Ethical Performance
inside intelligence for responsible business
 

editorial

Time to rethink knee-jerk resistance to regulation

December 2010

The vexed issue of lobbying is raising its head once again. On the one hand, the Carbon Disclosure Project reports that large companies are not putting enough pressure on governments to promote investment in the development of low-carbon technologies, even though this is clearly in everybody’s interest (see this page). On the other hand, we find fresh examples – in Canada (p7), California (p5), and India (p4) – of sections of the business community lobbying against planned legal measures that are widely regarded as being of social and environmental benefit.

Of course, each of the moves in question may have flaws that make them counterproductive and inexpedient – and not only from the standpoint of business. Certainly, the proposed regulations in India, which would require companies to spend a fixed two per cent of their profits on CSR, appear clumsy and overly prescriptive. But putting aside the pros and cons in each case, the overall impression is of a continuing disconnect between the good work that many businesses are doing on sustainability and the seemingly unthinking obstruction projected by their lobbying activities. This is not a new observation; concerns have been raised in this field for a number of years now. But it is increasingly worrying precisely because it is not new, and attitudes appear so slow to change.

Why are things moving at such a snail’s pace? There are many reasons, but perhaps the most important is the automatic knee-jerk reaction all too often displayed by business to any regulatory proposal. The idea that ‘regulation is bad’ remains the deeply ingrained default position of the corporate world, in spite of the fact that a lack of regulatory oversight has just recently contributed to market failures of historic proportions. Some business leaders still maintain their hard-line stance, resisting even light-touch measures likely to benefit their operations and reputations. They are conceivably no longer in the majority, but their views are amplified by the trade confederations that lobby on their behalf.

Some companies in the vanguard of corporate responsibility are revising these attitudes, as they realize that in an unregulated world their good behaviour is prone to go unrewarded in the short, if not in the long run. Here there is a role for heads of corporate responsibility. They could do a great service to their companies and their industry sectors if they internally lobby board members in favour of a more nuanced approach to regulation. This should express a view that is much more in tune with the times, and free of the constraints of trade bodies liable to reflect only the lowest common denominator.




Peter Mason | Global | Regulation

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