WASHINGTON WATCH: Global challenges

It is often said that surprise — any surprise other than profits greater than those called for in the business plan — is the one condition most troubling to corporate management. But the globalization of markets and production — the simultaneous enormous growth of environmentally-motivated product regulatory programs outside of the United States and the increasing sophistication of regulatory regimes in lesser-developed countries — has created a whole new area of troubling surprises. Moreover, developments in these foreign forums have a real impact on domestic policy and regulation. The challenge of understanding these pressures comes at a time during which the flattening of corporate structures often has eliminated the staff best positioned to recognize and respond to them.

All experienced environmental managers and legal counsel know that the time to influence these new requirements is when they are being conceptualized and developed, not when they have become law. But how can a company do this in an increasingly international arena?

Knowing the challenges

The first task is to recognize the nature of the challenges and their source. Regional and other supernational governmental organizations are key drivers. There is no doubt, for example, that the U.S. Environmental Protection Agency's (EPA) agenda is often set by pressures from such non-U.S. governmental entities as the Organization for Economic Development and Cooperation (OECD), the European Commission, and the United Nation's Environmental Program (UNEP). Recent examples include:

  • An OECD staff proposal to "harmonize" its thoughtfully-developed, trade-sensitive international waste management regulatory regime by adopting in its place far more proscriptive — and less well thought out — Basel Convention procedures;
  • Proposals from the European Commission's Environmental Directorate (formerly DG XI) to ban products containing cadmium, the use of certain fire retardant chemicals in computer plastics, and to compel electronics and auto manufacturers to implement end-of-life product takeback programs;
  • Efforts to adopt a decision modifying the Montreal Protocol that would override 1998 U.S. legislation preserving the use of methyl bromide as a food protection fumigant; and
  • The adoption of a limited "international superfund" liability protocol at the December 1999 Conference of the Parties to the Basel Convention, despite the complete failure of a committee of legal experts to reach a consensus on appropriate elements of such a protocol.

Similar cross-national challenges have also recently emerged, most notably in the areas of food safety and challenges to timber harvesting and mining practices in lesser-developed countries. These typically have been spearheaded by non-governmental organizations (NGOs) such as Greenpeace, rather than by such quasi-governmental groups as the OECD, but both have been equally effective in stirring public attention.

In addition, new programs at the national level are affecting both market opportunities and production operations. For example:

  • A 1999 resolution adopted in Brazil requires all cellular telephone distributors to participate in return and recycling programs, which must be implemented by the product manufacturers;
  • Mexico maintains an extremely complex product safety certification system for all products imported for sale there. Each importer must annually test such products at a Mexican laboratory to retain the certification. (There are recent indications, however, that the Mexican government may be willing to accept tests from ISO-certified foreign labs, however.); and
  • Taiwan's environmental agency has changed its labeling requirements for certain products three times in the past two years, considerably complicating electronic product distribution in that nation.

Gathering resources

The second task is to recognize that information channels exist by which world-wide developments can much more readily be monitored from a central location. A number of secondary sources also report on these matters, but typically suffer from delays inherent to their production processes and the fact that they spread too wide a net. However, the Internet has made real-time understanding of proposals from many parts of the world realistic. For example, the European Commission, the OECD and UNEP all maintain Web sites with ready access to previously hard-to-find documents.

In practice, however, simply monitoring the Web and the routine review of secondary sources with which so many environmental managers are familiar will not provide a comprehensive "early warning system." Moreover, there are many parts of the world in which participation is spotty, and language differences can be frustrating. Yet, as with rules proposed in the U.S. Federal Register, the best opportunities to seek adjustments often come earlier in the process.

The two most practical mechanisms for overcoming these challenges are to develop and maintain a network of worldwide contacts in regulatory arenas, and to attend conferences at which (sometimes unintentionally) revealing presentations are made. Here again, e-mail and videoconferencing technologies open the way for economically feasible communication that was only a dream a decade ago.

Time-saving tips

Limited corporate personnel resources can act as a roadblock to opening up this information highway. Transportation and per diem costs aside, these are time-intensive activities. There appear to be three ways in which forward-looking, but economically-efficient, companies are meeting these challenges:

  • A number of companies with world-wide operations have done a particularly good job of training their on-scene personnel to bring developments that may impact the company to the attention of a central manager. Some have established, or are in the process of establishing, Intranet resources that allow the instant communication of screened information and maintenance of user-friendly research files that focus on individual company concerns. They have thus energized an existing network;
  • A handful of U.S. trade associations have developed mechanisms for monitoring activities, and have begun regular international meetings with their opposite numbers in Europe, Asia and South America as a way of increasing information flow. This clearly is an attractive opportunity for membership service in an area in which collective action is feasible. As with intra-corporate systems, a variety of communications mechanisms are being employed, ranging from traditional newsletters, to e-mail alerts and Intranet sites; and
  • Some companies are inventorying their needs, identifying priority concerns and engaging qualified outside consultants to review, digest and provide information. This approach is particularly attractive where early access to information can provide a competitive edge, or where intra-corporate resources are so limited that it makes sense to rely upon screening by outside experts who both can become familiar with the businesses' needs while also obtaining economies of scale by working for several client entities.

Which approach makes the most sense to any given corporation or association will be a function of corporate culture, resources and organizational flexibility. It is inevitable, however, that only companies that can accommodate these new pressures and information realities can expect to succeed in the marketplace of the future.

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This article appeared in the March 2000 issue of Environmental Protection magazine, Vol. 11, No. 3, p. 66.

This article originally appeared in the 03/01/2000 issue of Environmental Protection.

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