Why Should You Comply With Environmental Law?

Apart from avoiding criminal sanctions there are economic justifications for compliance with environmental law. In short, the market has been shown to reward firms that protect the environment. Indeed, current research shows that consumers will not look favourably at companies and the goods and services they provide if they cause environmental harm or are indifferent to ecological problems. Likewise, companies that take environmental concerns seriously may be supported by consumers. This is evident even in such a consumption culture as our own, with the growing acceptance of the need for sustainable business development that better protects the environment and encourages greater social responsibility. This can be seen in three thousand well-known companies joining the UNO Global Compact program during first five years of its existence. According to this voluntary pact, business organizations are encouraged to work within the principles of people’s rights, employees’ rights, environment protection and anti-corruption.

Research also shows that environmental regulations provide a stimulus for innovation and productivity because it encourages firms to invest in research and development to develop less polluting products. It is equally evident that environmental law is associated with the wider issue of sustainable development, and that firms which proactively encourage compliance and support sustainable development can gain competitive advantage in the marketplace.

For example, Standard Chartered is one of a huge number of financial institutions who have moved into sustainable banking. It is a London based bank but its income comes primarily from Asia, Africa and the Middle East, which are the regions that suffer from poverty, disease and environmental issues. The bank recognised that there was a direct relationship between social issues and its profits. In 1999, 10 percent of its employees in Kenya missed work because of HIV and AIDS, which affected its business. In response, Standard Chartered began a global community campaign that seeks to raise awareness about HIV and prevention of its further spread. Its skills and resources enabled the bank to officially pledge to educate 1 million people about the disease by 2009. The bank has a similar campaign that targets the restoration of sight. These programs not only offer huge benefits to the communities in which they operate but they also create a good reputation for the bank. Both programs are a core part of the bank’s sustainability strategy to promote economic growth. As finance director Richard Meddings explains, ”The cost of treatment is often small but the impact on the person and their ability to contribute to the community is huge.” The community, of course, includes branches of Standard Chartered, whose profits rely on healthy and efficient workforce. Standard Chartered is joined by companies such as NestleĀ“ and Microsoft in its practice of the most effective Corporate Social Responsibility (CSR). Both these latter corporations have similarly recognised that their profits depend on their communities, and thus both have put considerable resources into targeting social problems in the areas in which they operate.

In all these cases it can be argued that firms have gone beyond what is legally required of them because it makes commercial sense to do so. The role for business is therefore not just to comply with the regulations but to innovate and go beyond what is legally required in order to reduce pollution further and to protect human life.

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