Greenwashing, corporate profits, and the Clean Air Act's environmental compliance

¶ … tension between businesses interests in maximizing profits and the public's interest in receiving complete, truthful, and non-misleading information about products that they purchase.

The dangers against greenwashing are that consumers will have no confidence in the products or services they are buying. This means that they will not purchase specific items. As they feel they are being deceived and cheated through false labeling / misrepresentation. At the same time, there is the possibility that a firm could face penalties from government regulators who feel that they are engaging in false advertising. This will have a negative impact on the image of the organization and their ability to address the needs of customers in the future. ("Six Sins of Greenwashing," 2007)

For an executive; it is advisable to not practice these kinds of policies. The reason why is because it will hurt the brand image of the products they are selling and invite an investigation into their procedures. This can result in the company losing customers who feel they were deceived based upon the tactics that were utilized in the process. When this happens, there is a realistic possibility that these issues will negatively impact the finances of the organization. This will create a decline in market share and their earnings. It is at this point, when these issues will impact the economic viability of the company over the long-term. ("Six Sins of Greenwashing," 2007)

Identify one environmental law that is relevant to your past, current, or future employer.

One law that is relevant to my previous employer is the Clean Air Act. This law is pertinent because I worked for a power plant. The emissions they submitted into the air were constantly regulated in order to determine if they were in violation of these provisions. To maintain compliance with these guidelines, they would utilize new technology to help curb the total amounts of pollutants and measure their activities. At the same time, they engaged in practices such as the purchase of emissions credits. This is when the firm would buy credits from other companies that were bellow these standards and sell them to those who may be slightly above. The power plant sometimes purchased additional credits during times when they knew their emissions were going to be higher. ("Clean Air Act Summary," 2013) (Casper, 2010)

In this case, the environmental regulations hindered the business. This is because they were not tough enough to force some kind of radical change in the way it was operating. Instead, a middle ground approach was taken, which imposed these guidelines selectively on the plant. However, in the event that they did not follow the law, is the point when they would have a way of reducing their emissions on paper. Yet, in reality, it was polluting more than it should. This is going directly against these provisions. ("Clean Air Act Summary," 2013) (Casper, 2010)

Outline

I. Introduction

II. Ethical outlooks

1. Deontological

2. Utilitarianism

III. Relevant Laws

1. Clean Air Act

2. Foreign Corrupt Practices Act

3. Kyoto Protocol

IV. Discussion of the Law

1. How both regulations are relevant

2. Impact on the producers and stakeholders.

V. Recommendations

1. Possible strategies for improving these regulations.

VI. Conclusion

Introduction

Over the last several years, the issue of power generation has been increasingly brought to the forefront. This is because the majority of plants (44%) are using coal-based technology. These facilities are more cost effective and can utilize a readily available natural resource which is inexpensive. However, in the process of producing electricity is when the emissions can create harmful side effects. The most notable include: sulfur dioxide, nitrogen oxides, particle matter and mercury. (Casper, 2010)

The combination of these elements is contributing to a decrease in air pollution levels and it has been shown to contaminate the water supply of local communities. Despite these negative environmental impacts, the industry believes that this is the only economically viable approach for producing electricity. This is because they will often cite how natural gas prices have increased exponentially. At the same time, many are opposed to the establishment of using alternative sources. As they have been shown to produce small amounts of electricity and are not cost effective. These areas are problematic, in creating a situation where environmental laws are becoming tougher in regulating the emissions from these facilities. (Casper, 2010)

Yet, the industry is unable to create an effective strategy for controlling emissions and have often relied on schemes designed to benefit them. The most notable is with the trading in carbon credits. Under this approach, those plants which are above the legal levels will be able to purchase credits from others who are not polluting as much. They can apply these credits to their own emissions. This gives them the appearance of following the different guidelines for these standards. (Casper, 2010)

However, the reality is that these plants have done nothing to decrease the overall amounts of pollution. Instead, they are utilizing a scheme that is not curtailing their activities or the negative impact it is having on communities. Over the course of time, this has resulted in power plants maintaining the same emissions levels despite tougher environmental regulations. (Casper, 2010)

This is problematic, in showing how the industry and many facilities are ignoring the legal and ethical obligations they have made to stakeholders. If left unaddressed, these challenges will create a situation where new and existing regulations are ineffective. At the same time, there is a possibility that the health of various communities will suffer more from these policies. This is illustrating how there are legal and ethical issues which must be addressed in the process. To fully understand the overall scope of these challenges requires carefully examining these variables and the long-term impact they will have on stakeholders. (Casper, 2010)

