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The Role of Corporations in Environmental Public Policy

September 04, 2014

Government and public policy usually go hand in hand. In the past, public policy was created, developed and controlled by the government. Today, the government still passes new laws and regulations for which we, U.S. citizens, and corporations are subject to respecting; but, in a constantly developing and complex society, the relationship between the government and public policy is no longer so black and white. Corporations are gaining more and more wealth and power providing them with stronger leverage on the political sage. It is thus not surprising that corporations are also increasingly playing a larger role in public policy decisions.

Author: Alain Kilajian, C’15

Let’s consider environmental public policy as the example, and even more specifically, water related policy. Before the 1970s and the creation of U.S. Environmental Protection Agency (EPA), U.S. major streams, lakes and rivers, also known as “waters of the U.S.” in the environmental policy world, were not heavily regulated, or even regulated at all. It shouldn’t have come as much of a surprise when in 1952 and again in 1969, the Cuyahoga River in Ohio caught fire. Fortunately, the EPA took initiative with two very important water-related legislations: the Clean Water Act in 1972 and the Safe Drinking Water Act in 1974. The Clean Water Act forced industrial facilities, and other point source polluters, to limit their direct discharges into bodies of water thanks to permits such as Total Maximum Daily Loads (TMDLs) and National Pollutant Discharge Elimination System (NPDES).  Meanwhile, the Safe Drinking Water Act set standards for drinking water facilities and guaranteed accessible and potable water throughout the U.S. Both laws have seen changes since their initial establishments but still today remain very significant for water related policy. Until then, corporations’ role was easy: they had to follow the law. If a corporation was a point source polluter, it would continue to function but only within the limits of its permits. They simply had to comply. More recently, corporations are changing their role in the water related public policy world, from regulatory compliance to innovative commitment.

Indeed, in recent years, major corporations have taken initiative in becoming more environmentally aware, be it eco-friendly or sustainable. For example, Coca Cola has set a goal to sustainably source all of its key agricultural ingredients by 2020. Walmart and PepsiCo are among others who have also set sustainability goals. This movement of corporate sustainability is not only redefining corporations’ inner business structures, it is also redefining their role in environmental public policy. As mentioned above, the EPA has thoroughly dealt with point source pollution (pollution coming from a single point like a sewage outflow pipe) with appropriate legislations. In this case, the relationship between regulation and the regulator is clear. However, when considering nonpoint source pollution (pollution from diffuse sources like urban or agricultural runoff), the regulatory practices are far from clear. Here, instead of issuing permits to the corporations, the EPA has found itself working with the corporation to address the issue.

Let’s consider the regulation of agricultural runoff, and more specifically, agricultural runoff in the Mississippi basin. The largest source of water pollution in agricultural runoff is nutrient pollution coming from the overuse of fertilizers and pesticides on farms. So, the EPA basically has two options: to regulate or not to regulate. If the EPA were to regulate agricultural runoff, and thus the use of fertilizers and pesticides, the EPA would have to monitor each farm to see if they are using the right amount of fertilizers and pesticides, and then ensure the enforcement of the regulation. However, the monitoring efforts to enforce this regulation are quasi-impossible. And without enforcement, a regulation will lose its value and purpose. Therefore, the EPA has to find other ways to deal with the issue, ways that will involve working with the corporate world.

To address the growing issue of nutrient pollution in the Mississippi basin, the main source of the hypoxic zone in the Gulf of Mexico, the EPA created a task force consisting of five federal agencies, 12 states and tribes within the basin, called the Mississippi River/Gulf of Mexico Watershed Nutrient Task Force, or more commonly known as, the Hypoxia Task Force. Since its establishment in 1997, the Hypoxia Task Force has made its goal to understand the causes and effects of eutrophication in the Gulf of Mexico and to work on finding the best methods to resolve it. To do so, it has worked with state agencies to develop nutrient reduction strategies to reach their size reduction goals of the Gulf of Mexico hypoxic zone by 2015. The task force has avoided the use of regulation and has focused more on collaboration techniques involving a variety of stakeholders. Within these stakeholders, the task force sees the most potential for collaboration with corporate entities. As mentioned above, major corporations have begun to develop efforts to addressing the sustainability of their supply chains by understanding the agricultural practices of the farmers at the base of their chain. The task force and some of the major corporations thus share a common goal: reducing nutrient use and pollution. And as the task force looks for other solutions then creating new regulations, corporations prefer to avoid being subject to new regulations. Consequently, collaboration efforts present a win-win solution for both parties.

Dealing with environmental issues at first was the duty of the EPA. However, with today’s complex society, corporations also have a role to play. At first solely subject to regulations without consideration, corporations now are not only being considered, but are also playing a significant part in shaping new environmental public policy.



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