NBS regularly spotlights key sustainability issues for business leaders. These issues have been identified by NBS’s Leadership Council, a group of Canadian businesses recognized for their leadership in sustainability. This month, the focus is on how companies can contribute to effective public policy. Dr. Graeme Auld, Dr. Alexandra Mallett, and Dr. Robert Slater of Carleton University tell businesses how and when to engage for maximum benefit.
Public policies can have major implications for your company’s operations and profitability. If you’ve ever tried to comply with recycling requirements, or anticipate climate regulations, you know this all too well. Here, we’ll describe some common ways that government policies can affect your business — and how you can make policies work for you.
How Government Policies Impact Businesses
- Policies may be uncertain, making it difficult for businesses to plan and smoothly adapt.
- Stakeholders and customers may criticize businesses if they believe that the government is treating them preferentially. For example: when businesses commit only to voluntary action on climate change, stakeholders often criticize them for not being accountable to clear emissions reduction targets.
- Alternatively, businesses can enhance their reputation through support for public policies that increase social and environmental protections. Stakeholders and concerned citizens will recognize business leadership and seek to reward it.
Businesses must think carefully about when and how to engage with the public policy process. This advice is based on our comprehensive review of research related to this area.
When Should Businesses Engage?
Engage Early. Business interests are at stake throughout the “policy cycle.” As the figure shows, policy moves through multiple stages, beginning with an initial diagnosis of the problem. An issue may be new or evolving: what is its scope and significance? Getting involved early on allows you to understand what is at stake for your business and demonstrate a commitment to finding solutions.
State Your View on Policy Options. In the policy development and selection stage, it’s particularly critical to have a seat at the table. This is when government and others involved will identify different policy approaches and narrow in on one or a few. With greenhouse gas emissions reduction, for example, a key policy choice is whether to address emissions via sector-by-sector regulations or a cap-and-trade system or emissions tax. Decisions at this stage determine who will pay for a policy and who will benefit, and how a policy will be enforced. These provisions matter for you, and they’re difficult to change once they’re fixed.
How Should Businesses Engage?
Explore Issues. Communicating with diverse stakeholders is a good way to identify emerging issues. Read different publications, talk to community members and generally expand your information net. If you’re a local business, you’ll probably focus on issues in your immediate area. Larger businesses will consider actions at higher levels of government. Your focus should be linked particularly to your markets. Consider whether an issue could impact your firm, and how significantly.
Develop and Communicate a Position. Share your questions and concerns with stakeholders and policymakers. Draw on your expertise: well-researched, relevant analyses can be highly influential throughout the policy cycle, and particularly early on. If you have insights into how an issue might unfold, or the impacts of different policy approaches, reach out to decision makers to share them. It’s important to present the information in a way that resonates with your audience’s understanding and values: show that you see their perspective.
Lead or Follow. Should you lead or follow regulations? Many companies face this question with actions on greenhouse gases. “Getting ahead of the regulatory curve” by committing to performance improvements before the government sets targets can have real benefits. Your company will have extra time to chart its course and choose the most efficient approach. And leading businesses can be influential voices in eventual government action.
Acting ahead of government action does come with risks. Your actions might not mesh precisely with the policy requirements ultimately developed through the formal process. Some companies have also found it challenging to get credit for early action. If you don’t feel your interests are sufficient to merit a leadership role, you can engage in another way: e.g. through your industry association. Industry associations may establish positions on issues, depending on how widely relevant the issue is to their members and the ease and value of organizing collaboratively.
Commit for the Long Term. Environmental issues stay relevant for decades. Globalization, technological innovation and changing public expectations mean that issues will evolve. Staying involved over time lets you make sure policies continue to be appropriate. Keep talking to government, industry peers and other relevant stakeholders, looking at ways to improve and adapt regulations over time.
Your Involvement Matters — Even When It’s Tough
The policy cycle isn’t always smooth. Conflicts occur on many issues, from climate change to mining and forest practices. Stakeholders will have strong opinions — some positive, some negative. But consistent involvement with policy can help establish that your business is committed to improvement and build trust with stakeholders and policymakers.
Government, business and NGOs all have a critical role to play in the policy process. Each has particular expertise and skills, and all ground their positions in important values, such as economic development, environmental protection and human welfare. For policy progress to occur, all parties must combine their efforts.
NBS’s executive report on “Building Effective Environmental Policy: A Framework for Decision Makers” provides information on good policy design, as well as the policy cycle and recommended business action at each step.
About the Authors
Dr. Graeme Auld is an Assistant Professor at Carleton University in the School of Public Policy and Administration. His research studies global governance across economic sectors, particularly fisheries, agriculture and forestry. He is co-author of multiple publications on governance, policy and institutional design.
Dr. Alexandra Mallett is an Assistant Professor at Carleton University in the School of Public Policy and Administration. She has worked in academia and the public sector, where she worked for the Canadian government and the Organization of American States on energy and environmental policies. Her research studies low carbon energy technologies, particularly in the developing world. Two particular areas of interest are (1) the connection between technology innovation and adoption and (2) how cooperation can build capacity in developing nations.
Dr. Robert Slater is Adjunct Professor in Environmental Policy at Carleton University. He is also President of Coleman, Bright and Associates, an international consulting firm specializing in sustainable development issues. Dr. Slater occupied several senior positions at Environment Canada, including Senior Assistant Deputy Minister and Assistant Deputy Minister Policy.