The Environment: It's Not Time to Relax

Abstract

A patchwork landscape of regulation Individual states will produce competitive disparities Baby boomers still care The American Environmental Movement seems to be in decline. After decades of mounting regulation, there is now a shift in Washington toward regulatory reform, cutbacks in administration and enforcement funding, and watered-down rewrites of the country's leading environmental laws, such as Superfund and the Clean Water Act. Recent polls indicate that public support for the environment is fading as issues like crime prevention and the protection of individual rights capture a greater share of mind. And many of the United States' largest nonprofit environmental groups have suffered steep falls in both membership and funding since their peak in the early 1990s. As a result, many corporations are beginning to rethink their approach to environmental management. Historically, most companies took a defensive, compliance-oriented approach to the environment, focusing on delaying regulation and implementing end-of-pipe solutions. Starting in the late 1980s, however, businesses began to recognize the benefits of a more cooperative position; they invested in pollution control measures, appointed environmental representatives to their boards of directors, and agreed to new, more flexible, market-based regulations. Today, having made real progress in protecting the environment, these businesses seem to be getting the message that the tide has turned [ILLUSTRATION FOR EXHIBIT 1 OMITTED]. They are starting to ask, Should we continue to be environmentally proactive, working to anticipate regulation and shape creative new solutions? Or can we go back to the old ways? ln spite of what current trends might suggest, turning one's back on corporate environmental management would be misguided, and perhaps dangerous. Closer examination shows that the environment still matters, and will continue to play an important role in everyday business decision making and corporate strategy. Those who neglect it do so at their peril. The threat of reform There is much talk in Washington of shifting the balance of power back to individual states and reforming the funding and enforcement of federal environmental laws. Although most businesses believe that the devolution of environmental regulatory powers to state level is a welcome and long-overdue change, the consequences may not be as beneficial as they imagine. Certainly, state regulation means that decision-making responsibility is closer to those affected by environmental costs and benefits, giving companies better access and more opportunity to influence regulatory outcomes at the local level. But it is also true that heightened state involvement implies a more fragmented set of environmental requirements for most businesses. Compliance becomes far more difficult when companies must adhere lo multiple environmental mandates that depend on where a product is produced, shipped, and sold. Cases where states have already taken the environmental lead illustrate the types of problem that devolution may create: Recycled content regulations for newsprint. Currently, 28 states have mandatory or voluntary requirements for the recycled content of newsprint produced, distributed, and/or sold in those stales (Exhibit 2). To complicate matters further, each state has its own specifications for pre- and post-consumer waste types, recycled content requirement as a percentage of virgin pulp, and implementation date. Newspapers published nationally are having to decide whether altering their production and distribution processes to comply with individual state mandates is cheaper than simply adhering to the earliest and most stringent state requirement for their entire product line. Clean Air Act mandates on vehicle emissions. Faced with the challenge of individual state compliance plans for the Clean Air Act, the petroleum industry has had to determine how to market gasoline to states with different sulfur content requirements. …