Holding companies accountable

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The transformation of the global supply chain has created new problems for holding companies accountable but has also generated a new awareness of the environmental issues and prompted the formation of a variety of NGOs and transnational activist networks specifically concerned to monitor the broad and narrow scope effects on the environment. At the intergovernmental level, the OECD, World Bank and United Nations (including the Global Compact initiative) have sought to bring together private corporations, environmental and other NGOs with national governments to encourage self-regulating corporate responsibility and better environmental performance (through environmental management systems, auditing tools, performance indicators and environmental reports). This has been more effective where the reputations (as an intangible asset) and efficiency of companies are at stake. Companies such as Nike have been increasingly derogated for being irresponsible (so much so, that many marketing departments in corporations use the buzzword 'NIKE-mare' as a worst-case scenario). There is also evidence that corporations are beginning to use the guidelines to connect environmental protection to social issues such as human rights. Current concerns include the effectiveness of top-down initiatives generating problems farther down the organizational hierarchy, as well as difficulties in coordination across different corporate sectors, between corporations and the role of small or medium-sized enterprises (where proximity to environmental problems is an important factor for success). The emergence of corporate citizen- 3 ship has also led some companies to include affected constituencies in h

stakeholder deliberation with company structures becoming arenas for d conflicts and negotiation, providing strategic opportunities for NGOs a and environmental movements. g

In the European Union, environmental responsibility is also promoted q


through political regulation. One of the most challenging regulatory ideas o

° for the corporate sector is the 'polluter pays principle', which states that ■¡H the costs of measures necessary to address the impact of a company on -g the environment should be borne by the company - that they should be S reflected in the price of the goods and services. For some environmental-£ ists, this involves passing on the costs of environmental protection to "5 the consumers, but in a global market there are additional incentives for 'iñ companies to change their manufacturing and packaging processes to 15 maintain price competitiveness and reduce impacts. While the polluter m pays principle internalizes environmental externalities in the production process or can be addressed through environmental taxes, addressing the precautionary principle demands a more robust response from corporations. This idea highlights the importance of forward thinking when production processes are being planned by seeking to avoid pollution, searching for alternatives and less degrading forms of activity and considering whether a particular production process is actually needed when the impacts will be substantive.

In England and Wales, the duty-of-care principle was incorporated into the 1990 Environmental Protection Act concerned with the transfer, treatment and disposal of controlled waste materials, including the requirement that waste can be handled only by a legal entity that possesses a waste management agreement licence. In addition, documentation must be provided to the Waste Regulation Authority, and the business or other institutions such as hospitals have a corresponding duty to identify where the waste is taken by registered carriers and visit the disposal sites to ensure compliance. In response to problems generated by illegal tipping (fly-tipping), under the 2005 Waste (Household Waste) Duty of Care regulations in England and Wales, householders have a duty to take all reasonable steps to ensure that their waste is passed to an authorized person. In addition, in 2006 the EU established new chemicals regulations (Registration, Evaluation and Authorisation of Chemicals - REACH) for 30,000 substances which came into effect in June 2007, whereby companies transporting controlled waste in excess of one tonne are required to register the process with a new body, the Chemicals Agency. In the case of the 3,000 hazardous materials where no alternatives exist, producers have to submit a research plan indicating their search for less hazardous alternatives. This points not only to the extension of the duty of care to individual citizens but also points to a convergence between the duty of care and the precautionary principle. In other words, what was once a matter of obligation is increasingly becoming a matter of duty.

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