1. 10/27/08ESPP-781 Economics and Environmental Governance: Three Elements Governments adopt market-based solutions Governments allow private sector actors to govern themselves Private sector adopts forms of self- regulation

2. 10/27/08ESPP-782 The Matrix of Governance Institu- tion Level StateBusiness and Industry NGOs (civil society) Local/ Regional Land use SIPs (air) Agenda 21 Sponsorships e.g., highway adoption NIMBY National Regulation Information Trading Technology e.g., Walmart CFL bulbs Participation Partnerships Media use Supra- national Treaties Global Compact Green labels Seal hunts Sweatshops

3. 10/27/08ESPP-783 Possible Public-Private Relationships Command-and-control regulation (statist): –standards, monitoring, enforcement, liability Deregulation (market-based): –incentives, information, market approaches –“bubble policy,” disclosure, emissions trading Business-government (or public-private) partnership (cooperative): –delegation of standard-setting, enforcement, etc. Corporate Social Responsibility (contractual) –greening of industry

4. 10/27/08ESPP-784 Environmental Accountability via the Market Government Civil Society Private Sector Regulatory Economic Cultural Political Legal Cultural ??????

5. 10/27/08ESPP-785 The Third Leg of Accountability - Corporations and Consumers When are corporations accountable to consumers? –rarely at the stage of product or process development –primarily through pricing, which does not question purpose or social impact of products –under conditions of economic inequality –usually without formal process –often ex post facto (via litigation)

6. 10/27/08ESPP-786 Green Promises Wal-Mart –Environment: Continue to create value for our customers while minimizing our footprint on the environment. DuPont –Safety, Health and environment: Creating shareholder and societal value…while reducing our footprint throughout the value chain. Dow –Environment, Heath and Safety: At Dow, protecting people and the environment is part of everything we do and every decision we make. Monsanto –The Monsanto Pledge: “A five-point declaration that compels Monsanto to listen more, consider our actions and their impact broadly, and lead responsibly….The elements are Dialogue, Transparency, Respect, Sharing, and Benefits.”

7. 10/27/08ESPP-787 Promising Sustainability Wal-Mart CEO Lee Scott on Sustainability Q: How does this environmental commitment fit into Wal-Mart's mission as a company? A: We've built our business on improving the quality of life for our customers, associates, suppliers, and their communities. And we have innovated all the way down and up our value chain to increase the value we offer and to grow our business. Our environmental commitments fit perfectly into this model. In fact, innovation is essential if we are going to make good on our commitment to improve the quality of life for customers and people around the world. Like other innovations that have defined our business, empowering our people and trusting them with responsibility are key to our success.

8. 10/27/08ESPP-788 Downside of Corporate Self-Governance Non-transparent objectives –Where did Wal-Mart’s CFL initiative come from? –Weakening deliberative democracy - role of citizens? –Devaluing public interest - value of life, of resources? Lack of accountability –Conflict of interests –Disparate global standards; injustice –Claims without substance, mere advertising –Science for hire (e.g., “tobacco science”)

9. 10/27/08ESPP-789 The Global Compact -- A UN Program What is it? –Not a regulatory policy or code of conduct –Value-based platform with 9 principles (human rights, labor, environment) Companies voluntarily commit to participate –Agree to publicly post steps taken to comply with principles (www.unglobalcompact.org) Uses power of transparency –Disseminates learning and good practices

10. 10/27/08ESPP-7810 The Compact’s Environment Principles The Secretary-General asked world business to: Principle 7: support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies.

11. 10/27/08ESPP-7811 How to Improve CSR? Transparency –“Engaging” citizens in environmental decisions Agenda setting –Upstreaming of public inputs Objectives –Getting beyond risk regulation to goals of technology Science –“Private science” a contradiction in terms? –But how to open industry science up to scrutiny?