3 Reasons You Should OVER-Comply With Environmental Regulations

Jan 12, 2011   //   by Bradley Short   //   Blog, Operations Management, Regulation, The Environment  //  1 Comment

Is regulation the enemy or your best untapped strategy? If you comply with minimum environmental standards to save money in the short term, you do so at your peril by limiting the long-term benefits of over-compliance.

Reason #1: Open Doors to More Markets

If you only meet the requirements of your local operation, you may limit yourself to that market.  By adhering to stricter standards, you can offer your products without sweeping changes to produce different products for different places.

Meeting minimum requirements on a market-by-market basis wastes valuable time and money. For example, the state of Kansas lacks a producer take-back law for electronic waste. A company operating in full compliance of Kansas law can build and sell their products without having to recycle their old machines.  In Texas, however, this would be illegal.  The computer maker would either have to design and implement a recycling program in their new market, or they would have to pay a third party to comply with the law.  Had they complied with stricter, more responsible policies earlier, they wouldn’t be surprised by those additional costs when entering a new market. On top of that, had they designed their products for remanufacturing, they would have been able to lower costs and toxic waste in their recycling program.

Reason #2: Embed Dynamic Thinking for a Changing World

Even if you stay in your current market, remember that regulations are always changing and the trend is toward MORE corporate responsibility. Prepare early and you’ll deliver a superior product, while your competitors struggle to comply.

Imagine how much stronger America’s auto industry would be had they developed cleaner cars to comply with California’s stringent emissions laws (as posited in this HBR article).  When California’s laws were passed between 2002 and 2006, they were much tougher than the ones affecting the rest of the country. Today, similar policies have been passed and are set to take effect nationwide, some as soon as the 2012 model year.

Japanese carmakers, such as Honda and Toyota, have been making more efficient, cleaner running cars for years. With their first-mover advantage, the Japanese carmakers can quickly adjust to stricter standards while American companies have had to spend time and money to reengineer entire model lines.

Reason #3: Grow and Strengthen Your Customer Base

Customers demand environmental stewardship.  If you go above and beyond what is legally required, you lower the risk of social and environmental disasters. Should disaster strike, customers and markets are more likely to forgive you due to your proactive approach to regulations.

Today’s society expects transparency from companies. Considering how easy it is to spread information online, customers will discover if your business is just scraping by, adhering to the weakest possible standards.

The most forward thinking companies recommend standards, positioning themselves to be the ones best poised to meet them.  Instead of lobbying for weaker regulations so they can get away with more, responsible companies fight for more stringent requirements and are already working to comply with them.

BICEP (Business for Innovative Climate & Energy Policy) is comprised of just such a group of businesses. Counting the likes of Levi Strauss, Timberland, and Best Buy among their rank, BICEP calls for strong environmental policies involving greenhouse gas emissions reductions, efficiency standards, and market incentives to spur development of environmental technologies.  As they achieve policy victories, BICEP companies will be ready to meet the new standards and take advantage of new incentives from the very beginning.

CSR (Corporate Social Responsibility) and Regulation: Over-Comply and Thrive

Over-compliers enjoy a competitive advantage because they are better positioned to expand into markets with different or more stringent standards. They avoid having to change their business to “keep up” with the latest regulation. Perhaps most importantly, companies that over comply with environmental standards strengthen relationships with their customers while staying on the right side of social discourse.

Make it a point for your business to seek out stricter regulations or, better yet, enlist professional help from a sustainability consulting firm like BusinessEarth.  BusinessEarth realizes that staying ahead of regulation makes good sense for companies and society alike.  We help businesses find ways profit, responsibly.

  • http://greenandprofitable.com Shel Horowitz-Green Marketer

    Yes, definitely. I’ve been an advocate of this for years. Just today I was listening to an interview I did months ago, suggesting to US cosmetics cos that they meet the stricter European standards and then *market* that to savvy US consumers.
    –Shel Horowitz, GreenAndProfitable.com