Professional Documents
Culture Documents
Finance Law 1
Finance Law 1
In the mid-19th century with a massive amount of technological innovations came the Industrial
Revolution.1 Since then people became obsessed with industries and huge corporations which were able
to manufacture new products to the world. After only a century only the countries felt the harm that they
have caused to the environment. A study even concluded that just 100 companies are responsible 71% of
global emissions around the world.
Today, a lot individuals are concerned about the environment that they live in, some of them are even
concerned about the harm that is caused by industries towards natural habitats in both land and sea. As of
today, corporations consider these types of environmental protection groups as stakeholders of their
business. The rights of these stakeholders have increases tremendously over the years but still some
corporations do hide information and carry out their work. The Annual/Financial Report “is the principal
way in which shareholders and others keep themselves informed on the activities, progress and future
plans of a company”, however modern principles have made an impact so that companies do have to
disclose environmental issues in their Annual/Financial Reports. Studies still conclude that only a
minority of the investors based their decisions to any degree on corporate environmental information.
Huge manufacturing corporations like Nestle, Unilever, Mars, etc. have implemented recycling as a
solution in which they could reduce the environmental pollution that they were making. It actually took
while for the world to realize that recycling was not a proper solution. Over 90% of the plastic and other
recyclable products still end up in landfills, or the environment specially in developing countries. 2 CSR
activities has also been an interest among corporations. Corporate Social Responsibility (CSR) refers a
range of activities done by businesses – from donating to charity to ethical trading. Main focus among
CSR activities has been the environment. CSR activities are not only about a company going out there
and taking care of a particular place such as a polluted beach, it is also about the company trying to
reduce any of their damaging effects on the environment. It could be even be achieved by reducing the
energy use, the water use, proper waste management or simply just decreasing the usage of paper. CSR
activities related to the environment can reduce business risk, improve reputation, and provide
opportunities for cost saving. When a company show the society that they do care about the environment,
more customers will be attracted towards it, thereby it would even increase revenue. 3
CSR is all about blending social and environmental aspects to operations of the busines and interacting
with the relevant stakeholders on a non-mandatory basis. Even if its not a legal requirement some
companies take responsibility in trying to meet needs of the society. CSR is connected to certain laws
such as corporate law, corporate governance, contract law, tort law, labor law, environmental law, and
even criminal law. These laws have played a part in trying to develop as well as solve several issues
regarding CSR activities of corporations. 4 It has been a mission of many corporations to adopt CSR
activities and publish reports of them to the world. Some companies who tend to affect the environment
more closely have even adopted strategies to prevent their damage to the environment. These corporations
1
(History.com, 2020) <https://www.history.com/topics/natural-disasters-and-environment/water-and-air-
pollution> accessed 20 October 2020.
2
'Ask Big Corporations To Stop Plastic Pollution! - Greenpeace' (Greenpeace, 2020)
<https://engage.us.greenpeace.org/onlineactions/2PXyhoBnZE6U2yuKTjNYvw2> accessed 20 October 2020.
3
Vallari Chandna, 'Impact Of Entrepreneur's Environmental Attitudes On Corporate Environmental Responsibility'
(2017) 2 International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility.
4
Indonesian Corporate Law and Investment Law oblige CSR. See Tineke Lambooy and others, CSR in Indonesia:
legislative developments and case studies (Konstitusi Press 2013).
even do carry out environmental reporting which tend to disclose 5 major pillars of CSR activities,
corporate governance, business ethics, employees, society, and environment.
Several governments, specially in developed countries have made it mandatory for the companies to
include their environmental performance level in their annual report. This is mainly done to remind the
corporations that they should work on their environment annually. The developing countries as well as
the developed countries are trying to implement a new form of financial reporting which would include
both gross domestic product and green domestic product. If a certain industry does not show their
environmental performance level on their annual report then these companies will fall under the attention
of environmental protection groups. If that happens the company will face several consequences.
The reason why corporations make an environmental report is due to the legitimacy theory. The theory is
based on the idea that that in order for a corporation to be successful, they must act within the bounds of
what society identifies as socially acceptable behavior. Environmental disclosure means the disclose of
information which is related to a soil or water contamination caused by the corporation. Environmental
accounting is bringing environmental aspects into the planning, operations, reporting and finally making
disclosures of issues.
United States
In 1970 the U.S. Congress passed the National Environmental Policy Act (NEPA) which paved the path
to establish the Environmental Protection Agency and the Occupational Safety and Health
Administration. Since 1970 these laws have been later on changed and developed to suite the country.
Each and every business in United States is affected by this these laws, and daily a certain business would
deal with a minimum of two environmental laws and also agencies that govern them. 6
China
China is a high growing economy, but due to this the industry in China engages in lot of pollution. There
is a regularity framework for listed companies in China. The government has increased incentives for
companies who cut down pollution and also a new Law on the Prevention and Control of Soil Pollution
was stipulated. The government deploys 18000 inspectors and support staff to inspect industrial sites and
the environmental pollution that they are creating. Heavy polluting factories such as Steel, aluminum and
coke are forced to relocated or are in a major risk of getting shut down. 7
References
5
Sudarshna Thapa, 'Impact Of Environmental Law On Corporate Governance - Ipleaders' (iPleaders, 2020)
<https://blog.ipleaders.in/impact-of-environmental-law-on-corporate-governance/> accessed 20 October 2020.
6
'Environmental Law And Business - Duties' (Referenceforbusiness.com, 2020)
<https://www.referenceforbusiness.com/encyclopedia/Ent-Fac/Environmental-Law-and-Business.html> accessed
20 October 2020.
7
Briefing C, and Wong D, 'Environmental Compliance For Businesses In China: Five Major Trends' (China Briefing
News, 2020) <https://www.china-briefing.com/news/environmental-compliance-in-china/> accessed 20 October
2020
(History.com, 2020) <https://www.history.com/topics/natural-disasters-and-environment/water-
and-air-pollution> accessed 20 October 2020.
'Ask Big Corporations To Stop Plastic Pollution! - Greenpeace' (Greenpeace, 2020)
<https://engage.us.greenpeace.org/onlineactions/2PXyhoBnZE6U2yuKTjNYvw2> accessed 20
October 2020.
Vallari Chandna, 'Impact Of Entrepreneur's Environmental Attitudes On Corporate
Environmental Responsibility' (2017) 2 International Journal of Sustainable Entrepreneurship and
Corporate Social Responsibility.
Indonesian Corporate Law and Investment Law oblige CSR. See Tineke Lambooy and others,
CSR in Indonesia: legislative developments and case studies (Konstitusi Press 2013).
Sudarshna Thapa, 'Impact Of Environmental Law On Corporate Governance - Ipleaders'
(iPleaders, 2020) <https://blog.ipleaders.in/impact-of-environmental-law-on-corporate-
governance/> accessed 20 October 2020.
'Environmental Law And Business - Duties' (Referenceforbusiness.com, 2020)
<https://www.referenceforbusiness.com/encyclopedia/Ent-Fac/Environmental-Law-and-
Business.html> accessed 20 October 2020.
Briefing C, and Wong D, 'Environmental Compliance For Businesses In China: Five Major
Trends' (China Briefing News, 2020) <https://www.china-briefing.com/news/environmental-
compliance-in-china/> accessed 20 October 2020