Accounting and Society - Essay Example

Introduction In Australia environmental laws have experienced and still experiences considerable alteration. New legislations together with alterations in the regulatory authorities’ policies imply that the impacts of legislation on business functions have risen considerably. Thomas (2007) asserts that environmental legislation mostly has its basis in state and territory. Its involvement of federal laws is minimal. Federal laws are mostly concerned with environmental responsibilities in international agreements or when needed by a significant task. Issues regarding environmental, planning and heritage are covered in the Environmental Protection and Biodiversity Conservation Act 1999, EPBC Act, which is the main federal legislation. The Environmental Protection and Biodiversity Conservation Act 1999, establishes legal framework that helps in the safeguarding and administration of national and international significant flora, fauna, ecological area and heritage sites. In addition, it also aims at safeguarding the heritage assets of the world, national heritage assets, wetlands that are of international significance, the endangered species nationally and ecological area, migrant species, the Great Barrier Reef Marine Park, commonwealth marine places and the setting that environs the nuclear activities. Therefore, organizations’ and individuals’ actions have to be approved by the minister in charge under the EPBC Act. This helps to determine whether a particular action has, will have or is likely to have potential impact on a topic perceived to be of national environmental consequence. Federal environmental legislation may be applicable to certain businesses and activities in addition to other existing responsibilities in the state or territory legislation under which business functions. State and territory laws involving environment differ in their requirements and intricacy. New South Wales laws are perceived to be all-inclusive. However, alterations in the same legislations in Queensland, Victoria, South Australia, and lately Western Australia are causing in a fast pace some level of consistency in the mainland states. At a level of state and territory different environmental offences are formed. This can be classified under an environmental duty that is general in order to evade pollution or particular offences that results in pollution of water, air, land or leads to noise pollution. The recommendation of environmental legislation may be that given businesses involved in certain actions have to approach environmental regulatory authorities for approval. Such approvals mostly operate as a license to pollute within specified restrictions. Hence, it forms exclusion to the legislation provisions of offence. Conditions contained in the licenses and approvals may give financial guarantee for conformity with environmental responsibilities or may require license fees to be paid and is calculated in relation to the pollutants quantity resulting from a given action. Responsibilities might also be forced by a particular state or territory legislation in a situation where an activity has cased impact on: fauna or flora, heritage that is classified as indigenous and non-indigenous, preservation, goods that are unsafe and harmful chemicals. In this secondary legislation, additional licenses or approvals might be necessary. Under the Environmental Protection and Biodiversity Conservation Act 1999, EPBC Act, action is defined in an extensive manner and consists of: various projects and expansions, tasks and activities sequence or even an adjustment of all this. Actions mainly consists of construction, development, buildings modification or destruction, structures, amenities, industrial procedures, exploration and taking out of mineral and other petroleum products, how hazardous materials are stored and transported, the discarding of waste, earthworks, water extraction and diversion, various activities of aquaculture, research and agriculture, doing away with vegetation, how animals culling is conducted, and other activities that mainly involve land. Actions cover the grounding and construction of a given location, the necessary operations and upholding, tasks’ stages of conclusion and closure, and current infrastructure adjustments. The effects of an action on the environment may be unfavorable and advantageous at the same time. Therefore, in deciding if authorization is needed under the EPBC Act, only the impacts perceived to be unfavorable regarding issues of national environmental importance remain applicable. Organizations or individuals who want to be involved in an action perceived to have or is most likely to have a major effect on an issue of national environmental importance has to involve the concerned minister. This will require a decision to be made regarding if evaluation and authorization is necessary under the existing EPBC Act. When an action in question is conducted without being approved considerable penalties will be given. Other environmental legislation introduced include: the National Pollutant Inventory (NPI), the National Greenhouse Energy Reporting Act (NGER) and the Carbon Tax among others. Richardson (2002) asserts that the definition and scope of regulation has remained as an issue that has been challenged by scholars and those concerned with making of policies. Regulation is perceived to involve various mechanisms utilized by institutions that govern at different levels of government to enforce restriction on the behavior of private sector. Regulation can also be defined to be a process where a government requires individuals, private and public institutions to observe given actions. This is usually conducted in an administrative process that is continuous through regulatory agencies that are particularly selected (Cole, 2002). Therefore regulation can be concluded to be direction that is commanding and is meant to manage and preside over behavior. Thus, when regulations regarding the environment are being discussed the focus is mainly on the existing rules established by an authoritative body that is self-governing. The authoritative body has been empowered to be able to oversee and ensure that organizations adhere to the existing environmental laws. An Authoritative body has the mandate to restrict organizations activities that may lead to the present laws being disobeyed. There are different regulation approaches and they include; free market and pro-regulatory approach to law. The willingness to comply by those who should observe given laws greatly depends on the