Which will have participated in the formulation of policy, will then often have to give

domestic effect to such things as international treaties or European directives via legislation
and appropriate executive action. Various global and regional institutions monitor activities
in different nation states.
Regulation at global/regional level
At the global level regulation is primarily concerned with nation states agreeing to
environmental protection initiatives via international summit meetings such as that on climate
change at Kyoto in December 1997. The Kyoto agreement will come into force when ratified
by at least six developed countries representing at least 55 per cent of the total 1990 levels of
greenhouse gases emitted. The agreement takes the form of a legally binding protocol to the
Rio Convention on Climate Change in 1992. The total agreed level of emissions by
developed countries has been estimated at about 5 per cent below 1990 levels.
At this global level the chief guiding concept is sustainable development assuring that, for
the sake of generations to come, the amount and quality of what has been called natural
capital for example, atmosphere, water, tropical rainforest and biodiversity is not reduced
by economic development. From the early 1980s onwards a range of key reports from
institutions, such as the World Bank, made pleas for integrating environmental considerations
into policy making on economic development.
Often progress at this global scale is slow. At the Berlin Conference on climate change, In
March 1995.it became evident that little progress had been made towards reaching the
greenhouse gas targets agreed in 1992. At Berlin the tensions between rich and poor countries
provided an interesting focus for the issue of trade-offs between environmental protection and
economic growth. The traditional and underlying assumption is that environmental regulation
impedes growth.
We turn now to the regional scale to discuss the role of the European Union in respect of
environmental regulation. The signatories to the Treaty of Rome (1957), which created the
EEC, were not particularly concerned with environmental issues. This oversight was rectified
by the Single European Act (SEA) 1987 which adopted the specific environmental objectives
in article 130R, namely.
To preserve, protect and improve the quality of the environment;
To contribute towards protecting human health;
To ensure a prudent and rational utilisation of natural resources.
These objectives were extended by the Treaty of European Union (1992) (the so-called
Maastricht Treaty) to include.
Sustainable and non-inflationary growth respecting the environment;
Promotion of measures to help resolve global environmental problems.

