Jan 30 2012

Environmental Law and Policy Review 2012 Symposium: Managing Green Business

Published by at 12:05 am under Miscellaneous and tagged: , , , ,

If you missed the ELPR Symposium but want to hear what happened anyway, ELPR has put up some amazing presentation summaries on their website.  Click the link to read the full summaries or read on for a few excerpts.

John Willoner's Eco-House at Findhorn. Turf roof, passive solar, solar panel, via wikimedia

The Myth and Reality of Green BusinessProfessor Judd Sneirson (summary by Vanessa Steltenpohl)

Professor Sneirson spoke at length about a continuum of green business achievement, which ranged from noncompliance with legal obligations to full integration. He explained that most companies are at the profit-driven level on this continuum, where companies will engage in green business practices only when those practices will result in greater financial benefits. An integrated company goes above and beyond what is expected of them by law; however, the integrated company still neglects the social impact sphere of sustainable business. For example, Nike has been commended for developing green business strategies such as replacing toxic glue products with stitching; however, the company still struggles with employing fair wages in other parts of the world where its products are developed.

Professor Sneirson then developed several theories as to why more businesses were not aiming for a fully integrated green business strategy. The business world is currently focused on a shareholder profit, which stems from ambivalent case law, market pressure, and behavioral norms. Professor Sneirson believes that this way of looking at profit margins will slowly pass as consumers and businesses strive for greener products and greener practices.

Fairtrade Certified Rice Producer in Thailand, via wikimedia

In an Age of Green Business, How Does Fair Trade Promote Sustainability?: Professor Paulette Stenzel (summary by Jordan Bowman)

Professor Stenzel began her presentation with an overview of fair trade, and discussed how different member organizations affect the process of a product receiving fair trade certification. Most importantly, the new Fair for Life symbol will likely become an important certification because the Institute for Marketecology will be able to offer both fair trade and organic certifications without producers having to go to different organizations to obtain these certifications. Professor Stenzel showed how the idea of fair trade is not a new idea, but can be seen in much older philosophies such as the Great Law of the Iroquois: “In our every deliberation, we must consider the impact of our decisions on the next seven generations.” …

With regard to the environment, fair trade products place an emphasis on sustainability in general, reusing natural resources, protecting ecosystems, protecting workers from toxic chemicals, and seeking organic certification…

Professor Stenzel concluded with recommendations for policies that would support consumption of fair trade goods. For the government, there should be a focus on funding fair trade through grants and using procurement contracts to purchase fair trade products. Private consumers should continue to “vote with their pocketbooks” and to educate themselves and others about fair trade products.

Grimsby B & Q Busy with pre-Easter shoppers, via wikimedia

Sustainable Commerce: Corporate Governance and Private Ordering Systems: Professor Peter Appel and Dr. Rick Irvin (summary by Rachel Procopio)

According to Professor Appel, the drivers of sustainable commerce are the public legal system and private environmental benchmarks. The public legal system drives sustainable commerce by requiring corporations to comply with government standards. Private environmental benchmarks drive sustainability by the implementation of corporations’ own standards to fulfilling their business objectives: brand promotion and cost reduction.

Professor Appel cited the need for corporations to look at sustainability from the private side. Additionally, he emphasized the role of lawyers in this initiative. Both corporate counsel and lawyers in private practice are provided with tools from the corporate governance that allow companies to perform better environmentally and increase their profit margins. Professor Appel went on to outline ways for both corporate counsel and outside counsel to achieve this proposal. He also highlighted the law gaps that may be preventing some corporations from implementing sustainable commerce initiatives.  …

Dr. Irvin began his portion of the presentation by explaining that the “private law,” private organizations’ ordering systems, is often more influential than the environmental regulations that are set forth in the “public law.” …

Dr. Irvin went on to give in-depth examples of the success of the use of private ordering systems on promoting sustainability initiatives. One example was Murray, a lawnmower manufacturer, in Lawrenceburg, Tennessee. In order to do business with the British home improvement company B&Q, Murray had to meet the company’s sustainability standards. Murray was successful in implementing the standards and decreased its toxic chemical generation by 50%.

To finish the presentation, Dr. Irvin explained his and Professor Appel’s Quality and Environmental Management Systems Plan – Do – Check – Act Model that is used to help establish corporate sustainable commerce programs. Throughout his description of the model, Dr. Irvin highlighted the role of attorneys. Attorneys are needed to draft contracts and ensure confidentiality for companies seeking to increase sustainability. Additionally, Dr. Irvin described three ways in which private ordering systems support sustainable commerce programs. These drivers include improved profitability and operations, customer requirements, and global capital markets.

based on "Sustainable development" diagram at Cornell Sustainability Campus, via wikimedia

Facing the Legal and Environmental Challenges of Green Enterprise: Professor Anthony Page (summary missing on ELPR website)

Professor Page discussed the different organizational challenges in forming a green business.  He began by identifying that green businesses are hybrids that balance between a financial goal and a social or environmental goal.  This make it difficult to fit such companies into either a for-profit or a non-profit corporation framework.  In the case of the purely for-profit corporation, shareholder profits are generally thought to override everything.  He cited the case of Ben and Jerry’s, a company pursuing clearly defined social goals that sold itself to a large multi-national corporation instead of remaining independent.  The reason was because the owners felt that the offer was simply too large for them to turn down and still say that they were representing the best interests of their shareholders.  The non-profit model is also a poor fit for green businesses, however, because of the “asset lock” which is a hallmark of the non-profit corporation.  This means that non-profits must rely on donations and can’t sell stock in their company.

