Its Contribution to Economic Growth, Well-being and Rationality
Chapter 13: Why We Need a Commitment Approach to Environmental Policy
13. Why we need a commitment approach to environmental policy with Thomas R. Sadler* According to Amartya Sen (1977) in his classic ‘Rational Fools’ article: ‘To run an organization entirely on incentives to personal gain is pretty much a hopeless task’ (pp. 333–5). This comment regarding employer– employee relations would seem to apply similarly to regulator-regulated relations with regard to environmental protection. Sen might also have said: ‘To protect the environment entirely using incentives to business gain is pretty much a hopeless task.’ Following Sen, in these situations, a large dose of commitment involving non-egoistic motivation is needed (pp. 327–9). The principal reason why economists have generally advocated environmental policies based solely on incentives is that their conception of business behavior and motivation derives from the neoclassical model of the ﬁrm. While businesses certainly do respond to proﬁt incentives, ﬁrms’ behavior is also greatly inﬂuenced by socio-political considerations and their organizational capabilities. Firms are, more than ever, recognized as socio-economic entities embedded in society. In recent years, a signiﬁcant group of businesses that are highly innovative, productive, competitive and socially responsible has emerged. These high performing organizations are capable of executing strategies that enable them to be ﬁnancially successful and environmentally responsible at the same time. These are not the ﬁrms that policy makers envisioned when they formulated command and control and market incentive environmental policies. Because of this and other new business realities, there is a need for new types of environmental policies. Thus,...
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