Merle Jacob

Professor

Climate, Companies and Context; the Prospects for Policy to Inspire Sustainable Business Strategies

Author

Steven Sarasini
Merle Jacob

Summary, in English

Sustainable development rests on, among other things, the ability of policy to stimulate corporate actors to improve their environmental performance. Yet policy design and implementation is a challenging task in this area. This paper investigates this issue by examining the ability of the UK Emissions Trading Scheme to foster corporate sustainability from two perspectives: (a) its institutional framework and (b) the rationale for firm participation.

The conceptual point of departure relates to ecological modernisation (EM) theory, and the argument issues from the assumption that firms will, if given the appropriate incentives, engage in schemes that lead to more sustainable practices. The paper explores the extent to which the trading scheme provides an institutional framework for firms to adopt corporate sustainability strategies, focusing on its nature and function in comparison to the dominant principles of EM. Motives for firms’ participation in the scheme are also considered in relation to profit-maximisation, stakeholder and institutional theories.

The paper argues that the UK Emissions Trading Scheme was successful in so far as it was voluntary in nature and offered substantial financial incentives for participation. The scheme did however establish a ‘pay-the-polluter’ principle and thus may arguably be said to have violated the spirit of Kyoto and the general rule established in other schemes such as the EU ETS which are based on a ‘polluter pays’ principle. While firms listed diverse reasons for participation the foremost was the prospect of collecting incentive monies, suggesting primarily economistic motivations for selecting environmental strategies.

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