legislation procedural standards and the intervention of regulatory (Richardson, 2002). Free-market approach to regulation provides organizations with adequate opportunity to be able to rectify given regulatory breach. Under this approach organizations will also be able to develop schemes for their own certification. Hence, with this approach to regulation organizations will be able to provide a proper review and report focusing on their own environmental acts. Free-market approach to regulation is cost effective. Pro-regulatory approach is perceived to be costly because of the bureaucratic mechanisms involved and it might also result in regulated organizations being hostile. Richardson (2002) asserts that it is possible for organizations to conduct self-regulation in an effective manner since most organizations are concerned with maintaining their reputation. However, goodwill of organizations cannot be fully relied on. Hence, other approaches of regulation ought to be in place in order to control legal violations and contrary behavior. For example, with existence of environmental legislation, lenders who provide funds to polluting developments can have the liability imposed on them. It is important to understand that the activities of all the community sectors, the government and the economy play a significant role in attaining growth that is sustainable (Richardson, 2002). In addition, it should be clearly understood that financial institutions are not to replace others effort but is just an addition. Considering the contemporary society being faced with various risks and the increased rate of environmental degradation, realistic solutions need to be sought. This will ensure that economies are readjusted on a basis that is more ecologically sustainable. Environmental regulations are evaluated wholly based on their environmental efficiency, political suitability, effectiveness and social fairness. Increased attention has been focused on the criteria in which various techniques of regulation are selected and assessed by those making policies and academic analysts. Environmental effectiveness remains to be one of the criteria for rating the success of existing policy, with focus being the desired environmental outcome being attained. In this case the focus of effectiveness is on the outcome, and the balance between the costs incurred and the outcome. This mainly refers to the level in which policy mechanism has led to policy intentions being attained in a cost effective manner in comparison to other alternative choice. Political acceptability involves different aspects such as accountability and transparency (Walker, 1994). On the other hand, social equity deals with issues that regard distributive fairness. Small progress will be made by policies without political support because of social prejudice regardless of the effectiveness prospects in place. There are different policy mechanism criteria that include managerial costs, and rivalry and innovation effects. Hence, the selection of regulatory methods that are suitable can be difficult. This is because individual mechanisms can conflict with particular criteria and the problem will be how to allocate every criterion with proportional weight. However from environmental policy view, economic effectiveness remains to be the most significant prerequisite. Organizations that do not focus on sustainable growth goals in a significant manner are not worth being considered especially with the predominance of environmental life-support mechanisms. Organizations that lack proper characteristics of environmental effectiveness will have several questions raised against them. Such organizations’ political viability, financial cost and fairness remain to be of major concern. At times, trade-offs will have to be made between the concerns of economic and social that are competing. Financial institutions have the potential of improving existing regulatory approaches environmental effectiveness. However, signing up financial bodies as a way of environmental policy can be politically challenging and some financial and community effects will have to be dealt with. Major pressures have occurred on how to boost environmental protection in the long-term in the center of economic deregulation scheme that aim to lessen the states’ role as a resource administrator. According to Holder and Lee (2007), there are various business cases that are related to environmental legislation. First is financial, most organizations view is that they can achieve cost reduction by increasing their environmental performance and devotedly observing the legislations put in place. The second case is reputation; today most customers focus on environmental awareness. In the market place one of the factor known to create difference among organizations are policies regarding an environment. This case is beneficial to an organization since various stakeholders take note of it. Such stakeholders include; employees, shareholders, the surrounding communities, and other pressure groups. Thirdly, is risk management, with existence of environmental legislation organizations that do not comply get penalties. In most cases penalties are in form of monetary terms and the amount can be huge. There are also other costs involved such as losing management time and legal bills. Organizations that fully observe and engage in environmental issues will in the long term boost their business continuity. The final case is recruitment and retention; employees’ morale can be enhanced by various environmental practices and policies. In addition, such policies and practices are perceived to act as incentives to individuals who would prefer to be hired in organizations that have an environmental outlook just like theirs. Most individuals in the managerial positions would not be willing to work in organizations whose environmental record is rated to be poor. Free market and pro-regulation approaches to regulations Conservative individuals promote adoption of free market environmentalism elements when dealing with environmental issues. These individuals oppose government regulation and remain determined in the promotion of free-market virtues. Their recommendation is that market should be used in determining the allocation of environmental resources that are scarce. They also suggest that environmental legislation ought to be replaced with; voluntary industry conformity, property rights that have been reinforced or newly formed and economical mechanisms. Those opposing the environmental legislation argue that it will bring about unnecessary commands and