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Corporate Environment and Mentality

The major goal of corporations is to make money for their owners or stockholders. Over the centuries, corporations have clung to that goal as their sole purpose, and ignored the world around them as well as their impact on that world. That mentality, and the business environment it created, did not work out very well, and in fact in many countries corporate business still represents the most destructive social dynamic.

Many countries are working toward a cleaner environment and improved social conditions for their citizens. On the opposite end of the spectrum is China, the world’s largest emerging industrial economy. Corporations in China prefer the old mentality and the environment shows the effects of this; China is home to a majority of the world’s most polluted cities and it shows only marginal, if any, respect for worker rights and workplace conditions.

Because corporations in the United States, Europe, and Japan operate under the heavy scrutiny of regulatory forces, which of course they deeply resent, the environment is improving and worker rights and workplace conditions are improving as well. Business investors and politicians in the United States still constantly squawk, whine, moan, and groan about government regulation. They also work to evade citizen demands for great corporate social responsibility, even though embracing that responsibility has proved to be profitable in both the short and long term.

The Guiding Principles on Business and Human Rights endorsed by the United Nations (UN) Human Rights Council on June 16, 2011, with strong support from the United States, are the first global set of guidelines on business and human rights. The Guiding Principles provide an important framework for corporations, states, civil society, and others as they work to strengthen their respective approaches to business and human rights. The principles are organized under a three-pillar framework:

  • ? Protect: States have a duty to protect against human rights abuses by third parties, including business enterprises, through appropriate policies, regulations, and adjudication.
  • ? Respect: Businesses have a responsibility to respect human rights, including acting with due diligence to avoid infringing on the rights of others, and addressing adverse impacts with which they are involved.
  • ? Remedy: There is a need for greater access to remedy for victims of business- related abuse, both judicial and non-judicial [1].

Another major issue that corporations need to deal with is the global movement for improved environmental protection. The International Standards Organization’s (ISO) ISO standard 14001 addresses the issues of corporate impact on the environment. It also describes the specification and requirements for an environmental management system (EMS) to reduce negative impact on the environment. As with most macro ISO standards, 14001 calls for constant improvement over time and reducing the negative environmental impact on the part of corporations.

An EMS encourages an organization to continuously improve its environmental performance. The system follows a repeating cycle and the organization first commits to an environmental policy, then uses its policy as a basis for establishing a plan, which sets objectives and targets for improving environmental performance. The next step is implementation. After that, the organization evaluates its environmental performance to see whether the objectives and targets are being met. If targets are not being met, corrective action is taken. The results of this evaluation are then reviewed by top management to see if the EMS is working. Management revisits the environmental policy and sets new targets in a revised plan. The company then implements the revised plan. The cycle repeats, and continuous improvement occurs. The five main stages of an EMS, as defined by the ISO 14001 standard, are as follows:

  • ? Commitment and Policy: Top management commits to environmental improvement and establishes the organization’s environmental policy. The policy is the foundation of the EMS.
  • ? Planning: A company first identifies environmental aspects of its operations such as air pollutants or hazardous waste that can have negative impacts on people and/or the environment. Once significant environmental aspects are determined, a company sets objectives and targets.
  • ? Implementation: A company follows through with the action plan using the necessary resources (human, financial, etc.). An important component is employee training and awareness for all employees. Other steps in the implementation stage include documentation, following operating procedures, and setting up internal and external communication lines.
  • ? Evaluation: A company monitors its operations to evaluate whether targets are being met. If not, the company takes corrective action.
  • ? Review: Top management reviews the results of the evaluation to see if the EMS is working. The plan is then revised to optimize the effectiveness of the EMS. The review stage creates a loop of continuous improvement for a company [2].

As global movements to pressure corporations to be better citizens progress, a third area that corporations must deal with is national or local regulation, much of which is aligned with the goals of protecting human rights and the environment. In the United States, corporations must deal with federal government regulations as well as state regulations and state and local laws on how corporations conduct business and manage their operations. There are over 400 federal agencies that, depending on the industry sector, corporations may be regulated by in some fashion, and many have state-level counterparts. The major federal regulatory agencies of the United States are

  • ? Department of Agriculture (USDA)
  • ? Department of Commerce (DOC)
  • ? Department of Defense (DOD)
  • ? Department of Education (ED)
  • ? Department of Energy (DOE)
  • ? Department of Health and Human Services (HHS)
  • ? Department of Homeland Security (DHS)
  • ? Department of Housing and Urban Development (HUD)
  • ? Department of the Interior (DOI)
  • ? Department of Justice (DOJ)
  • ? Department of Labor (DOL)
  • ? Department of State (DOS)
  • ? Department of Transportation (DOT)
  • ? Department of the Treasury (TREAS)
  • ? Alcohol, Tobacco, Firearms, and Explosives Bureau
  • ? Centers for Medicare and Medicaid Services
  • ? Consumer Financial Protection Bureau (CFPB)
  • ? Consumer Product Safety Commission (CPSC)
  • ? Environmental Protection Agency (EPA)
  • ? Equal Employment Opportunity Commission (EEOC)
  • ? Executive Office of the President (EOP)
  • ? Federal Aviation Administration
  • ? Federal Financial Institutions Examination Council (FFIEC)
  • ? Federal Trade Commission (FTC)
  • ? General Services Administration (GSA)
  • ? Internal Revenue Service (IRS)
  • ? Interstate Commerce Commission (ICC)
  • ? National Labor Relations Board (NLRB)
  • ? National Transportation Safety Board (NTSB)
  • ? Nuclear Regulatory Commission (NRC)
  • ? Occupational Safety and Health Administration (OSHA)
  • ? Office of Personnel Management (OPM)
  • ? Security Exchange Commission (SEC)
  • ? Small Business Administration (SBA) [3]

The final corporate battlefront addressed in this book is citizen group and special interest group pressure on companies to engage in corporate social responsibility (CSR). The trend toward CSR has been steadily increasing, though its extent varies among industries. CSR exists when companies self-regulate according to sustainable legal standards, ethical principles, and international norms. There are many ways and various degrees of rigor by which sustainability is measured. Systems of rating and endorsement have been established by nations, the UN, states/provinces, industries, professional associations, and environmental groups. Companies often display their ratings and awards in public relations materials to great positive effect. In fact, sometimes a business will seek to boost its public image by advertising itself as greener than it actually is. This is referred to as green washing [4].

The U.S. Department of State has a strong commitment to CSR, which is exemplified by its comprehensive approach to providing support and guidance in areas of responsible corporate conduct. Key areas of focus are labor and supply chains, energy and the environment, anti-corruption, health and social welfare, partnerships and exchanges, and the empowerment of women and girls [5].

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