Mandatory Disclosure of Environmental Hazards


By Kelsie Howle

Industrial production can lead to pollution of the environment without the knowledge of those who are affected. For example, unsustainable agricultural methods can cause long-term harm to the soil and land, adversely impacting the local community without their consent or knowledge. Mandatory disclosure by industries of environmental hazards they cause provides the information and transparency needed to enforce environmental policies, and for governments, individuals, and corporations to take appropriate action. In a globalized world, this will especially benefit developing countries that are currently most negatively affected by a “race to the bottom” of corporations based in developed countries relocating polluting factories to the places with the least enforcement of environmental legislation. Greater abundance is created by providing the greater public access to information regarding possible environmental hazards.

Relationship to Needs:

People in all communities need food and water in order to survive. Mandatory disclosure of industrial information allows the public greater access to knowledge regarding possible hazards in what they eat or drink, including the presence of chemicals or additives that may negatively affect their health and well-being. Mandatory disclosure refers to both pre-and post-sale of the food, meaning that not only should food items be properly labeled at the time of purchase, but if new information emerges regarding contamination of food that has already been purchased, that should be made known via broadcast media, press releases, and other methods of communication. Water that people drink should also be clearly marked with information about possible toxins and pollutants in order to preserve their health.

Transparency regarding possible environmental dangers should also address air pollution and its impacts on health, so that citizens can take precautions or exert pressure for change, and for civic and governmental actions to be taken to reduce pollution. This involves participation in collective economic and political decision-making in order to regulate industries.

Mandatory disclosure also affects people’s ability to live meaningful livelihoods. While polluting industries provide employment (at the cost of the health both to employees and other people living in the vicinity), truly meaningful livelihoods provide benefits to people while minimizing environmental costs and paying for unavoidable damages. There is thus a lot of scope for creating more meaningful livelihoods by reducing pollution, which is not possible without good information.

Relationship to Resources

Industrial production can have a negative effect on all natural resources, including water, air, and living organisms. Mandatory disclosure of environmental hazards allows greater public knowledge regarding these possible damages. Furthermore, it enables people to take informed action in order to reduce these environmental hazards, protecting themselves and their community.

The human need for mobility can also be affected by mandatory disclosure of environmental hazards. The public should be aware of transportation methods that may endanger their environment or themselves. Furthermore, public transportation methods should seek to be environmentally sustainable.

Relationships to Organizational Forms

Community solidarity is an important organizational form when it comes to mandatory disclosure of environmental hazards because communities should be able to have access to information in order to work together to better their environment.

Members of the community are also self-provisioning, meaning that they utilize their knowledge about industrial environmental hazards in order to make their own decisions, for example, which goods they purchase, where they want to live and work, and what companies they choose to invest in.

Mandatory disclosure of environmental hazards will affect individual sales because people can use this information when deciding which companies to invest in and buy from, withdrawing support from environmentally destructive corporations. Conversely, they will have the proper information regarding which companies are not damaging the environment, on both a local and international level, and purchase their products.

Committed sales and service is also affected by mandatory disclosure of environmental hazards by allowing for more corporate transparency to the public, permitting a more cooperative, friendly, and productive relationship between industries and communities. Research shows that the environmental reputation of a company positively affects profit, and this increased public knowledge will allow for more environmentally friendly industries to prosper while environmentally damaging industries lose profits.

Mandatory disclosure of environmental hazards is a type of free knowledge, increasing corporate accountability and improving economic and political decision-making through more knowledge of costs and benefits of alternative actions..

Networks also affect transparency because international treaties regarding environmental policies should work to increase knowledge about possible environmental harm to other nations, especially in the developing world. Mandatory disclosure also affects natural resource management because it can allow communities access to information about which industries will produce the most environmental harm. Transparency can also force companies to use resources in a more ecologically sustainable way because research indicates that incorporating environmental impact assessments into corporate strategies could be economically beneficial to industries.

