Corporations, Responsibility and the Environment
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Corporations, Responsibility and the Environment Carrie Julia Bradshaw UCL PhD 1 I, Carrie Julia Bradshaw, confirm that the work presented in this thesis is my own. Where information has been derived from other sources, I confirm that this has been indicated in the thesis. ___________________________________ 2 Abstract Corporate Environmental Responsibility (CER)—that corporations can and should play an active role in the governance of environmental protection—is justified primarily by reference to the business case; the claim that behaving responsibly pays. In privileging a market voice for the environment, however, the business case alone is an inadequate justification for CER. As such, this thesis considers a qualitatively different justification: that there exists normative and pragmatic space for CER within contemporary approaches to environmental law and regulation. The thesis suggests that CER is best understood and justified by reference to the positive and normative implications of decentred regulation, where regulation is no longer the preserve of government and, in view of the limitations of governmental control, nor should it be. A waste-based case study illustrates the potential and limits of CER in this regard. However, this normative space for CER in decentred environmental regulation is not mirrored within corporate law and governance. Notwithstanding references to the ‘environment’ in the Companies Act 2006, the theoretical orthodoxy and its influence over the positive mainstays of UK corporate governance regard environmental concerns as largely irrelevant to company law and decision-making. In order to remedy this problematic position of corporate environmental irrelevance, as well as to more generally enhance CERs limited normative appeal, the thesis examines the nature and location of a voice for the environment within corporations. It argues that intra- corporate environmental voice should be enhanced through company law, providing environmental management systems (EMSs) as one possible example of ways in which company law might provide room for corporate environmental conscience to breathe. 3 Contents Acknowledgements 6 List of abbreviations 7 1 Introduction 9 1.1 Corporate Social Responsibility 9 1.2 Making the case for CER 12 1.3 Environmental voice 14 1.4 Regulatory voice and space for CER in environmental law and governance 17 1.5 Regulatory voice and space for CER in company law and corporate governance 18 1.6 Addressing the limitations of CER: intra-corporate environmental voice 20 1.7 Methodology 22 1.8 Thesis structure 27 PART I: ENVIRONMENTAL VOICE AND SPACE FOR CORPORATE ENVIRONMENTAL RESPONSIBILITY—POTENTIAL AND LIMITS 2 Market Voice and the Business Case 30 2.1 Introduction 30 2.2 Stakeholder and environmental voice 31 2.3 The business case for CER 35 2.4 Deeper objections to the business case for CER 44 2.5 Conclusion 54 3 Regulatory Voice (I): The Limitations of Governmental Regulation 55 3.1 Introduction 55 3.2 The limitations of command and control 56 3.3 Direct waste regulation 61 3.4 Beyond command: moving up the waste hierarchy 70 3.5 Conclusion 83 4 Regulatory Voice (II): CER and Decentred Regulatory Space 85 4.1 Introduction 85 4.2 Decentred regulatory space 87 4.3 Potential and limits of CER in decentred regulatory space 99 4.4 CER and ‘law’ 108 4.5 Conclusion 114 5 Regulatory Voice (III): Company Law and Environmental Irrelevance 116 5.1 Introduction 116 5.2 Environmental irrelevance: the normative contractarian thesis 117 4 5.3 Weak environmental relevance: the positive contractarian thesis 125 5.4 Environmental irrelevance and environmental voice 138 5.5 Conclusion 144 PART II: INTRA-CORPORATE ENVIRONMENTAL VOICE 6 Intra-Corporate Environmental Voice and Corporate Conscience 147 6.1 Introduction 147 6.2 The fiction theory corporate conscience according to company law 149 6.3 Beyond the persona ficta: real individuals 153 6.4 Organisational conscience 164 6.5 Conclusion 175 7 Corporate Conscience and Procedural CER 177 7.1 Introduction 177 7.2 Decentred regulatory space, procedural law and CER 180 7.3 The limitations of UK company law for corporate conscience 187 7.4 EMSs and corporate conscience 193 7.5 Company law proceduralisation 201 7.6 Conclusion 214 8 Conclusions 216 8.1 Justifying CER and decentred regulatory space 216 8.2 Encouraging CER – the environmental proceduralisation of company law 218 8.3 False dichotomies and questions of legitimacy 220 8.4 Structural critiques, pragmatism and ways forward 223 Bibliography 226 5 Acknowledgements I could not have asked or hoped for better research supervision. I am indebted to Professor Maria Lee, who is always so generous with her time. As well as pushing me