Business Wanted To Support Rule of Law Framework
Business Wanted To Support Rule of Law Framework
Introduction
In the article entitled Business Wanted to Support Rule of Law Framework published in the Risk and Compliance section of the Wall Street Journal, the business community is called forward to become more involved in their responsibility to the public. The report indicated the effort of the United Nations Global Compact in pushing for the promotion of laws that demand a sense of greater corporate responsibility, not only among existing business, but also among emerging markets. Based on research, the lack of sufficient law of potential markets is one of the main reasons why some companies are discouraged from investing. According to human rights lawyer Kevin Coon, the said Business for the Rule of Law Framework will pave the way for better protections of “intellectual property and allows for remedies to resolve disputes and enforce laws regarding labor rights, human rights and environmental protections” (Dipietro, 2015). Most organizations are aware of the importance of sustainable business practice in supporting the viability of different businesses as well as the solidity of the environment, however, it was observed that there is still a need to adopt stricter laws on sustainability.
Local and international businesses recognized the role of adopting corporate practices that promote sustainability, yet research revealed that the efforts are not sufficient to restore the damage brought about by different business operations. In the article, it was pointed out that issues concerning rule of laws in different countries are generally left to the consideration of government officials, with little regard to the recommendations of corporate organizations. But as Mr. Coon, a managing partner of Baker & Mckenzie firm stated: “There is increasing evidence for economic sustainability and the need for a stable system of laws where companies are doing business”(Dipietro, 2015). In some instances, some international organizations cannot wait for the implementation of sustainable laws, thus they took it upon themselves to initiate the needed change. The brilliance of adopting a structural framework for international governance and development practices cannot be disregarded, and its eventual implementation may have a considerable effect on organizational management.
Management Implications of the Rule of Sustainability Law
The international integration of different business such as the presence of transnational supply chains demands the adoption of general sustainability laws that will be adhered by international organizations. It is to be noted that the environmental policies in a particular region can greatly affect another company which is located even in the farthest part of the globe due to the presence of international companies. A business operation in another state is subject to the environmental regulations of the host country. Accordingly, the implementation of the rule of law, such as those that are promoted by the United Nations Global Compact will intensify the impact of environmental laws, to the extent of possibly affecting companies that do not physically operate in a particular region.
Undoubtedly, the adoption of sustainability framework is a fast growing strategic scheme of many business organizations. Some pioneering organizations have acknowledged the necessity of sustainable business practices, thus, they develop plans and policies to efficiently address the concern. As described in the article, despite the absence or lack of specific laws in certain countries, some of the global organizations recognized the need for them “to be the catalyst for driving some of this change”(Dipietro, 2015). For example, Procter and Gamble implemented its own regulations in terms of establishing supplier relationships. Recently, P&G came up with its environmental sustainability supplier scorecard with the goal of improving the supply chain relationship about environmental concerns, “and encourage the sharing of ideas and capabilities to deliver more sustainable products and services for our consumers” (Procter & Gamble, 2015). This means that an international organization that holds different facilities or have a product marketed in a worldwide scale expects to go over diverse local and international regulatory laws, as well as policies that are imposed by other organizations. Accordingly, business managements are affected by the rule of law in two ways, first as a company that comply with sustainability laws and second, as an organization that imposed its own sustainable policies for others to comply. In either way, organizational management is affected by the implementation of the rule of law on sustainability.
A. The Use of Expert Advice
The continuing advocacy for sustainability and compliance with local and international policies, requires that corporate managements seek legal advice from experts in order to be able to confidently navigate through these regulations. As companies pursue the expansion of their business in the international scene, there is also an increase about compliance concerns and many organizations may find that one of the challenges in embarking in the global market is the need to obtain sufficient legal information. In order to be able to adequately manage and comply with an environmental regulation, corporate management must adopt a sound repeatable procedure “including using experts to research and advise on environmental laws, aiming to work with suppliers who prioritize environmental risk management” (KMPG, 2011).
B. Engagement with Other Organizations that Adopt Sustainable Practices
Setting Procter & Gamble as an example, there are many companies that aim for the reduction of the negative effect of their business process to the environment. As one among the pioneers in promoting environmental concerns, P&G created the guidelines that must be complied by its suppliers. Interestingly, compliance does not only involved the reduction of the environmental impacts of their operation, but that the “companies need to ensure that procurement standards comply with various countries’ environmental laws and regulations” (AIG, 2013). The management of a manufacturing company that wants to develop a list of suppliers that comply with its sustainability goal may need to work intently with its suppliers in order to be able to gather compliance data. Consequently, the management may require its partners in the supply chain to use a system where it would be more efficient to suppliers to “identify and manage compliance with product environmental regulatory requirements” (AIG, 2013). Additionally, management may opt to develop policies that are geared towards complying with product-related environmental regulations, while there are those that require their partners in the supply chain to do its business taking into consideration its social and environmental responsibilities.
C. The Need to Comply with Environmental Management Standards
The implementation of the rule of law where the business community will have a greater involvement in the promotion of corporate social responsibility will have a considerable impact on the policy making of corporate management. While environmental policies worldwide may be fundamentally similar, there may be instances when difference arise due to certain conditions, such as the existing government policies or culture. The management is therefore advised to be flexible in such circumstances, keeping in mind that it is still best to be looked upon as a business that can adhere both to widely-accepted voluntary standards as well as to the more specific ones.
The corporate management may be called to embrace an environmental governance best practice such as the Environmental Management System (EMS). The EMS is a “framework for managing an organization’s environmental programs in a comprehensive, systematic, and well-documented manner” (AIG, 2013). While many companies has already adopted the ISO 14000, which is considered to be the dominant EMS in the world, any corporate management that wanted to be recognized for its efforts to comply with sustainability standards may still aim to conform with other widely adopted EMS.
Conclusion
Becoming more involved in the social and environmental sustainability should be one among the priority of corporate management. Research revealed that businesses that aimed to establish a strong standing towards sustainability are generally benefitted due to the increased number of patronizing customers who prefer to support environmentally compliant companies. The growing support towards environmentally friendly products creates an opening for corporate management to go over the particulars of different local and international environmental regulations to complete legal compliance. The direct relationship between the rule of law and social and economic development necessitates the rolling out of regulations to deal with sustainability and environmental issues. Despite the often different definition of sustainability across companies, it all boils down to the management taking its initiative in committing to comply with sustainability policies because it is the right thing to do after all.
References
AIG. (2013). From compliance to sustainability: Managing multinational environmental exposures. Retrieved from http://www.aig.com/Chartis/internet/US/en/Managing%20multinational%20environmental%20exposures_tcm3171-554959.pdf
Dipietro, B. (2015). The Morning Risk Report: Business Wanted to Support Rule of Law Framework. The Wall Street Journal.
KMPG International. (2011). Corporate Sustainability. Retrieved from http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/corporate-sustainability-v2.pdf
Procter & Gamble. (2015). Improving sustainability end-to-end. Retrieved from http://us.pg.com/sustainability/environmental_sustainability/supplier_efforts