Relevant Law

The most relevant law that is applicable in these kinds of situations is the Clean Air Act. This is designed to enforce the total amounts of pollution that is being emitted. Under the law, there are a number of provisions which are designed to achieve these objectives. The most notable include: air quality / emissions limitations, ozone protection, the prevention of significant decreases in air quality and the establishment of new procedures. (Martineau, 2004)

Air quality standards and emissions are determined based upon national / regional standards which were established. This is accomplished by setting mandatory guidelines and providing support / assistance in helping these facilities to comply with these regulations. Ozone protection is concentrating on limiting the total amounts of fluorocarbons that are emitted by power plants. These substances can harm the ozone layer (in the upper atmosphere) and have been shown to have a negative impact on global / regional weather patterns. The prevention of deteriorating air quality standards is designed to protect the health of the general public through measuring the total amounts of pollutants a particular facility is emitting. The establishment of new procedures is when there is a focus on keeping an inventory of what substance are being released, having the necessary permits for various activities, ensuring control provisions are in place and having contingency plans available. These different areas are showing how the Clean Air Act is designed to address the activities of polluters through introducing new practices and helping them to change their procedures. On the surface, this is supposed to ensure that they have manageable controls for following these guidelines and taking into account the needs of stakeholders. (Martineau, 2004)

Under these provisions, the Environmental Protection Agency (EPA) has the responsibility for enforcing these regulations. However, on the state and local level, these guidelines can be imposed more strictly on stakeholders. This means that they can go beyond them, by setting their own amounts of pollutants, which can be released from new and existing facilities. ("Environmental Protections Rules and Regulations," 2012) ("EPA To Set Modest Pace," 2010)

The regulations fall under an agreement that was reached in 2010 called New Source Performance Standards. These guidelines require that all power plants have a 28% decrease in the total amount of pollutants being emitted 672 MeHG. At the same time, they must demonstrate how they have implemented measures to change their practices by implementing new controls and eliminating the use of pollution credits. This took place July 1, 2012 and it is designed to enhance enforcement inside these areas. ("Environmental Protections Rules and Regulations," 2012) ("EPA To Set Modest Pace," 2010)

The industry has agreed to this settlement based upon the fact that they were facing increased amounts of litigation from the EPA. At the same time, the public was placing pressure on states and local government to control the total levels of pollution which are being emitted. As a result, these new practices are changing company policies by forcing them to take a different perspective surrounding the impact of the industry's activities on stakeholders. ("Environmental Protections Rules and Regulations," 2012) ("EPA To Set Modest Pace," 2010)

For instance, Southern Company has imposed changes which are designed to create a shift in these practices by limiting the total amount of sulfur dioxide to .50 btu / lbs. This is a part of the increased provisions from the Clean Air Act (which the entire industry agreed to). These practices, are showing how there has been a shift in the way ethical standards and guidelines are enforced. ("New Source Litigation," 2013)

At the same time, the sector realizes that the ethical approaches of the past will have a negative impact on the lives of different stakeholders. As they can no longer use legal loopholes (such as: the trading of pollution credits) to illustrate how they are following the law. When in reality, these individuals are making the situation worse by not effectively reducing the total levels of emissions. ("Environmental Protections Rules and Regulations," 2012) ("EPA To Set Modest Pace," 2010)

However, the increased amounts of regulations and the new agreement are forcing the industry to embrace a deontological approach. This is taking place with them realizing that public anger about their activities is leading to changes in their practices. At the same time, the political and legal climate has made it impossible for them to be able to continue with the same policies of the past. This is because the courts have found that many firms are in violation of the law from following these guidelines and must embrace new controls. The only way that this can occur, is for them to change their attitudes about the laws and the ethical approaches they are using in the process. ("Environmental Protections Rules and Regulations," 2012) ("EPA To Set Modest Pace," 2010)

To address these challenges, there are some cases where plants are constructed in other countries (such as: Mexico) in order to avoid the new regulations. This is when company officials can establish facilities a few miles away from the U.S. And not have to worry about these issues. In these kinds of situations, they can use their influence, money and power to corrupt government officials who may be adversely influenced by the activities of the company. This is the point when these challenges could become so extreme that they will have a negative impact on the environment by allowing large power producers to avoid U.S. regulations. (Cassin, 2008) (Jennings, 2010)

