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The Absence of Corporate Environmental Responsibility: Causes and Its Governance

Author: SunXiaoWei
Tutor: LiuChengYu
School: Southwestern University of Finance and Economics
Course: Population, Resources and Environmental Economics
Keywords: Corporate Environmental Responsibility Environmental Regulation externality
CLC: F270
Type: PhD thesis
Year: 2010
Downloads: 806
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Abstract


Since China’s opening-up, her economy has seen rapid development with industrialization drive pressing ahead. While at the same time, along with the industrial advancement, a series of environmental problems, such as earth erosion and water pollution, has occurred. This is the manifestation of the absence of corporate environmental responsibility. The accountability of the environment on the part of the enterprises are a basic social responsibility, which is mainly lies in the environmental protection, reducing the depletion of environmental resources in the process of pursuing the maximization of economic interest. It is their social responsibility to maintain the public interests. To be specific, the social responsibility is embodied in the control of pollution sources, the reduction of toxic substances’ leak into the environment, cultivate and protect the environmental resources and the lowering of the depletion of the environmental resources.The absence of corporate environmental responsibility is deeply rooted in the market failure, which requires the government’s intervention. The government intervenes enterprises’behaviors, through making out a series of laws and regulations for the environmental protection, to urge them to take on environmental accountability. But enterprises are by nature rational economic individuals, always driven by egoism. Any of their economic decisions are made on the principle of cost and return, seeking the interests while stepping away from harms with the objective to maximize the economic interests. At the same time, the attribute of public goods for the environmental resources offers the enterprises rooms to carry out opportunism. The economic rationality on the part of enterprises shows that whether or not the enterprises can effectively take on the accountability on the environment depends on the perfectness of the environment regulations and their implementation. Whether the environmental policies can bring enterprises to take on the environmental accountability or not matters much for the government’s ability to solve the environmental problems and the sustainable development. Therefore, to study the regulation-making policies is of great significance in the urging enterprises to take on the environment accountability, and thus realizing social and economy’s fast and sound development.In view of this, this dissertation analyses the status quo of enterprises’part in implementation of their accountability in China, starting from the accountability in environment on the part of the enterprises, and from the perspective of China’s the regulation-making policy. The dissertation then comes to analyze the regulation-making policies that result in the status quo, which include the absence of the institution, different targets for regulation-making between the central government and local governments; game strategy between different interest groups. With enterprises as rational individuals, this dissertation makes analysis on both the existing problems in this regard. Then it points out that it is the policy-making system and the lack of efficiency that bring about the absence of environment accountability on the part of enterprises. With the above analysis, the dissertation puts forward some proposals on how to perfect the regulation-making policies, with the aim to urge the enterprises to take on the environment accountability.Built upon the objective of this study, the main contents of this dissertation are as follows:Part One raises the issue; it conducts the literature reviews of both home and abroad, which includes the comparison of the instruments of regulation-making policies, the impacts of the environmental regulations on the enterprises; the research on the supervision and penalty in the implementation of the regulation; the effects of the implementation. With the literature review, this part tries to find out the limitations in others’researches. And thus makes out this dissertation.Part Two mainly focuses on the relevant theories for the subject. It conducts a systemic review of the externality theory, upon which it analyses the externality of enterprises’behaviors concerning environment, the definition of their accountability and the absence of their environmental accountability. All the above efforts make possible the probes into relevant theories and contents regarding government’s policies in environment regulation. Part Three dwells on the relationship between the regulations and enterprises’ accountability in environment basing on Part Two. Under the regulations concerning the environment, the environmental factor serves as an important element for the enterprises’production function, whose regulations concerning environment bring about three different theories regarding enterprises’ competitiveness, and enterprises’strategies in their environmental accountability are thus formed.Part Four probes into the different stages in China’s economic development. Firstly it analyses the evolution of the accountability in environment for China’s enterprises. With the rising awareness of environmental protection, the enterprises have come to understand better their accountability concerning environment. But judging from the real situation, especially through relevant data and cases, the absence of environment accountability on the part of enterprises is obviously demonstrated. Next comes the manifestation and causes for this phenomenon-the failure of the regulations regarding environment.Part Five expounds on the historical evolution and policy framework concerning environment and makes a short review of performance of the policy concerning enterprises. It points out that the absence of the environment policy is manifested in the unsound legal system, the lack of mechanism for motivation and constraint, the imperfectness of the system of the general public’s participation and the different targets or the central government and local governments, and so forth. The part goes further to point out the deep cause for the lack of the absence of the regulations regarding environment.Part Six advances the proposals on how to perfect the policymaking system of environment. In this part introduces three cases of typical developed countries, namely the United States, Germany and Japan. The article uses their experiences in the regulations which promote the accountability for reference. And basing on this, this part puts forward some suggestions on the construction of the implantation system, the construction of the implementation subject, and the construction of implementation efficiency. All these proposals are meant to promote the enterprises’effective implementation of their accountability concerning environment.From the above analysis, the perfectness of the system and the implementation efficiency are very important factors for they are the basis and guarantee for enterprises to carry out their accountability concerning environment. On one hand, China should reform and perfect the policymaking system regarding environment regulations, strengthening local governments’efficiency in the implementation of environment policies; It is advised to weaken the power of officials at local governments, and thus avoid rent seeking and the captives of the regulations concerning environment from the interest groups; It is advisable to effectively lower the transaction costs in the formation of the regulation-making process; The political achievements appraisal the central government conducts on local governments should be reformed, getting rid of localism and opportunism. On the other hand, democracy of the environment management must be reiterated, building a supervision mechanism where the general public can participate in the implementation of the environment regulations. At the same time, the means of marketization is to be perfected, lowering the cost for the enterprises to implement their accountability in environment. All this is to enhance the enterprises’initiative to implement the accountability, so that the accountability can not be the shackles for the enterprises in their development process.

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CLC: > Economic > Economic planning and management > Enterprise economy > Economic theory and methods
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