Understanding Current Patterns of Abundance and Scarcity

There are many advantages associated with the mandatory disclosure of environmental hazards. This principle is widely recognized in that most governments officially require reporting about many environmental hazards, although enforcement of these provisions may be weak. If properly enforced, mandatory disclosure allows:

  • governments to pass well-informed policies cognizant of the costs as well as benefits of environmental and industrial policies,
  • citizens to put pressure on government to regulate industry, and on industries directly to become cleaner,
  • consumers to make their buying decisions based on companies’ environmental records, and
  • environmentally responsible companies to bear fewer costs and gain greater markets, thereby outcompeting the environmentally irresponsible companies. These companies will enjoy greater legitimacy in the eyes of the public.

The biggest weakness associated with mandatory disclosure policies is the lack of compliance by corporations with environmental disclosure policies. The best way to combat this weakness and to create abundance is to strictly enforce disclosure policies and require corporate compliance. However, to do this, we need to understand why enforcement is often so weak. Governments may not enforce mandatory disclosure policies because of fear of economic decline if polluting industries become less profitable or move away, or because of the political clout of the polluting industries, or because government officials are paid by polluting industries (e.g., bribes, campaign contributions), or because of a revolving door between regulatory agencies and the industries they regulate (government officials become industry reps and vice versa). All these causes of poor enforcement must be addressed in order to achieve lasting policy change.

Developing World

Environmental degradation in the developing world has been severely impacted by economic globalization. Corporations from developed countries outsource labor and production to newly industrializing countries in order to take advantage of lax environmental protection laws, cheap labor, and low taxes. Developing countries have been trying to fight against this through legislation and required disclosure of environmental hazards; however the biggest issue in these countries seems to be lack of compliance with mandatory disclosure laws. Furthermore, the corporate “race to the bottom,” that is, the quest by corporate investors to find the places where they get the most governmental support with the least obligations placed on themselves, has led to a number of governments allowing unrestricted industrial access to their natural resources. In short, developing governments are allowing international corporations to degrade their natural environments in exchange for business. Since impacts on health and environmental quality do not show up in their accounts, this appears as an increase in wealth.

India

The rise of international attention to the necessity of mandatory disclosure of environmental hazards gained traction due to a 1984 gas leak in Bhopal, India, that released 40 tons of methyl isocyanate, a highly hazardous and lethal chemical used to make pesticides. Union Carbide, an American corporation and subsidiary of Dow (another American company), was the owner of the facility where the leak occurred. The catastrophic leak caused the death of an estimated five thousand people and injured around 50 thousand more, while the damage to the environment continues to cause health problems for inhabitants to this day.

The local and international outcry that followed was compounded by the lack of reparations made by Union Carbide and its CEO Warren Anderson, who escaped imprisonment by fleeing the country after his initial arrest. In 1986 the Indian Environment (Protection) Act was enacted in order to increase industrial transparency for information regarding environmental hazards. However, issues have arisen regarding the actual application and lack of compliance with regulations under the this legislation.

For more information, see Sukumar (2004), Baxi (2009).

Nigeria

Lack of accountability of multinational oil corporations in the Niger River Delta area has led to severe animosity between local inhabitants and these companies. Oil companies from overseas continue to make huge profits while local people remain impoverished and face severe environmental degradation. This animosity culminated in 2006 when militants kidnapped two foreign oil workers. That same year, the Nigerian National Assembly ordered Shell Petroleum (an Anglo-Dutch corporation) to pay $1.5 billion in compensation for environmental degradation.

Increased transparency and compliance with Nigerian environmental laws by the oil companies could have prevented the current animosity between the surrounding communities and the oil companies, studies have found. The fines imposed on Shell Petroleum led to their publishing of numerous studies on research regarding environmental hazards because they are trying to legitimize their company’s image to the public, a common tactic for companies hoping to increase profits through increased public environmental consciousness (Eweje 2006).

Developed World

United Kingdom

The Companies Act of 2006 requires corporations to report all environmental impacts they cause, in the business review section of their annual reports. However, this act gives managers much discretion in in terms of the descriptive statistics by which they report these impacts. Consequently, it is difficult to determine the comprehensive coverage of all reports because they are reported differently depending on managerial influence. However, in one study the United Kingdom showed a higher score of corporate disclosure, both mandatory and voluntary, than countries without a legal framework for reporting, such as Germany (Barbu et al. 2012).