academically, her kindness and excellent sense of humour kept me going on the (thankfully few) bad PhD days. Dr Marc Moore has also contributed so much by way of time, expertise and encouragement. In his modesty, he would deny that he has in fact gone well beyond the duties of a second supervisor. Thanks are also due to Dr Douglas Guilfoyle, whose rigorous conduct of my upgrade was invaluable in defining the contours of the project and unpacking the central arguments in an early draft of Chapter 2. It has been a privilege to be part of the UCL Research Student cohort between 2010- 2013. I am appreciative (and proud) of the intellectual and emotional support provided by our community, so wonderfully fostered by Professor Diamond Ashiagbor and Professor Alison Diduck. Kim Bouwer and Claire Lougarre (both also at UCL) and Natasa Mavronicola (a UCL Laws alumna) provided extensive and insightful commentary on the introductory and concluding chapters. I feel fortunate that they are still my friends after I imposed on them such a thankless task. I also owe thanks to the Faculty of Laws at UCL generally. Bentham House has been my much-cherished institutional home since September 2004, and the Faculty supported me financially through a generous Research Scholarship. I am especially lucky to have carried out my research as part of UCL’s Centre for Law and the Environment. I have also benefited greatly from the safe presentation forum provided by the London Environmental Law Reading Group, founded and convened by my friend and colleague, Emily Barritt, of King’s College London. Most importantly, I am forever thankful for my family, Lynne, John and Emma, who love and support me, even when I am at my most unreasonable. 6 Abbreviations AD Anaerobic Digestion BMW Biodegradable Municipal Waste BOGOF Buy One Get One Free BIS Department for Business, Innovation and Skills BSI British Standards Institution CA 2006 Companies Act 2006 CBI Confederation of British Industry CC1 Courtauld Commitment Phase 1 CC2 Courtauld Commitment Phase 2 CC3 Courtauld Commitment Phase 3 C&D Construction and Demolition (waste) CD&E Construction, Demolition and Excavation (waste) CER Corporate Environmental Responsibility CFP Corporate Financial Performance CHP Combined Heat and Power CORE The Corporate Responsibility Coalition CSR Corporate Social Responsibility DECC Department of Energy & Climate Change DEFRA Department for Environment, Food & Rural Affairs EA Environment Agency ELVs End-of-life Vehicles EMAS EU Eco-Management and Audit Scheme EMS Environmental Management System ENGO Environmental Non-Governmental Organisation EPA 1990 Environmental Protection Act 1990 EPR Extended Producer Responsibility EPR 2010 Environmental Permitting (England and Wales) Regulations 2010 ESV Enlightened Shareholder Value EU European Union FRRP Financial Reporting Review Panel ISO International Organization for Standardization JCT Joint Contracts Tribunal KEPI Key Environmental Performance Indicators KPI Key Performance Indicators LATS Landfill Allowance Trading Scheme NGO Non-Governmental Organisation OECD Organisation for Economic Co-Operation and Development OFR Operating and Financial Review PRN Packaging Recovery Notes PERN Packaging Export Recovery Notes 7 PET Polyethylene terephthalate RN (Packaging) Recovery Notes SME Small and Medium-sized Enterprise SRI Socially Responsible Investment SWMP Site Waste Management Plan WCA Waste Collection Authority WDA Waste Disposal Authority WEEE Waste electrical and electronic equipment WFD Waste Framework Directive WRAP Waste & Resources Action Programme WTO World Trade Organization 8 Chapter 1 Introduction 1. Corporate Social Responsibility This thesis asks two main questions. First, should corporations play an active role in the regulation and governance of environmental protection? By this, I mean corporate activities which go beyond the narrow confines of legal compliance in a proactive and engaged manner, although it will become clear that there is no simple dichotomy between compliance and non-compliance. Second, how might such an active role be encouraged, aided or enhanced through legal intervention? These two questions feature prominently in the literature on Corporate Social Responsibility (CSR), of which Corporate Environmental Responsibility (CER) might be considered a sub- species.1 The term ‘CSR’ (and by extension, CER) comes with a fair amount of definitional baggage.2 To start with, there is overlap with other labels for related territory, including business ethics, corporate citizenship and corporate accountability.3 We might otherwise label corporate environmental responsibility as sustainable/green business, corporate greening or corporate environmentalism.4 Labelling aside, CSR at 1 Neil Gunningham (ed), Corporate Environmental Responsibility (Farnham: