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Corporate Governance and Environmental Issues

The sources of the morals seem to be mandated, because many corporations are seriously considering environmental issues as a result of rapidly changing consumer pressures and Government regulations that have compiled a bewildering series of laws under which corporations must report and guarantee environmental fulfillment. B. What forces are in motion for and against corporations who use/abuse natural resources? Lobby groups and environmentalist groups shareholders profit motive which have a terrible impact on the environment are the forces in motion for corporations who use/abuse natural resources.

Government Regulations, international organizations, non-governmental organizations (NGOs), socially responsible investors and consumer pressures are the forces in motion against corporations who use/abuse natural resources. C. Sustainability- a selfish or unselfish responsibility? Sustainability may be viewed as a selfish act of responsibility of the corporations as they are not working to protect the environment instead they oppose laws designed to protect because they hurt their business.

These corporations may use structural power, and threat of relocation, to encourage governments to loosen regulations or to not enforce those rules on the books, as well as to influence the discourse on “sustainable development”. This is, however, a shortsighted view however when one will foolishly believe that they will save millions from shortcuts in environmental care. A wiser group of corporations would view sustainability as an inherent necessity for the entity to protect the environment in which it operates.

Paradoxically, continuing operations that oppose the law are expensive, short sighted, and do not add to the sustainability of the entity. For what resources will these corporations use in the long term when they would have destroyed the very environment where they now operate? This should explain large corporations that are publishing their corporate social responsibility (CSR) reports. D. Prevention and Control- Internal emergency response plans Training is required to know the emergency response plan and handle the emergency efficiently.

The environmental issues may be incorporated in the existing On-site Emergency Plan- an integrated approach, In addition, a small booklet consisting of summary of On-Site Emergency Plan may be prepared and distributed to create awareness amongst the employees. II. Legislation in Place A. Clean Air Act The Clean Air Act establishes federal standards for air pollutants from stationary and mobile sources and to work with the states to control polluting emissions.

This law allows the Environmental Protection Agency (EPA) to set up National Ambient Air Quality Standards (NAAQS) to protect the environment and public health. The primary aim of the Act was to set and achieve NAAQS for SO2, total suspended particulates, CO, HC and Lead in all states by 1975. The Act was amended in 1977 primarily to set new goals for accomplishment of NAAQS as many states had failed to meet the requirements. The 1990 amendments were mainly intended to meet unaddressed problems such as acid rain, ground-level ozone, stratospheric ozone depletion and air toxics. B.

Oil Pollution Act The Oil Pollution Act (OPA) inflicts legal responsibility for removal expenses and damages resulting from incident in which oil is discharged into navigable waters or adjoining shorelines or the exclusive economic zone. Thus, improving the nation’s ability to prevent and respond to oil spills. This Act was signed into law in August 1990, largely in response to increasing public concern following the Exxon Valdez incident. The Oil Pollution Act also established the national Oil Spill Liability Trust Fund, which is manageable to offer up to one billion dollars per spill incident.

C. Toxic Substances Control Act The Toxic Substances Control Act of 1976 requires the Environmental Protection Agency to adopt rules requiring testing of chemical substances and mixtures that may present an awkward risk of damage to health or the environment. The EPA is authorized to regulate, to limit or ban the manufacture, processing, distribution, use and disposal of these substances and mixtures. Furthermore, EPA also tracks the thousand of new chemicals that industry develops each year with either unidentified or hazardous characteristics. D. Resource Conservation and Recovery Act

The Resource Conservation Act (RCRA) is the primary law governing the disposal of solid waste and hazardous waste. Congress passed RCRA on October 21, 1976 to tackle the mounting problems the nation faced the growing volume of municipal and industrial waste. This Act provides regulation for harmful waste and supports environmental agencies to regulate the cleaning of unhygienic spots. Furthermore, the Act deal with the environmental problems linked with harmless solid waste and encourages states to develop solid waste management programs, regulate solid waste landfills and abolish open dumps.

RCRA also contains provisions on numerous other topics, such as resource recovery, used oil management and recycling, small town environmental planning and plastic ring carriers. III. What are the forces that pressure a corporation to push the cost down so far as to be unsafe and irresponsible “citizens”? A. Stakeholder wealth It is obligatory for the Corporations by law to always act in the paramount interests of their shareholders, and that is almost always justified by keeping profits and the share price high.

This profit drive of the shareholders has a horrible impact the environment. For example, suppose a company is discharging harmful waste which is not illegal but it could spend shareholders money on a machine to check the emissions. The typical shareholder orientation would say don’t clean up unless there is some demonstrable benefit for shareholders or unless the emission becomes illegal. B. Financial Health The large corporations have grown- up to be amongst the most powerful entities in the world. About 51% of the largest economies in the world are solely corporations.

Because of their size and amount of wealth they control, they have significant power over other societal institutions. These companies frequently spend fraction of their profits toward influencing the government, aiding NGOs and forming support groups, mainly for proposals that benefit their temporary interests. (Erik). Pure financial wealth allows them to support politics and expect paybacks in return. For instance, the major 82 American companies made political contributions in 2000 adding over US$34 million and the corporate dominance in Brussels and Washington is considerable.

C. Strategic Positioning Pollution is a major anxiety to environmentalists who agonize that corporations are unwilling to curtail on greenhouse gas emissions in their industries. Correspondingly, noise pollution and waste production are major by-products of large industries, mostly poisonous waste. To escape fro environmentalists, some corporations shift their operations to third world countries with less rigid environmental laws. Thus, a result of globalization, many corporations work under the legislation of many different countries making legal restrictions very complicated.

Subheading: Corporate Governance, Environmental Issue and Ethic IV. Overview of Corporate Governance Corporate governance is a business concept which consists of policies and processes that are normally adopted by corporations. It sets out the relationships between stakeholders from the point of corporate management. Under the principle or concept therefore, corporate management defines on one side its relationship with its shareholders, corporate officers and the board of directors.

At the other side, management also communicates how it will relate with other stakeholders like the employees, suppliers, customers, creditors, government and private regulators, the community at large and even the environment. One could thus see therefore the great connection of corporate governance with the environmental issue. Since corporate governance is not legally mandated as a rule as its development is more of practical considerations as corporations realize the working together of the various stakeholders to sustain their business.

Since the concept is principles-based, it concerns more itself with self-regulation rather than being governed by laws; hence its practice may be different from country to other countries and company from other companies from the same or different country. The state regulators cannot be discounted from its influence on corporate governance by the passage of laws governing stock exchanges which in turn will put pressure on corporations to adopt their own corporate governance.

It is in this latter sense the laws will have effect on corporate governance. The practice of ethics in corporate governance therefore gets borne and developed overtime as institutions and individuals, which are part of stakeholders, assert their distinct roles in influencing end of corporate governance such as accountability of certain individuals and elimination of conflict of interest problems, economic efficiency and shareholder welfare.

Since corporations are players of the economic systems of the worlds in providing the needs and wants of people, the issue of corporate governance will continue to form part of life of these corporations. With their operations becoming more complex as each company tries to live the game of ‘survival of the fittest’, the influence of corporate governance which has been claimed to be the secrets of corporations’ success will continue to occupy the minds of management thinkers of these corporations.

In seeing their roles in strengthening of the concept of corporate governance through several mechanisms, the government authorities are acting through the various agencies in enacting and implementing laws for the protection and preservation of the environment. These laws on the environment necessarily become major considerations or economic variables for the decision-making activities of these corporations as enforced in the requirement of reports and the corresponding disclosure requirements of corporations environmental compliance from these corporations.

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