Directors' prescription for environmental care

The Institute of Directors (IOD) made its first contribution to the environmental debate on 22 January with a report which urged tax concessions to promote environmental care by industry, privatisation of pollution monitoring, and regulation focussed on consumers in preference to producers.1

The IOD appears to have been encouraged to prepare its report by the Government's calls for voluntary environmental initiatives by business. The report is designed to influence this new agenda.

Outlining the IOD's preferred hierarchy for environmental care, the report says that priority should be given to encouraging voluntary action by companies. "Economic instruments should be the next line of approach followed by outright regulation as the last resort."

The report's specific proposals are:

  • Financial measures: Any use of tax instruments should take the form of tax reductions, not increases, the IOD contends. It voices strong opposition to the European Commission's proposals for a carbon tax, arguing that they would increase distortions in the energy market. Instead, energy subsidies and other distortions should be removed to allow "untrammelled market mechanisms to operate."

  • Regulation: Only substantial changes in consumer behaviour will have a significant impact on pollution and resource consumption, the IOD believes. Regulations aimed at consumers should therefore be considered to require segregation of recyclable household waste, and ban the possession or use of "environmentally noxious" materials.

    Some additional regulation of producers is regarded as the inevitable consequence of a tighter environmental policy. However, many regulations of producers "have the unfortunate effect of restricting competition by erecting substantial barriers to be scaled by potential new participants in the industry concerned," the IOD says. This is particularly true of rules requiring the prior authorisation of new facilities.

    An alternative mooted by the report would involve the extension of private rights in the environment and easing the capacity of individuals to enforce them through the courts.

  • The role of business: The private sector should be given the role of inspector in the same way that MOT testing is done by private enterprise, the IOD proposes, with the Government's role being confined to "accrediting the verifiers."

    Under this approach, it would be left to companies to survey their activities, set targets and check progress towards them, with the results being verified by outside professionals. More businesses, the IOD recommends, should take on the responsibility of self-regulation and introduce product stewardship.

    Meanwhile, a survey to be published by the IOD early in February will show that almost half of the directors questioned belonged to boards which have spent no time at all on environmental issues. Almost 30% expect this to continue over the next five years. Compliance with legislation remains the most important factor behind companies' concern about environmental issues.

    Only 22% of the directors work for companies with an environmental policy, while 16% of companies have carried out environmental audits. Again, legislation was a dominating factor, with 60% of audits being conducted to assure compliance with regulations.

    About 54% of the directors questioned said they were "quite" or "very" unknowledgeable about how environmental laws affected their companies' responsibilities. And two-thirds gave the same response when asked how much they knew about the Government's plans for future legislation.

  • Please sign in or register to continue.

    Sign in to continue reading

    Having trouble signing in?

    Contact Customer Support at
    or call 020 8267 8120

    Subscribe for full access

    or Register for limited access

    Already subscribe but don't have a password?
    Activate your web account here