles, purchasing, publicity).

- Command and Control (emission standards, bans, BAT [best available technology], EIAs)

- Market mechanisms

• Binding or legal governance• Guidance

Governance: two basic types

Moral persuasion (guidelines, principles, purchasing, publicity) Command and Control (emission standards, bans, BAT [best available

technology], EIAs) Market mechanisms

Monetary(taxes and fees; subsidies; licenses; deposits; quotas; emissions trading; removal of subsidies, monopolies and other distortions).

Information (Emissions release inventory, product labeling, materials imprinting) Extended Product Responsibility (product stewardship; voluntary/subsidized

recycling and compulsory EPR laws) Government investment (prevention, regeneration, information dissemination,

research, education)

Forms of Governance

Government: International

• Identification and definition of global or trans-boundary problems

• Politicization and agenda setting by national and international advocacy groups

• Policy formation through negotiations• Establishment of binding agreements,

conventions and protocols, action plans• Implementation by national governments

Company Perspective• Market demand• NGO credibility• External challenge• Cross-fertilization• Greater efficiency• Protect image• Engage stakeholders

NGO Perspective• Markets are powerful• Government insufficient• Need for funding, expertise• Business is credible• Cross-fertilization• Impact on value chains• Greater leverage

Non-governmental Organizations

Mutually Beneficial Partnerships

Industry Self-governance

To beat costs of escalating regulation requirements, monitoring, reporting and image

• Industry Associations• Cross-industry associations• Certifying authorities• Government led agreements (covenants)

Value Cycle

ResourceExtraction

MaterialsProcessing

PartsManufacture

ProductAssembly

Distribution

Consumption

MaterialsCollection

Recycling

Value Cycle supported by

Physical and Social Infrastructures

Material & Energy Inputs

Pollution Outputs

Transfer Impacts

What are the infrastructure needs of your company?

• What kind of physical infrastructure (roads, electricity, other fuels, sewage, buildings,recycling systems, etc) does your company need or could it convert to?

• Should you work with the government, other companies (competitors, suppliers, distributors, recyclers), or NGOs to build these infrastructures?

• What kind of values can be created at each stage of the industrial loop to ensure transaction are undertaken?

• What kind of regulatory, guideline, membership, or social conditions are necessary to ensure that transactions are undertaken?

• Is it feasible to expect the creation of these infrastructures in the short, medium, or long run?