Corporate Governance after the Financial Crisis
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Corporate Governance after the Financial Crisis

Edited by P. M. Vasudev and Susan Watson

The financial crisis of 2008–09 raises questions about the assumptions that underpin corporate governance. Shareholder value and private ordering may not in fact be the best means of promoting efficiency and corporate responsibility and the mechanisms used to ensure management accountability may not be effective. In this fascinating study, experts from around the world draw on the experience of the financial crisis to explore topical issues ranging from shareholder primacy and the corporate objective to the stakeholder principle, business ethics, and globalization of corporate governance principles. The chapters are provocative, acknowledging that our understanding of fundamental questions of corporate governance is still developing and demonstrating that the corporate governance debate is far from over.
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Chapter 11: Public Regulatory Encouragement to the Adoption of Private Ordering Systems to Achieve Environmental Protection through Sustainable Commerce

Peter A. Appel and T. Rick Irvin

Extract

11. Public regulatory encouragement to the adoption of private ordering systems to achieve environmental protection through sustainable commerce Peter A. Appel and T. Rick Irvin INTRODUCTION Sustainable commerce provides an underappreciated source of environmental improvements. By sustainable commerce, we mean products and practices that minimize environmental impacts and optimize commercial value while realizing both public and private environmental benchmarks (Irvin et al. 2008, p. 562). The term includes means of improving the environment described under names such as sustainable development, greentech, cleantech, and the like. Current corporate governance structures allow for the adoption of programs to achieve sustainable commerce, but firms often underperform from an environmental standpoint. Sustainable commerce solutions employing private/public partnerships that encourage the application and enforcement of private ordering systems can result in faster and more economical environmental improvements than reliance on traditional command and control regulatory systems alone. Environmental challenges pose difficult problems for human communities at every level from the local to the global. Basic understanding of economic incentives in the context of group action and the unique risks presented from environmental exposure provide some insights into understanding why the conundrums that environmental threats create resist easy solutions. Environmental threats often operate at a subclinical level of impact in humans, so that exposure to a toxic chemical may not cause a recognizable reaction or present a diagnosable condition until years after the exposure. Even then, scientists may not fully understand the mechanism of how the substance produces a particular effect (e.g. cancer) so that the...

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