The professor proposed that a third, “hybrid” organizational form should be created that could meet the needs of green businesses better.  He then analyzed a few examples of such a hybrid that had been passed in various states, such as the “B” or “Benefit” corporation designation now available in California, Virginia, and other states.  The current offerings were found to still lack protection for companies against “selling out” to larger organizations, but may represent a step in the right direction.

Photograph of the Earth taken on December 7, 1972 by the crew of the Apollo 17 spacecraft, via wikimedia

People Versus Planet: Under-Examined Tensions in the Triple Bottom Line: Professor Robert Katz (summary by James Gorsuch)

He began with a basic idea of the “bottom line,” that where the last line of the profit & cost ledger determines the goals and success of a business. From this most basic model he introduced the idea in business of “Corporate Social Responsibility,” or the phenomenon of businesses gradually beginning to identify additional responsibilities and goals outside the profit-only conception of the bottom line. It identifies a duty of business to its “stakeholders”: not only shareholders but also employees, suppliers, and customers as well. Professor Katz indicated that this has infiltrated the business model over time, although there is not a definite moment when it began to do so. …

From this double bottom line framework, businesses began to feel pressure to consider the environment and their impact on it in their decision-making process. This “corporate sustainability” trend began to impact businesses as well, adding yet another concern to their bottom line, resulting in the “Triple Bottom Line” framework. Professor Katz identified the core of this triple bottom line as “Profits, People, Planet.” However, Professor Katz continued to argue that this framework is really a method of adding more and more people to the businesses focus: from shareholders, to stakeholders, to communities and gradually the global population.

 

Picture of the "Gingerbread House" in Essex, Connecticut, USA, via wikimedia

Green Business and Private Law: Professor Heather Hughes (summary by Andrea Gregory)

Through Professor Hughes’ talk, the Symposium shifted gears from a business and sustainable commerce focus to how property rights can be used to protect the environment. Her presentation highlighted three areas of property law that could be targeted to reach this goal: (1) creditor properties and the role of Universal Commercial Code (“UCC”) Article 9; (2) structured finance in real estate; and (3) the common law usage of servitudes and defeasements. She underscored that in order to more successfully incentivize environmental sustainability investment, we must look beyond the private role of businesses.

Harking back to the limitations of purely business solutions that were presented earlier in the morning, she advocated for the introduction of new and innovative secured transaction and debt finance rules that could effectively sidestep some of these limitations. Business contracts are limited to the parties, which raises concern over who can, will, and should bring action against a breach and where the proceeds of these remedies should be directed. Under contracts, third parties have not been established as beneficiaries. Property rights, on the other hand, are enforceable against the whole world because property rights have a maximum scope that cannot be exceeded. When these scopes are exceeded, third parties have standing to bring suit.  …

After closing, a few areas of further research were identified during the question and answer session. Namely, on the impact these types of programs will have on the international market place and on enforcement mechanisms. Professor Hughes also highlighted that her proposals require state-based reform. In order for her ideas to work, one must believe that these types of reforms are possible at the state level, as opposed to federal or local levels. One issue that arises from this is that these private laws are not enacted in a uniform way like the UCC was. This could drive state competition. Another potential issue that focuses on her second topic of creating a new form of LLC is that land use would have to be transferred from the municipal to the state level. This appropriation of power could be controversial.

 

March from the Tidal Basin, via wikimedia

DC’s Energy Efficiency Plan for Development: Preston Bryant, Chairman of National Capital Planning Commission

Preston Bryant, Jr., the final speaker of the Symposium, closed the weekend with his presentation on the National Capital Planning Commission’s (“NCPC”) plan for the development of an ‘ecodistrict’ in Southwest Washington, District of Columbia.  …

The focus of Mr. Bryant’s discussion was a comprehensive planning program that the NCPC has been working on for the past eighteen months to turn the Southwest quadrant of the District of Columbia into an ecodistrict. The goal of the plan, called the Southwest Ecodistrict Initiative, is to transform the 10th Street and Maryland Avenue corridors, located south of the National Mall in Southwest Washington. Mr. Bryant explained how the NCPC is currently working with sixteen other federal agencies to turn this district into a showcase of sustainable urban development by 2030.  …

Mr. Bryant explained NCPC’s vision, including but not limited to: scenic improvements to the major avenues of the District; rehabilitation and redevelopment of existing buildings; new developments on vacant or underutilized lots; construction of new roadways and parks; beautification of existing streets; and construction of new energy and water systems. Of particular interest was the construction of a new energy and water use system, which would have to comply with Executive Order 13514, which encourages federal agencies to be more environmentally responsible.

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