France

In 2002, France passed the New Economic Regulation (Nouvelles régulations économiques). This required larger corporations to annually report all environmental impacts they make. The Second Grenelle Act of 2010 extends these regulations and requires the reporting of any polluting activity of companies with over 50 employees. Like the UK, France received a higher disclosure index score than Germany, but still more than half of all firms were shown not to have complied with required reporting information.

Germany

Unlike the US, UK, and France, Germany does not have specific regulations that require the reporting of environmental impacts. Past legislation that did require these reports has since been repealed. Consequently, Germany received much lower reporting index scores, and was shown to report less descriptive information in company reports. This is likely the result of a less legal reporting requirements.

United States

In 1986, the Reagan Administration passed the Emergency Planning and Community Right-to-Know Act (EPCRA) in response to the Bhopal Disaster. Under the Environmental Protection Agency, this act requires state and local agencies to have action plans in place to respond to possible environmental disasters, companies to report environmental activity and possible hazards, and the notification of environmental and industrial emergencies to local agencies in a timely manner. Unlike FEMA, which is a federal agency, EPCRA works at a state and local level in order to plan for how to react to environmental disasters caused by industries.

Sections 311-312 of EPCRA outline the community right-to-know requirements. Facilities that use or store hazardous materials must fill out Material Safety Data Sheets (MSDS) annually and submit them to local emergency planning committees and local fire departments so that these agencies will have a file of possible hazardous chemicals that will be available if a problem occurs. MSDS must list any hazardous materials being used or stored at the facility, the amount of the material, and how it is being used or stored. Compliance with these reports is important in the case of a leak, spill, or other industrial disaster because it will keep emergency agencies as well as the public informed about possible risks. Research has shown compliance with EPCRA to be highest in areas with larger populations that have greater resources available to allocate to local emergency planning programs. Because the act requires the compliance of many different industries, including gas stations, landfills, and sewage treatment plants along with industrial factories, many states have found that increasing compliance across the board requires several different services and agencies to help regulate the different industries (Finto 1990, O’Leary 1995).

In order to keep the public informed about possible industrial hazards, the EPA created the Toxic Release Inventory (TRI) Program. This program created a website (as well as a mobile application) that allows all citizens to search for facilities in their area, and gives them access to information regarding hazardous chemicals and materials being used. The TRI website has an easy-to-use interface in order to allow greater access for all citizens to information about possible environmental hazards in their area.

The Food and Drug Administration (FDA) is a federal agency under the US Department of Health that regulates food products, tobacco products, prescription and over-the-counter drugs, vaccines, medical devices, electronic materials (due to possible harm from radiation), cosmetics, and veterinary products. The FDA is responsible for regulating labels on these materials, as well as the continued supervision of products in case a necessity for recall arises. The FDA works along with the EPA in order to regulate pesticides and water supplies (the FDA is responsible for the labeling of bottled water).

While guidelines imposed by the FDA promote public safety through increasing and promoting information regarding the products that they consume and use, it is important for the public to understand the scope of the agency. For example, the FDA does not regulate herbal medicines or electronic cigarettes. Furthermore, the agency does not regulate the advertisement of products that are approved (with the exception of medical and tobacco products). The FDA is also often accused of being too close to the industries it regulates, meaning that important hazards are ignored. Products not regulated by the FDA require a label in order to be sold, but it is not clear if this small label is effective in keeping the public informed. However, the labeling of products is an important facet to promoting mandatory disclosure of environmental hazards in the United States.

Approaches to Creating Greater Abundance

-More governmental influences and sanctions, especially in developing countries, and an increase of forced compliance by industries.
-Increased public awareness of industrial environmental hazards through media reports, open access to knowledge, and easy to understand formats.
-Increased corporate accountability through required transparency regarding environmental hazards and incentives for compliance with these policies.

This post was previously published on Commonsabundance.net and is republished here under a Creative Commons license CC BY-ND 3.0.

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