Sustainable development is development that meets the present needs without compromising the

ability of future generations to meet their own needs” ( Morris 2002, 14). In 1992, all
governments started to implement sustainable development strategies and supportive policy
frameworks (Brueckner 2010). Sustainable development aims at equal consideration of three key
pillars: economic, social and environment. The challenge for policy-makers is to attain an
economic development that ensures better living standards, and economic prosperity without
compromising the capability of ecosphere and without disrupting social structures (Brueckner
2010). The conventional environmental policy was largely based on command-and-control
policy such as banning (Brueckner 2010). However, these policies are too costly and inefficient
(Brueckner 2010). Therefore, they are being replaced by the approaches such as self-regulation,
property rights systems and market-based policies because these approaches are more cost
effective and efficient (Brueckner 2010).
Regulation can be defined as policy implements by governments to influence the performances
of various actors such as consumers, civil society, public and market (Patimes.org 2013). The
purpose of implementing regulations is to protect both people and environment (Patimes.org
2013). Additionally, regulatory pressure is very important for organisations. Regulation can help
businesses in many ways such as raising awareness, changing behaviour across households,
industries, consumers, companies and society (Dhakal 2016). Furthermore, if regulations are
efficient, they can reduce the environmental impact of production, consumption, disposal and so
forth (Dhakal 2016).
Regulation can ensure that companies incorporate the costs of negative externalities in the price
of products and services (Dhakal 2016). It is called cost internalization. There are three types of
cost: private costs, external costs and social costs (Dhakal 2016). Social cost is the sum of private
and external cost (Dhakal 2016). It means if we do not internalize social cost or environmental
externality, the value of the product will be cheaper than what it needs to be (Dhakal 2016).
However, people and markets respond to price signal because regulation forces companies to
internalize the environmental costs (Dhakal 2016). Thus, it makes environmentally harmful
products and services more costly to produce and consume (Dhakal 2016). Therefore, right
pricing is always a challenge for policy-design.
There are some problems in sustainability policy. It is difficult to demonstrate that not having the
regulation would lead to undesired side effects (Brueckner 2010). Another problem is policy
scepticism that means people rely on social media more than scientific evidences (Brueckner
2010). Furthermore, there is pressure on government from all across the spectrum. For example,
people want government to provide better protection to social and environment, government is
needed to give favourable conditions for businesses and politicians always wants to be re-elected
(Brueckner 2010). Additionally, the problems for policy design are costing, political resistant
and balancing social, economic and environmental interests (Brueckner 2010).
Regulation can be a threat to some organisations. For example, if policy is too restricted, then
companies will move to new location where production costs are cheaper. In addition to this,
companies can lose profits since regulation forces them to internalize environmental costs and it
leads to rise in production costs (Brueckner 2010). On the other hand, it can also be an
opportunity. For example, double dividend that means it delivers environmental improvement
and economic benefits.
In conclusion, regulation can be a threat or opportunity for businesses. As mentioned above,
there are things that regulation can implement for society and environment and things that
regulation can be a pressure for businesses. If government and businesses have common interests
in sustainable development, regulations around green market are undoubtedly an opportunity
(Brueckner 2010).