Promoting Business Responsibility for Environmental Management in Developing Countries: What Role for “Self-Regulatory” and “Co-Regulatory” Policy Instruments?

Jonathon Hanks

In view of the generally poor record of enforcement of environmental standards throughout most developing countries, and the growing trend in OECD countries towards the adoption of more innovative forms of environmental regulation, this paper examines the potential within developing economies for shifting greater responsibility for environmental protection from the public to the corporate sector.

The paper begins by arguing that effective environmental policy-making requires an active participatory approach, as well as the promotion of incentive and information-based strategies, as opposed to traditional command-and-control rmes. After describing the various available policy options in some detail, the paper outlines some of the shortcomings associated with directive-based (command-and-control) regulation, contrasting these with the arguments in favour of self- or co-regulatory policy approaches. The application of innovative policy options within OECD countries is then reviewed, and the possible strengths and weaknesses of such instruments is assessed.

The second part of the paper focuses on the use of negotiated agreements as a specific policy instrument that strongly promotes a participatory approach to environmental policy-making. By examining the development of such agreements within various OECD countries, and questioning the extent to which they have been successful in improving environmental performance, a number of conditions and criteria for their implementation in developing countries are identified.

The third section of the paper outlines some of the difficulties associated with implementing innovative policies in developing countries, but nevertheless suggests that there is merit in pursuing such strategies under certain conditions. Based on a consideration of recent developments in South Africa, the author identifies a number of actual and potential constraints to, and possible strategies for, pursuing innovative policy options. Areas for future research are also identified.

The paper argues that if sustainability is to be achieved, responsibility must be shared between government and business. While recognizing that the necessary political and institutional conditions for the adoption of negotiated environmental agreements may not always be present in many developing countries, the author makes the case that such instruments are an important complementary means of achieving business responsibility for environmental protection in developing countries.