Tag Archives: #regulation

The Government of Business Responsibility

By Erin Leitheiser.

Governments play an important role in shaping the roles and responsibilities of business in society.

Promoting responsibility directly and indirectly

Whilst I have previously blogged about how business sometimes leads government in helping promote the public good, this in no way means that governments are not actively seeking to shape and promote responsible business conduct. Governments do this in a variety of ways, and frequently. As such, this post provides an overview of some of the notable policies put into place in just the last few months by governments world over, as well as some reflections about what this means for business responsibility.

Can companies be held liable for climate change?

According to a newly-filed suit, proponents hope that the answer will be “yes”. Following a 3-year investigation of Exxon Mobile, New York’s attorney general is suing the company not for its role in creating climate change (legal theories on these grounds have yet to gain much support) but for defrauding its shareholders by not following through on its promises to factor climate change risks – primarily regulatory and financial – into its business decisions.

Takeaway: Shareholders continue to represent a powerful avenue for legal action, and if successful, this case could break new ground on linking environmental and fiduciary responsibilities.

Everyday plastic objects pollute oceans and beaches.

Single-use plastics banned in Europe

The European Parliament voted for a sweeping ban on single-use plastics – such as straws, cotton swabs, plates and cutlery – due to come into force in 2021. Affected products have “valid alternatives” available and are estimated to represent more than 70% of the plastics polluting our oceans.

Takeaway: If business doesn’t move quickly enough to re-conceptualize products more sustainably, governments will increasingly exercise their power to exclude such products from the marketplace altogether.

Information Accessibility

In India, the Department of Telecommunications recently approved some of the strictest legislation regarding net neutrality, which protects Indians’ rights to have free and fair access to the internet. Providers will not be allowed to prioritize, promote, curtail, throttle or in any other way manipulate users’ access to content. In a de-evolution, the US recently repealed such protections for its residents. Google has increasingly come under fire for Dragonfly, it’s forthcoming censored search engine for the Chinese market.

Takeaway: The manipulation of citizens’ access to information is unethical, even if profitable.

California Leading the U.S. (and the world?)

Over the summer California established ambitious goals for 100% clean electricity and carbon neutrality by 2045. Last month, it became the first state to require publicly-traded companies to include women on the boards of directors. Now in October, the state has signed into law legislation requiring drug stores and hospitals to fund take-back programs to curb the improper disposal of needles and leftover prescription drugs which can lead to accidental poisonings and environmental harms.

Takeaway: State- or other non-federal level governments are sometimes the most nimble in their speed and vision for promoting business responsibility.

California paved the way to become a carbon neutral state.

NAFTA updated to promote sustainable forestry

Updates to NAFTA – the North American Free Trade Agreement – aim to crack down on illegal logging and promote sustainable forestry. In particular, it hopes to help address the deforestation of the Amazon – happening in large part due to demand by the NAFTA countries – by promoting sustainability within the logging industries of the U.S. and Canada.

Takeaway: By re-structuring the rules of the marketplace, governments can both address sustainability problems (e.g. deforestation) as well as promote more sustainable industry alternatives.

Updates to NAFTA against illegal logging and sustainable forestry.

What do businesses think of the ever-changing regulatory environment? While business is typically painted as anti-regulation, this is hardly a universal truth. Companies – particularly the more responsible ones – often want legislation. For example, Apple’s chief executive Time Cook recently spoke to the European Parliament where he warned against the weaponization of personal data, praised Europe’s new GDPR regulations, and called for similar (tougher) regulation in the U.S. as well. (Though it’s worth noting that companies may embrace or eschew responsibilities and legislation on a case-by-case basis; for example, Apple has just been hit with a 10 million Euro fine for its strategy of “planned obsolescence” of its phones).

Governments have and will continue to play an important role in shaping the roles, responsibilities and expectations of business in society.


Erin Leitheiser is a PhD Fellow in Corporate Social Responsibility and Sustainability at Copenhagen Business School. Her research interests revolve around the changing role and expectations of business in society. Prior to pursuing her PhD, she worked as a CSR manager in a U.S. Fortune-50 company, as well as a public policy consultant with a focus on convening and facilitating of multi-stakeholder initiatives. She is supported by the Velux Foundation and is on Twitter as @erinleit.


Photos by: Jason Blackeye on Unsplash, and from pixabay.


A Story of Poison, Pork and Consumer Protection

By Jan Bauer.

  • Renewal of controversial weed killer supported by Germany despite internal dissent
  • Corporate support seems the only consistency in many decisions
  • What evidence should determine the public opinion of a minister?