Under the Foreign Corrupt Practices Act, any entity which is involved in these activities will have the responsibility of ensuring that they are following the highest ethical standards. This means that even though these firms are beyond the scope of U.S. officials. The fact that they have significant operations in the country; requires them to not engage in: bribery, kickbacks or special favors. This means that these facilities could have increased amounts scrutiny about what is occurring from Mexican officials (who will impose their standards on emissions). (Cassin, 2008) (Jennings, 2010)

For instance, Mexico is a signatory of the Kyoto Protocol. This requires that each nation cut their greenhouse gases dramatically starting in 2006. The fact that a firm could build a plant in these locations, will subject them to these provisions of the law. When this happens, it means that they may face tougher amounts of scrutiny and not have the ability to address critical challenges in the process (through bribing government officials). (Cassin, 2008) (Jennings, 2010)

As a result, the various international, national, state and local laws are creating a change in the activities of power producers. This means that they cannot engage in the same practices of the past. Instead, they will be subject to sanctions (such as: Foreign Corrupt Practices Act) which will hurt their ability to deal with critical challenges. At the same time, there is the possibility that international agreements will be imposed upon these operations. This is further evidence of how these firms have no choice, but to embrace a deontological approach in their practices and attitudes. (Cassin, 2008) (Jennings, 2010)

Recommendation

The best way to reduce any kind liability and enhance ethical practices is to improve different regulations. The most effective way that this can occur is to expand the provisions of the Foreign Corrupt Practices Act. Under the law, it is specifically applied to the actions taken by company executives in relation to foreign officials. This is provides a solid start. However, more needs to occur to change these behaviors. In this case, the law could require that firms show, how they are not engaging in any kind of unethical or illegal activities. As they could demonstrate the way these provisions are being followed (based upon sworn affidavits they are submitting to regulators). This will require companies to show that they are abiding by different aspects of American law and not trying to circumvent them through going to other locations outside of the U.S. (Deming, 2010) (Martineau, 2004)

At the same time, new environmental guidelines need to be imposed on the international level. This is because the Kyoto Protocol does not go far enough with the U.S. effectively exempting itself from these provisions. If a new agreement was established, these accords would be more effective by enacting controls that will mirror national and international guidelines. (Deming, 2010) (Martineau, 2004)

For example, one possible strategy is to have provisions of the Clean Air Act which mirror the controls for the pollution of emissions with the Kyoto Protocol. This will create a change in the attitudes of company officials about pollution standards and how they are applied. At the same time, some kind of provisions can be enacted, which will enhance the Foreign Corrupt Practices Act through stronger international accords. (Deming, 2010) (Martineau, 2004)

This will occur by changing what is defined as relationship building and illegal activities. What happens in many countries, is special favors are provided by large entities to government officials. These areas are considered to be a part of the entitlements associated with the position. This means that they will often ask for them in order to circumvent different regulations. If there were strong agreements in place, it will create a shift in ethical standards. This will occur by mirroring federal laws with these accords. When this happens, it will be more difficult for officials to engage in these activities (much less seek out some kind of special benefit in the process). (Deming, 2010) (Martineau, 2004)

In these situations, this kind of strategy will force electric utilities to follow more stringent guidelines. While at the same time, it is making sure that they are not contributing to the underlying problem. This is achieved through establishing provisions which will force a change in behaviors and attitudes within the industry. This starts by mirroring federal regulations for environmental standards and the practices utilized by executives in the process. It is at this point that that they will embrace a deontological approach when it comes to ethics and how they are applied. (Deming, 2010) (Martineau, 2004)

Conclusion

Clearly, the actions taken by electric utilities, when it comes to environmental standards are not legal. This is because they identified a loophole in different regulations and used them to circumvent numerous provisions of environmental laws. To address these challenges, various federal, state and local agencies have been imposing tougher regulations upon them. However, the problem is that many of these entities could establish operations in other countries (which are in close proximity to the U.S.). This will hurt regulators abilities to effectively control their activities. At the same time, company officials could use their power and influence to force these individuals to look the other way. When this happens, there is a realistic possibility they may circumvent these provisions.

To avoid these challenges, these laws must be enhanced to mirror international standards for the environment and corruption. This will force the companies to change their ethical approach in how they look at the situation and the impact it is having on them. It is at this point when they will alter their behavior and the practices they are using in the process.