Module Seven covers interesting and important topics, although they are also somewhat controversial. We will examine in detail global environmental policies and specific market environmental policies. Another part of Module Seven analyzes the increasingly important role of corporate social responsibility, and documents ways companies can use it to their advantage. As we have learned in prior modules, environmental policies for each global market, their enactment, and their control instruments are decided by governments in each market. It is part of their sovereign right to make environmental policies that best fit the market and protect their country, natural resources, and, most importantly, their people. “Environmental problems are often addressed by several different jurisdictions and multiple levels of government” (Goulder & Parry, 2008). This could present a potential challenge for companies interested in bringing foreign direct investment (FDI) into the country. Governments need to provide visible and easily identifiable linkage between the different jurisdictions and levels of government to provide foreign companies adequate information about the different environmental policies so they may make an accurate decision about their potential investments. In the last two decades, climate change, air pollution, and droughts have drawn attention to environmental issues, and many industries, companies, and individuals have become environmentally conscious and adopted green thinking. Developed countries have been fairly fast to adopt new policies to protect the environment, but in many developing and least developed countries, these polices are still lacking or non-existent. Thus, many companies entering new markets have developed the strategy of following the environmental laws of the more developed markets. “Consumers increasingly favor environmentally friendly firms, and therefore more firms are taking the opportunity to maximize their profit while reducing costs by investing in ecofriendly projects” (Al-Najjar & Anfimiadou, 2012). This is a new dimension that was added to the way companies do business. It led to a new management discipline called eco-efficiency (EE), “a management control process aimed at reducing environmental intensity and increasing environmental productivity while also reducing costs and creating value” (Sinkin, Wright, & Burnett, 2008). For example, think about all the recent changes in the packaging of goods, such as groceries, water, etc. Cutting on packaging saves money for the company and is more environmentally friendly. The same can be said about using recycled materials in production. As you explore the assigned readings and do additional research, you will see how much impact environmental policies have on investment decisions and purchasing decisions. We will see more and more companies complying with higher environmental standards and countries adopting new, better laws to protect their environment. References Al-Najjar, B., & Anfimiadou, A. (2012). Environmental policies and firm value. Business Strategy & The Environment, 21(1), 49–59. Goulder, L. H., & Parry, I. H. (2008). Instrument choice in environmental policy. Review of Environmental Economics & Policy, 2(2), 152–174. Sinkin, C., Wright, C. J., & Burnett, R. D. (2008). Eco‐efficiency and firm value. Journal of Accounting and Public Policy, 27, 167–176.
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