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  • Robert Hinkley

Thought for the Day

12/6. (Part 3). Enforcing the Code. Why the Code for Corporate Citizenship (Code) will be effective without precisely defining the term “severe damage to the environment” and without specified enforcement procedures and penalties can be difficult to grasp. The legislative debate over most proposed business regulation focusses on defining the abusive behaviour and the penalties which will be assessed if it isn’t stopped.

However, the Code is not like other business regulation. Its job is not to police the day-to-day operations of big companies. Its purpose is to change the mindset of the corporation by establishing the outer boundaries of acceptable corporate behaviour.

Photo by Richard Miller

Unspoken is that the Code only applies when environmental regulation has failed, and severe damage continues. If business regulation has already stopped abusive behaviour before its damage becomes severe, the Code has no applicability.

Under existing law (i.e., without the Code), corporations can continue to engage in severely destructive behaviour until government passes laws prohibiting it. Indeed, existing law justifies the continuation of the abusive behaviour by telling directors they must act in their company’s best interests.

The climate crisis is a good example. Twenty-eight times the nations of the world have met at Conferences of the Parties (COPs) to try to craft new environmental laws which will significantly reduce the emission of greenhouse gases (GHGs). Twenty-eight times the emitters have succeeded in frustrating their attempts. Twenty-eight times government has failed.

The consequence has been that the carbon in the Earth’s atmosphere continues to build, our weather becomes more extreme, millions of homes are threatened, and more people get sick and die prematurely.

The legal emission by big companies of significant quantities of GHGs is clearly causing severe damage. Government has proven unable to stop it. The Code will finally make it stop by requiring the emitters’ own directors to bring the emissions to a halt themselves.

Boiled down to its essence, the Code’s purpose is to make it clear to business that business has no unalienable right to severely damage the environment. The Code achieves this by telling company directors, if regulation has been unable to stop the severe damage, then the task falls to them to make it stop. The Code thus corrects a flaw in current law, a flaw in liberal democracy for that matter, that has allowed the emissions to continue for far too long.

Next time we’ll focus on how directors will know that the damage their company is causing has become severe and the Code requires it to stop.

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