controls. In addition, they view environmental legislation to be ineffective and that it has many deficiencies. However, according to Hussen (2012), in an economy that is free-market oriented, prices do not account for the side-effects that result from various business activities that are harmful. The harmful side effects are known as externalities. The argument is that most operating businesses exploit too much from the environment in a manner perceived to be detrimental. Secondly, most products manufactured by organizations require increased amount of energy and the toxins and pollutants are also in excessive quantities. Thirdly, most organizations manufacturing methods and products generate unusual waste. Hence, such waste is harmful to the generations both in the present and in the future. The pro-regulation approach has its basis on the view that lack of mandatory regulation in place, results in organizations and individuals not being fully accountable to their involvement in pollution. Government legislative action helps to regulate environment hence providing solution to dilemmas that result from free-market regulation approach. The main intention for creation of such regulation is to help in the amendment of environmental externalities. Therefore, with regulations in place, most organizations costs of running business will be accountable for nature utilization. The accountability to the environment would be both as raw materials source and as waste depository. With pro-regulation approach in place, standardized policies regarding the environmental protection will be in place. Different factors determine how most organizations react to various environmental legislations in existence. They include different conditions perceived to be economic, political and even social. Another factor is the public awareness of an organization regarding various environmental distresses that emerge. Such concerns may be categorized as being local, regional, national and even global. Often environmental regulations have been the cause of controversy. Most critics have argued against the need for such laws and the huge costs incurred in its implementation. Today various debates are still ongoing regarding the environmental regulations necessity, fairness, need and costs (Christie, 2008). Regarding necessity, the main topic of discussion has been the need for a specific activity having to be regulated openly due to its effects on the environment. Such debates can be term as being scientific. A clear illustration of this is that existing scientific ambiguity has stirred the present debate over the regulation of greenhouse gas. As a result, it has become a key factor in the debate regarding pesticides whether they should be forbidden. Concerning cost, most industries that are regulated oppose environmental laws on the cost basis. However, it is not easy to conduct a cost-benefit analysis. The value on an ecosystem viewed to be healthy, and the value of clean air and species diversity cannot be measured easily. In addition, ethical and moral aspect may be added to environmental issues thus cost being discounted. Regarding effectiveness, environmental regulation is frequently criticized by those with environmental interests as not being able to safeguard the environment in an adequate manner. Moreover, tough environmental regulations do not warranty strong implementation. Nevertheless, society’s cost benefit analysis amid having laws that safeguard society from toxic or dangerous living and conditions at the workplace evidently come down on the part of regulation. The defense of legislation by those with vested interest can be done in a manner perceived to be misleading. In addition, when they conduct an analysis regarding the legislation structure it can be viewed by others as defective. For example, Macintosh (2009) points out deficiencies in an article written by Gerard Early. Gerald Early had given a description of the Australian Government’s principal piece of environmental legislation, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) key elements. Gerard Early also did an analysis on the environmental legislations since when it was started in July 2000. According to Macintosh (2009), Gerard Early conclusion that the best environmental assessment practice was demonstrated clearly in the EPBC Act was questionable. Gerard Early held a position in the Commonwealth Department of the Environment, Water, Heritage and the Arts as a deputy secretary. In that position his role was to lead a department branch whose responsibility was EPBC Act administration. According to Macintosh (2009), Gerard Early article clearly demonstrate various problems that result when individuals who are government representatives in senior positions are directly involved in academic research. Macintosh further adds that deficiencies are clearly seen in the works of such individuals and they can provide misleading analysis. In addition, Macintosh criticizes the use of selective case studies to make general effectiveness conclusions. He suggests that case studies can be utilized in explaining the operation of an environmental assessment regime. Macintosh states that such problems arise when legislation is defended by individuals with vested interest using examples that are not comprehensive. Potential impacts resulting from the environmental legislation being introduced using free market and pro regulatory approach to regulation There are several potential impacts resulting from the environmental legislation being introduced using free market and pro regulatory approach to regulation. Such environmental legislation impacts affect both the organizations and individuals as well. The first potential effect is economic; with the environmental legislation in place, higher costs will be incurred in industries, infrastructure and by several individuals. They will be forced by the existing laws to go an extra mile beyond their usual activities. Since the enactment of environmental legislations, some areas have shown huge progress. However, environment protection has proved to be costly. The argument of those criticizing environmental legislation is that the achievement in the environmental protection come at a cost that is perceived to be too high. Hence, organizations not complying with the existing environmental regulations are common in some areas because of the increased costs that cannot be afforded. The perception of most stakeholders is that the government ought to play a key role in financing the protection of environment. Individuals participating in various