The European Commission, through Directorate General DG XI, is responsible for the
environment. DG XI takes the role of initiating and implementing European Union policies
on the environment. EU policy intentions are set out in its Environmental Action Programme.
To date there have been five such programmes, the first from 1973 to 1976 and the fifth from
1993 to 2000. EU policy has, over the years, changed in its scope. In the past, European
environmental initiatives tended to be reactive and based on regulation; they are now
becoming more market-driven and voluntary. The polluter pays principle, discussed above,
is now at the centre of much EU legislation.
It has also been recognised by the fifth programme that legislation is a toothless beast
without compliance, so there is now increased emphasis on the enforcement of existing
legislation. Towards the end of 1993 it was agreed that a long-planned European
Environment Agency (EEA) should be set up in Copenhagen, Denmark. One of the major
tasks of the EEA has been to set up a European Information and Observation Network to
provide objective, reliable and comprehensive scientific and technical information at a
European level. The aim is to provide data to enable the European Union to take the steps
necessary to protect the environment as well as to assess the results of their actions (CEC,
1994).
The EEA co-ordinates a system of national networks to enable it to achieve its objectives.
Collaborative activity is important in order to avoid duplicating work being carried out by
other bodies. It published its first report on the environment in 46 countries in 1995, the
Dobris assessment, which uses a wide range of headings to analyse the extent of any
progress, including.
Climate change;
Stratospheric ozone depletion;
Acidification;
Tropospheric ozone;
Chemicals;
Waste;
Biodiversity;
Inland waters;
Marine and coastal environment;
Soil degradation;
Urban environment;
Technological and natural hazards.
A second version followed in 1998. Conferences of European environment ministers,
such as those in Sofia in 1995 and Aarhus in 1998, aim to use these assessments to help to
develop principles and policies designed to bring about environmental improvement and
convergence upon a more sustainable pattern of development in Europe. A useful summary
can be found at www.eea.dk/Document/3-yearly/Dobris2/summary/en/gencon.htm.
As we turn to consider regulation at a national level, it is important to note that the
environmental laws of EU member states are increasingly determined by the Union, while
the mechanisms through which these objectives are to be reached are determined nationally
(Welford and Gouldson, 1993). Furthermore, as industries are becoming increasingly
globalised, organisations need to comply with varying environmental legislation and respond
to action from cross-border pressure groups which may differ widely from those in their
home market.
Regulation at national level
In the United Kingdom, the task of central government in regulating health and
environmental issues or providing support for organisations is largely carried out through the
Department of the Environment (DoE). The main legislation in this field is the Environmental
Protection Act 1990 (EPA) and the Environment Act 1995 (EA). Chien (1991) suggest that
legislation is based on the four Rs. It includes reduction of the amount of waste produced,
reuse of durable items, recycling of natural resources, and regeneration of discarded products
for use as new materials or products. Support is also provided by other ministries, such as the
Department of Trade and Industry, whose Business Link scheme provides advice on
environmental issues for small firms in particular.
If a business organisation produces waste it has a duty of care in respect of that waste
under the EPA 1990. Managers in such businesses need to be aware that breach of this duty
of care can lead to fines and prison sentences in addition to civil liability for causing damage
to environmental or human health by waste. (Legal issues are looked at in more detail in
Chapter 7.) The EPA 1990 can grant authorisation to make emissions from any prescribed
processes but the process must satisfy a test known as BATNEEC (best available technique
not entailing excessive cost). BATNEEC obliges organisations which are polluting to adopt
cleaner technologies than those in place, providing they are not excessively costly.
However, the definition itself is ambiguous, and subject to a test of reasonableness. Welford
and Gouldson (1993) note that organisations which have developed self-regulation schemes
such as BS EN ISO 14001 (discussed below) will be at a considerable advantage when
gathering the information and applying the criteria of BATNEEC.
Additionally, the EPA 1990 subjects the most polluting processes to an integrated
scheme of pollution control. Here, control is integrated in the sense that the impact of an
organisations emissions to air, water or land must be treated in a holistic way, in order to
achieve what is known as the best practicable environmental option.
Enforcement notices may be served if an organisation is in breach of the terms of its
authorisation to emit. More serious risks which cannot be dealt with in this way will result in
