ENVIRONMENTAL POLITICS saklviTüal½yCatiRKb;RKg NATIONAL UNIVERSITY OF MANAGEMENT karRKb;RKgbriyakasGaCIvkmµ ENVIRONMENT BUSINESS MANAGEMENT CHAPTER VII ENVIRONMENTAL POLITICS Creating the Conditions for the Completion of the Product Cycle PREPARED BY SAY PUNNAREAY, MBA

1. SOCIAL INFRASTRUCTURE  Reasons why businesses need to participate in social infrastructure  Policy instruments  Main Actors - Government: international, national - Non-governmental Organizations - Industry associations and other third parties - Public-private agreements

2. REASONS WHY BUSINESSES NEED TO PARTICIPATE IN SOCIAL INFRASTRUCTURE  Compliance with regulations, policies and other pressures  Information acquisition  Cost and risk sharing  Credibility

3. CORPORATE CONCERNS IN SOCIAL INFRASTRUCTURE DEVELOPMENT Implementation and enforcement of polluter pays principle (fairness or maintaining first mover advantages).  Cost efficiency  Technology and product development freedom  Time (and resources) to develop responses  Social acceptance (local, national, international)

 Cost efficiency and competition  Information, 4. TRANSACTION COSTS  Cost efficiency and competition  Information,  Searching for partners,  Monitoring and enforcing performance,  Compliance needs,  Opportunism.

5. GOVERNANCE: TWO BASIC TYPES BINDING OR LEGAL GOVERNANCE GUIDANCE  Forms of governance - Moral persuasion (guidelines, principles, purchasing, publicity). - Command and Control (emission standards, bans, BAT [best available technology], EIAs) - Market mechanisms

Governance: two basic types Binding or legal governance Guidance Forms of Governance Moral persuasion (guidelines, principles, purchasing, publicity) Command and Control (emission standards, bans, BAT [best available technology], EIAs) Market mechanisms Monetary(taxes and fees; subsidies; licenses; deposits; quotas; emissions trading; removal of subsidies, monopolies and other distortions). Information (Emissions release inventory, product labeling, materials imprinting) Extended Product Responsibility (product stewardship; voluntary/subsidized recycling and compulsory EPR laws) Government investment (prevention, regeneration, information dissemination, research, education)

Government: International Identification and definition of global or trans-boundary problems Politicization and agenda setting by national and international advocacy groups Policy formation through negotiations Establishment of binding agreements, conventions and protocols, action plans Implementation by national governments

Non-governmental Organizations Mutually Beneficial Partnerships NGO Perspective Markets are powerful Government insufficient Need for funding, expertise Business is credible Cross-fertilization Impact on value chains Greater leverage Company Perspective Market demand NGO credibility External challenge Cross-fertilization Greater efficiency Protect image Engage stakeholders

Industry Self-governance To beat costs of escalating regulation requirements, monitoring, reporting and image Industry Associations Cross-industry associations Certifying authorities Government led agreements (covenants)

Value Cycle supported by Physical and Social Infrastructures Parts Manufacture Materials Processing Product Assembly Value Cycle supported by Physical and Social Infrastructures Resource Extraction Distribution Recycling Consumption Materials Collection Material & Energy Inputs Pollution Outputs Transfer Impacts

What are the infrastructure needs of your company? What kind of physical infrastructure (roads, electricity, other fuels, sewage, buildings,recycling systems, etc) does your company need or could it convert to? Should you work with the government, other companies (competitors, suppliers, distributors, recyclers), or NGOs to build these infrastructures? What kind of values can be created at each stage of the industrial loop to ensure transaction are undertaken? What kind of regulatory, guideline, membership, or social conditions are necessary to ensure that transactions are undertaken? Is it feasible to expect the creation of these infrastructures in the short, medium, or long run?