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This article proposes a policy framework for analysing corporate governance toward sustainable development. The aim is to set up a framework for analysing market evolution toward sustainability. In the first section, the paper briefly refers to recent theories about both market and government failures that express scepticism about the way that framework conditions for market actors are set. For this reason, multi-layered governance structures seem advantageous if new solutions are to be developed in policy areas concerned with long-term change and stepwise internalisation of externalities. The paper introduces the principle of regulated self-regulation. With regard to corporate actors| interests, it presents recent insights from theories about the knowledge-based firm, where the creation of new knowledge is based on the absorption of societal views. The result is greater scope for the endogenous internalisation of externalities, which leads to a variety of new and different corporate strategies. Because governance has to set incentives for quite a diverse set of actors in their daily operations, the paper finally discusses innovation-inducing regulation. In both areas, regulated self-regulation and innovation-inducing regulation, corporate and political governance co-evolve. The paper concludes that these co-evolutionary mechanisms may assume some of the stabilising and orientating functions previously exercised by framing activities of the state. In such a view, the government's main function is to facilitate learning processes, thus departing from the state's function as known from welfare economics.
Environment and human rights
(2004)
Wolfgang Sachs argues for environmental human rights as a fundamental prerequisite to end the violence of development. He outlines the numerous conflicts over natural resources in the struggle for livelihoods and argues for a transition to sustainability in the more affluent economies, in both the North and South, as a necessary condition for the safeguarding of the subsistence rights of those whose livelihood depends on direct access to nature.
In February 2000, the German Bundestag established a Study Commission on "Sustainable Energy Supplies in View of Globalisation and Liberalisation" (cf. Final Report, 2002). The Commission's Final Report is a contribution made by Germany toward implementing the sustainable development objectives defined in 1992 at the World Summit in Rio de Janeiro (Agenda 21). Despite minority votes of several members of the Study Commission, the main outcomes of the Final Report are worthwhile discussing in other industrial countries. The Commission had been given the mandate to identify "robust, sustainable development paths" for the energy sector for the period up to 2050, which represent a scientific basis for the German parliament's further decision-making in the field of long-term energy policy. The applied backcasting approach showed that an ambitious climate-protection goal - reducing CO2 emissions by 80% by 2050 - is technically and economically feasible. The main strategies and instruments for protecting the climate while ensuring asustainable energy supply are summarised.
Global climate
(2004)
From 10 to 14 September 2003, the Ministerial Conference of the World Trade Organization (WTO) negotiated over a further liberalization of world trade. A lot was at stake there for the environment. It is true that in the current round of negotiations the Doha Declaration has agreed certain points relating to the environment. But this should not conceal the fact that the WTO is still a long way from taking due account of ecological aspects in its policies. The present paper begins by analyzing the discussion on environmental issues within the WTO, which for more than ten years has been conducted mainly in its Committee on Trade and Environment. It is shown that many environmental effects of trade liberalization have not been discussed at all, that conflicts of interest among WTO member-states prevent any deep discussion, and that an ecological reform of the WTO has up to now stood no chance. This analysis then forms the background for a twofold strategy. First, arguments are presented as to why the WTO, given its environmental policy deficits, should afford sufficient scope to institutions actively concerned with environmental policy. The conflictual relationship between Multilateral Environmental Agreements and the WTO is examined at this point. A distinction is drawn between minor and potentially critical conflicts, and it is shown how a limitation of the competence of the WTO's Dispute Settlement Body, together with cooperative political-legal processes to resolve conflicts between affected institutions, might offer a solution and lead to greater institutional equity in the global political arena. Second, the paper discusses how ecological aspects might be integrated step by step into the WTO. After a detailed examination of the potential and limits of instruments like impact assessments, it makes a number of recommendations for their further development. Finally, it considers how impact assessments might be integrated into the WTO's institutional structures, so that ecological aspects can be systematically input into policy-making processes and better public participation in WTO policy be ensured. In this connection, the paper discusses both the integration of impact assessments into the WTO's Trade Policy Review Mechanism and the creation of a new Strategic Impact Assessment Body within the WTO.
The objective of analytical strategic environmental assessment (ANSEA) is to provide a decision-centred approach to the SEA process. The ANSEA project evolved from the realisation that, in many cases, SEA, as currently practised, is not able to ensure an appropriate integration of environmental values. The focus of SEA is on predicting impacts, but the tool takes no account of the decision-making processes it is trying to influence. At strategic decision-making levels, in turn, it is often difficult to predict impacts with the necessary exactitude. The decision-making sciences could teach some valuable lessons here. Instead of focusing on the quantitative prediction of environmental consequences, the ANSEA approach concentrates on the integration of environmental objectives into decision-making processes. Thus, the ANSEA approach provides a framework for analysing and assessing the decision-making processes of policies, plans and programmes (PPP). To enhance environmental integration into the decision-making process, decision windows (DW) can be identified. The approach is designed to be objective and transparent to ensure that environmental considerations are taken into account, or - from an ex-post perspective - to allow an evaluation of how far environmental considerations have been integrated into the decision-making process under assessment. The paper describes the concepts and the framework of the ANSEA approach and discusses its relation to SEA and the EC Directive.
Transnational corporations' (TNCs) economic operations cover numerous countries and can be diverted between several continents. These units have reached a level of significance, having not only economic, but also social and environmental implications. This justifies that they shall be treated separately as a social phenomenon, when considering strategies for the development towards sustainability. This paper presents the concept of Responsible Corporate Governance (RCG), as a strategy to "govern" TNCs. RCG is suggested as a stakeholder based policy instrument, which aims at allocating responsibilities to societal actors aiming at corporate accountability. RCG recognises that the process of societal change is strongly based on what can be called as bottom up-processes. Learning processes take place through the interaction of the different societal members, which eventually leads to macro changes. Therefore, governing TNCs towards sustainability improvements is considered to be a collective process including all stakeholders. Firstly, the paper places the concept of RCG in the ongoing debate of political modernization based on the fact that society develops overtime and the political system must correspondingly modernize. In this context, political overload developed as a consequence of increased resource interdependencies is explained and as a resolution, network approach is discussed. Secondly, demands on the orientation of the TNCs in terms of accountability and innovative action are brought forward. Here, the paper also lists down corporate elements (stakeholder empowered corporate governance, management and performance evaluation systems, transparency enhancement and accountability verification), which need to be in place to attain an accountable orientation in the society. Following, using an analytical framework, the orientation and capabilities of each societal actor (environmental non-governmental organisations, financial institutions, intergovernmental organisations) to affect improvements in the corporate responsibility elements are investigated and recommendations for their effective orientation are listed.