the issue of a prohibition notice, which can force the closure of a facility until an organisation
complies with its authorisation.
The Environment Agency (EA) is a key body in respect of such enforcement issues in the
UK. It came into existence in April 1996. The EA 1995 established this body for England and
Wales; it combines all the functions previously undertaken by H.M. Inspectorate of Pollution,
the National Rivers Authority and the waste regulation authorities under one umbrella. The
EA 1995 established the principal aim of the agency as to protect or enhance the environment
as a whole and make a contribution towards attaining sustainable development. In an attempt
to approach environmental issues from a holistic perspective the EA has identified nine key
themes in environmental management:
Addressing climatic change;
Regulating major industries;
Improving air quality;
Managing waste;
Managing water resources;
Delivering integrated river basin management;
Conserving the land;
Managing fresh water fisheries;
Enhancing biodiversity.
Considerable similarity may be noted with the approach of the European Environmental
Agency discussed above. We turn now to examine regulation at the local level
Regulation at local level
In the UK, local authority environmental health departments have the responsibility for
regulating food hygiene, health and safety (together with the Health and Safety Executive),
pest control and air and noise pollution. Local authorities are also responsible for planning,
licensing and trading standards.
The issue of planning controls is a crucial one in terms of more localized environmental
issues. In England and Wales a series of Town and Country Planning regulations between
1990 and 1995 gave effect to a European directive on Environmental Impact Assessment
which required member states to consider the environmental effects of new developments
before planning consent is given (Croner, 1998). The regulations require developers to
produce an environmental impact statement to help the planning authority make a decision.
The Environment Act 1995 set up an improved network of centres for monitoring air
quality; by the end of 1996 there were expected to be 36 such locations in the UK. This local
authority responsibility is the only area not incorporated into the work of the Environment
Agency, discussed above. He European Union is also emphasising local regulations in its
current Environmental Action Programme.
The city of Leicester was the first in the UK to receive the designation Environment
City. The City Councils experience of this project suggest that the greatest progress at this
local scale results from local authorities developing links with community groups and both
local charitable and business organisations. A number of local businesses, including the
brewers, Everards, are reported to have made savings as a result of waste minimisation
reviews encouraged by the project (Glosing, 1996). At the end of 1998 UK legislation was in
place that allows councils to charge motorists for journeys into towns and cities.
In summary, it is true to say that progress at the global level in talking ecological
regulatory action is often slow. However, sivce most serious ecological concerns tend not to
be confined within particular geographical boundaries, the ability to make progress at this
global level is critical to the effective tackling of many of the earths ecological problems.
Action at regional, national or local levels often stems from these wider global initiatives.
Questions
1. Consult the Dobris website at www.eea.dk/Dokument/3-yearly/Dobris2/Summary/en/
gencom.htm.
2. Give examples of national regulations that have evolved from a global initiative.
Trace the progress of the issues. What has been the impact in business organisations?
ORGANISATIONAL AGENDAS
Exxon faced a $2 billion (1.3 billion) clean-up operation and fines of a similar amount,
resulting from an oil spillage, when the tanker Exxon Valdez aground in March 1989. This
caused oil contamination to about 4000km of Alaskan coastline, killing substantial numbers
of wild creatures including at least 32000 birds and millions of fish. However, Cannon (1994)
has estimated that loss of market share, disruptions to supplies, compliance with new
regulations and the effect on share price cost the company a further substantial sum
between $8 billion and $15 billion (5.2-9.7 billion). Rebuilding consumer confidence in
such cases may prove very difficult.
All organisations cause environmental problems and disasters as a direct result of their
activities. Taylor et al. (1994) identify three categories of company.
High penetration companies have the greatest impact on the environment. They include
agriculture, chemicals and plastics and metals and mining.
Moderate penetration companies have some impact, and can save money by cutting
wasteful practices. They include electronics, leisure and tourism, and packaging and
paper.
Low penetration companies feel that environmental matters do not concern them. These
include advertising, education, and local government.
It is evident that organisations also have responsibilities. Hutchinson (1996) outlines four
responsibilities of business, which are shown in Figure 6.10.



