Law and the Transition to Business Sustainability

This chapter asks what is needed to craft effective legal frameworks that take the notion of sustainable production seriously. Getting to an answer requires consideration of three questions. First, what do we mean by “sustainable production” in terms of a definition and fundamental principles? Here the chapter adopts a definition and examines three central principles: life cycle thinking, integration of environmental, social and economic concerns, and a preventive orientation. Second, what types of mandatory regulation can be used to advance sustainable production in accord with the fundamental principles? In response the chapter provides an overview of forms of sustainability-based regulation, and maps them onto five existing regulatory programs that to various degrees reflect sustainable production concepts. Third, which of those forms of regulation should be used to advance sustainable production? Recognizing the breadth of this normative question, the chapter does not attempt to identify the optimal regulatory approach. Instead it offers a set of factors that may influence regulatory design in this context.

As sustainable practices continue to sweep across the country, the federal, state, and local governments chose to further encourage the construction industry through various legislative and regulatory actions. In these initiatives, the policymakers need to decide on whether to incentivize participants or compel compliance as well as whether to set their own standards legislatively or to adopt programs developed by third party organizations. In making these decisions and adopting legislation, the state and local policymakers may inadvertently spark another round in the lengthy struggle for power with the federal government under the Supremacy Clause of the Constitution. With this situation at hand, this chapter considers the approaches taken by federal and state governments, the solutions presented by third party organizations, and the responses by the courts to such legislative initiatives relating to environmentally friendly policies that promote sustainability mandates in construction.

This paper explores the gap between the principles of take-back legislation and their implementation. The discussion is based on my experience with take-back legislation implementations in Europe and in the United States, as well as my research exploring the underlying economics of take-back systems on the ground. I argue that the transposition of legislative principles into working systems can lead to an array of unintended consequences, ranging from exacerbated environmental damage to uneven competitive landscapes. I illustrate these phenomena with the help of a series of economic models, and argue that the design of environmental legislation needs to carefully take into account the economics of such practices on the ground. A natural follow-up question is to what extent such legislation should define an implementation structure. Answering this question can help legislators in identifying the correct boundaries and scope of legislation they write and environmental NGOs in strategic lobbying.

Theories of governance remind us that even in the context of neoliberal political economic governance, the state still has a role to play in facilitating the conditions that create the free market, as well as in participating in new types of arrangements that have formed to address the challenges of regulating global economic spheres. Often referred to as hybrid governance, these new arrangements blur the traditional responsibilities of actors from the public and private sectors, as well as from civil society. This chapter draws on theories of hybrid governance to analyze how the Wal-Mart Corporation implements its sustainability initiative in the agri-food system by drawing on the resources and activities of public and non-profit organizations. Based on qualitative research that includes a content analysis of Wal-Mart’s publicly available documents, as well as fieldwork in both the US and Honduras, this chapter demonstrates how state policies and programs facilitate the implementation of Wal-Mart’s sustainability initiative, which in the agri-food system takes the form of local produce sourcing. As an illustration of the role of the nation state in the present era of neoliberal globalization, this chapter demonstrates both how national policies created the conditions for the emergence of Wal-Mart as a powerful player in the food retailing industry, domestically and internationally, and how the state plays a role in the implementation of Wal-Mart’s programs, often through public/private partnerships. This chapter finds that relationships between Wal-Mart and public and non-profit organizations allow the company to outsource the costs, risks and responsibilities of developing local supply chains. Therefore, Wal-Mart’s sustainability program relies on public subsidies to operate. This chapter considers the implications of public subsidization of a transition to sustainability in the context of corporate sustainability initiatives.

The threat of climate change—problems requires new technologies to mitigate the effects and adapt to new circumstances. Many of these new technologies, such as next generation biofuels, GMOs or new solar technologies, are patented. Companies and institutions in wealthy countries own most of the patents. In recent decades, developed countries have made promises to transfer technology to developing countries. But despite these promises, more action is needed. To that end, two new institutions, the Technology Mechanism and the Green Climate Fund, were established after the Copenhagen climate summit in 2009. Intellectual property rights are absent from their policies despite calls from developing countries to address the issue. In this chapter we argue that there is untapped potential in the business community to license technologies on favorable terms to developing countries and we suggest that the new climate change institutions could aim to become a global facility for licenses to climate change technology to promote technology transfer.

Access to affordable, sustainable energy and the issue of climate change are set to become key concerns for business. This chapter describes how improved trade governance can help businesses to massively ramp up the development of sustainable energy. The chapter shows that there is considerable momentum for different trade-related initiatives and in particular for an Environmental Goods Agreement, the major part of which would cover sustainable energy technologies. It explores in more detail why business should follow the developments in this field closely and discusses some promising ways forward.

Sustainability reporting is now a mainstream activity among large, global corporations. The majority of the largest corporations in the United States now produce sustainability reports, and several European countries either mandate corporations to produce some form of sustainability reports or are in serious consideration of such legislation. Although leading standards such as the Global Reporting Initiative have made significant advancements in setting out the types of information that corporations should publicly disclose, mandatory sustainability reports will not work as an effective policy mechanism unless they are placed in a system that can effectively utilize the information and cause corporations to change their policies and practices. Using insights from New Governance regulation and meta-regulation, this paper examines the current sustainability reporting industry, and explores potential breakdown points (e.g., conflicts of interest in information intermediaries) and possible future developments.

The traditional paradigm for investigating, studying, and combating greenwashing has been to focus on claims by companies engaged in marketing consumer products or services to individual consumers (i.e., business-to-consumer, or B-to-C, communications) and the effects of those claims on consumers. But the current clean tech revolution has greatly increased commerce in green technologies, much of which is business-to-business (“B-to-B”). This shift calls for a new paradigm in understanding greenwashing. Rather than limiting the focus to deceptive marketing of consumer products to individual consumers, we must contemplate a wider variety of cases that include representations made to green commercial consumers (B-to-B communications) and legal actions brought by and on behalf of commercial consumers. This chapter builds on the author’s previous arguments for this broader view of greenwashing by providing threat matrices that can be used as identification tools. They can help eliminate a current blind spot and provide the broader vantage point necessary to identify and understand new instances of greenwashing.