By Mr Shane Gladigau, Associate; Research, Strategy and Communications, Equilibrium
Business operates in the broader framework of society, which grants it the licence to operate and determines the relevant rules of the game by way of laws and regulation. These rules are the outcome of the trade-off between the positive impacts of business (supplying consumer demands, employment, wealth and income generation) and the possible negative consequences of business operations (environmental damage).
There is increasing public scrutiny and developing expectations that businesses should behave responsibly and accountably in terms of improving their sustainability performances and minimise their environmental footprints. This development is partially due to the increased stress the Earth is under and partially because of increased connectivity.
The inability to defend the environmental standards of a business may quickly result in legal action (eg. by regulators, activist lawyers and class actions) and the possibility of increased government regulation, each of which creates friction and adds to the costs of running a business.
This discussion paper to be presented at the Sustainability Business conference in May 2012 lays out the trends that highlight how companies are operating in a more challenging environment where risks of legal action against them with respect to environmental issues are increasing. Businesses, directors and managers are being exposed to a widening range of environmental laws with heavy penalties for breaches.
Even if companies avoid trial and prosecution in real courts or tribunals, society could put companies on trial in the court of public opinion, especially in the era of Facebook, Twitter, LinkedIn and other forms of social media, and via traditional consumer initiatives, (eg. boycotts, NGO campaigns, demonstrations, negative media campaigns).
Mr Shane Gladigau
Taking Care of Business: Sustainable Transformation Conference
Radisson Resort, Gold Coast – May 21 & 22, 2012
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