FIG. 6.10








The responsibilities of business
Source : adapted from Hutchinson C, 1996 Integrating environmental policy with business strategy. Long Range Planning, 20 (1),
11-23

Given the nature of the business environment facing them, it is clear that organisations
though out the world realise that there is a wide range of responses available to meet the
changing environmental agenda. More are discovering that they need to be seen to be
responding to this changing context. Hamel and Prahalad (1994) suggest that radical change
is necessary if lasting solutions are to be found, and government, business and individuals
have a role to play. The future is about sustainability. Companies are competing for the future
but can only do so if they are farsighted, regenerate their core strategies, innovate and use
new ways of thinking to transform their organisations. Of importance to this agenda are
changing stakeholder views, which we will explore in the next sction.

The environment and stakeholders

Stakeholders are groups or individuals who have a stake in, or an expectation of, the
organisations performance (see Figure 6.11 and also Chapter 1). The environmental stance
of an organisations is influenced by the perceptions of its stakeholders and the relative power
which each possesses. In the United Kingdom we have grown accustomed to road-building
and the export of live animals being accompanied by protests carried out by some
stakeholders. However, an event in
substantial minority which, at best, can be said to be reactive to environmental problems;
these often did not have an environmental policy.

We must be careful not to suggest that all shareholders are short-term investment
opportunists seeking a return at any cost. Differences of approach can be seen between
companies and countries. In Germany and Japan, for example, shareholders are more likely to
take a longer-term view than their American or UK counterparts.
Economic
Measured in terms
of monetary (profit)
performance
Use of resources
Responsible use
of finite resources
Social

community values
Ecological
Sustaining the
natural environment
In much of our coverage of factors in the business environment we have noted that the
way in which organisations perceive changes is dependent upon their unique perceptual
filters. Divergent stakeholder interests add another level of complexity. It must be
recognised that changing stakeholder views are beginning to have an impact on how
organisations perceive the environment, and are likely to have effects on business and profit.

The importance of the organisations environmental context

Organisations need to respond to the question of how the environment is viewed in the
country or market in which they operate. It is important because the environmental context
will have a direct impact on the way that the organisation operates.

Multinational companies are key players in the economic development in less developed
countries (LDCs) as they are footloose and can choose to locate anywhere in the world. The
proliferation of legislation in Europe and the United States. as well as increasing cost, has
caused the development of pollution havens as some organisations have relocated to
developing countries in order to escape tougher environmental legislation in their home
markets (Croner, 1996). Mexicos maquiladora zone is home to blue to blue-chip American
companies such as DuPont, General Electric and General Motors. There is a clear trade-off
between business growth and concern for the environment as these companies exploit the less
stringent environmental controls of many LDCs. Is this an example of organisations trying to
shirk their environmental responsibilities?

We will examine this activity with reference to the work of Azzone and Bertele (1994),
who outline five environmental contexts which relate either to national context or to the
situation prevailing in certain product/service markets:
1. Stable context. Here there may be either slow changes or no changes in environmental
legislation. there may be a of lack of public perception of environmental issues or an
almost complete lack of consumer power. Organisations in these circumstances will
find it easy to ignore legislation and adopt a non-compliance stance. This could be the
case in developing countries of South America, for example the maquiladora zone in
Mexico or the former Eastern bloc nations.
2. Reactive context. Here environmental problems are known by small groups, consumer
interest is limited and legislation evolves slowly. In this context, organisations may
comply with legislation, responding only slowly when the pressures build up. Many
UK firms have opted for this approach to dealing with environmental problems.
3. Anticipative context. Here the public are more aware and have the ability to move
issue onto the political agenda. It is more difficult for firms to influence the political
process. Legislation and regulations become more demanding and organisations need
to develop a compliance-plus strategy, anticipating changes and using technological
developments to ensure that new stand-ards can be met. The regulatory regime in the
European Union and the United States is increasingly encouraging this approach (see
Exhibit 6.3 on p.254).
4. Proactive context. With his context green consumers are said to have a major
impact. Organisations may need to demonstrate more concern for the environment if
they are to prosper. Commercial and environmental excellence may provide a
competitive advantage in the short term but may be indispensable if an organisation is
to complete in this environment in the long term (see Case Study 6 in Part II).
5. Creative context. Here public opinion is extremely aware of environmental problems
but there is a lack of accepted technological solutions to problems. A leading-edge
company will be at the forefront of the technological push for the optimal solution.
The cost of this could be substantial, but the rewards from developing and controlling
a proprietary technological development can be enormous.

Clearly organisations need to be aware of the context in which they operate and need be
able to respond to changes. Organisations that adopt a stance which is out of line with the
context in which they operate may not survive in the long term. The next section examines
some options based on roome (1992) and gives some illustrations of how organisations,
because of growing environmental concern of a diverse range of stakeholders, might be
following a path toward a more environmentally concerned way of operating.

Environmental option

Roome (1992) sets out a continuum of five possible environmental option for
organisations:
Non-compliance
Compliance
Compliance plus
Compliance and environmental excellence
leading edge

The first three options may be taken by businesses whose primary reference point is
legislation.