Glyphosate and a German Minister under Fire
The German Minister of Food and Agriculture, Christian Schmidt (CSU), came under fire in the end of November. He voted in favor of renewing the license for the controversial weed killer Glyphosate in Europe – against the will of the Minister of the Environment, Barbara Hendricks (SPD), and without consulting chancellor Merkel. Mr. Schmidt said he “made the decision on [his] own and within the responsibility [his] department”. While the potential health and environmental risks of Glyphosate, better known under Monsanto’s commercial name Roundup, are still subject to debate, the unilateral approach by the minister has at least poisoned the political climate between the two parties before the upcoming exploratory negotiations to renew their “grand coalition”.

Many Question Marks behind a Political Free Solo
One can only speculate why Mr. Schmidt considered it necessary to purposefully violate the joint rules of procedure between the federal ministries that would have required him to abstain from voting as long as there is a disagreement between the federal ministries. Mr. Schmidt defended his actions by claiming that his vote will lead to a more restrictive use of the herbicide in some areas. Glyphosate producer Monsanto, currently in the process of being taken over by the German chemical company Bayer, seems not satisfied with the renewal either and would have expected an extension of the license by more than five years.

Eat more Meat, but don’t sell a “Vegan” Schnitzel
This decision is by no means the first controversy surrounding the German Minister of Food and Agriculture and his duty to balance cooperate and consumer interests. Mr. Schmidt openly promoted the consumption of pork in public institutions, which has been abandoned by some canteens to avoid complications with religious customers. Additionally, he encouraged to ban the use of common marketing practices to sell meat replacements as “vegetarian sausages” or a “vegan schnitzel”. This effort was advocated to prevent the confusion of consumers, as they might be overburdened by linking the words “vegan” or “vegetarian” with the meatlessness of the product in questions – what should happen to German meat dishes that falsely claim to be vegetarian, such as “Leberkäse” (literally translated to “liver cheese”) remains unclear. Despite the minister’s concern, there is little evidence for an actual confusion among consumers and the fact that the growing popularity of vegetarian and vegan products negatively affects the meat industry created some skepticism about the motives for such a proposal.

The ambivalent Role of Scientific Evidence in the Process of Policy Making
This issue relates to larger questions about the importance of scientific evidence to guide regulatory action. Despite increasing efforts to foster evidence-based policy, the scientific evidence rarely provides perfect guidance on what will be the outcome of a certain policy (the discussion about the impact of the planned U.S. tax reform is another famous example). So in the absence of clear evidence; what determines a minister to go one way or the other: personal beliefs, the opinion of his constituency, the influence of lobbyists?

The Traffic Light System for Food Labels – as Case in Point
For the specific case, we might shed some light on this by looking at remarks from Mr. Schmidt on issues with clearer evidence. In the area of nutritional food labels, research shows that the mere provision of nutritional facts on the back of products does insufficiently guide consumer choices and recent studies highlight that salient and simplified front-of-package labels, such as the traffic light system, can help consumer making healthier choices. Additionally, there is a broad public support for better food labelling that guide consumers and make healthy choices easier. Despite this evidence, the minister considers such labels as an “impermissible simplification” and rejects further regulation in this direction as too paternalistic.

A view shared by several other EU countries that tried to go against the voluntary traffic light food label in the UK, as it “aimed at classifying food as more or less “healthy””, which would violate trade legislation. Traditional product manufactures have little leeway to reformulate their products and claim to be disadvantaged. For instance, the majority of meat products would receive a red label which might negatively affect sales – in other words, the fear is that such labelling actually works from a consumer’s point of view. Hence, there seems to be an inherent tension between consumers’ needs for guidance and industry claims of discrimination. The European Commission apparently announced “a thorough review” by the end of 2017.

People before Profits
It is hard to understand on what basis Mr. Schmidt himself determines the needs for regulatory action and why he made each of these individual decisions. While the Glyphosate incident appears to be a procedural failure in the absence of clear evidence, his stances on food labelling fails to acknowledge a general consumer science and public consensus. All decisions, however, seem to be in line with the interests of the industry. Mr. Schmidt himself stated that “we should not restrict the choice for the majority of society for reasons of ease or cost” when it comes to leaving pork off the menu. Hence, I propose to consistently follow this logic and not restrict consumer protection supported by the majority of scientists and the public for reasons of ease or costs for some special interest groups.


Jan Bauer is Assistant Professor at Copenhagen Business School and part of CBS’ Governing Responsible Business Research Environment. His research interests are in the fields of health economics and consumer behaviour. As part of the Nudge-it Project, he focused on fostering healthy food choices of children and adults.

Pic by GLOBAL 2000 / Christoph Liebentritt, flickr.