activities such as those of marine have been forced by the existing regulations to invest in new technologies. Due to reduced fuel costs this is beneficial to charterers while the owners have minimal benefits from the improved revenues. According to Wang (2011), the effect of environmental legislation on jobs is that it creates and destroys at the same time. This greatly affects various organizations’ stakeholders in a negative way. As per the research conducted, it clearly showed that adoption of environmental legislation resulted in increased costs of production hence higher prices. The outcome is business sales and jobs being lost. At the same time other opportunities are created through control of pollution. According to economic literature, potential effects resulting from regulations are little and occur at macro level. However, for certain businesses, regulations effects on the creation and sustainability of jobs at micro level can be immense (Hardman Reis, 2011). It is possible for jobs to be created by the enacted regulations since most organizations will be forced to perform some tasks that are not done at present. Hence, they will need to increase the workforce and expertise. However, one of the significant questions is whether the new jobs resulting from regulation are of value. This question has remained unanswered because neither the academic research nor government analysis has been able to provide satisfactory clarification. Therefore, even though regulations create more opportunities for individuals to be hired, it can be counterproductive. The main concern regarding regulation should be focused on if it can bring about benefits that can be viewed to justify the resulting costs. Secondly, regarding pollution and environmental matters most organizations have to face extensive risks that are legal. The range is mostly from the State and Federal statute law, the current common law source of action and repeated common law legal progress (Elliott and Thomas, 2009). These legal risks are faced on top of clean up costs that are weighty and normally occur in a pollution occurrence. Most enacted environmental protection legislations worldwide have the principle that the polluter has to pay. However, the extent of liability for both effluence and pollution has been extended by regulators in an increased manner. It is possible for organizations to incur various liabilities for environmental analysis and rectification regardless of whether a tenant or a preceding landowner is to blame for pollution. This can be attributed to governments worldwide lacking adequate funds to meet the clean-up costs when the party involved in pollution is unable to. No matter what the sense behind all this, the escalating hard work witnessed imply that liability might broaden from an auxiliary company up to that of origin. In addition, failure to reveal possible pollution may result in organizations having to face legal risks. The penalties and fines made compulsory by regulators and governments are just a fraction of the risk. Other parties may force organizations and individuals to meet the costs when they cause or are involved in pollution. Individual directors and officers life also may become difficult since they will have to face higher liabilities. This comes as a result of possible pollution or revelation of pollution regulations becoming stiff. Regulators have been empowered by the existing laws to command cleaning and rectification. At times, companies who are not responsible for a particular pollution may be forced to conduct such activities. Finally, with the environmental legislation in place, organizations and individuals that need to undertake given actions may not attain their outlined objectives within a given time limit. This may result in businesses incurring unnecessary losses and being overtaken by their competitors. This is because they have to adhere to the process of referral, assessment and approval that is involving and time consuming. Failure to do this results in unnecessary penalties. For example, in Australia every action perceived to be unfavorable has to be scrutinized under the Environmental Protection and Biodiversity Conservation Act, 1999. The first step is the referral process. When self-assessment has been conducted and the outcome is that the action in question is likely to adversely impact on issues of national environmental importance the matter has to be referred to the minister of environment in the Australian Government. When an individual or an organization proceeds with an action perceived to cause negative impacts without approval, considerable penalties will be applicable. After the referral has been received by the minister, decision is reached on whether a given action will have a major impact. If the concerned minister sees that an action will likely have a major influence on an issue of national environmental importance then it will have to be approved under the EPBC Act. However, if the decision is that it will not have a major influence the actions’ sanction under the EPBC Act will not be necessary. The minister may also have to give instructions on the manner in which a given action is to be conducted when it is perceived not to have major impact. The next process is the assessment and approval process. When the ministers’ decision regarding an action is that approval is necessary, then an action’s environmental assessment has to be conducted. If a mutual agreement exist the state or even the region where action will be conducted will do the necessary assessment. Here, the procedures credited in the mutual agreement are applicable. If another Australian Government evaluation process is credited in the declaration of the minister, then an action may be evaluated using the declarations’ credited procedure. After an evaluation has been done using one of the assessment ways given in the Environmental Protection and Biodiversity Conservation Act 1999, EPBC Act, preparation of an evaluation report will then be done. After analyzing the report the minister of environment in the Australian Government comes up with a decision on whether the action will be given approval and the stipulations to be put in place. These processes may impact the concerned individuals and organizations negatively due to delay. Hence, the desired targets might not be attained as earlier planned. The decisions made may also be prejudiced since the final decision is made by the minister of environment in the Australian Government whose intention may be to stop certain actions of an organization or individual from proceeding. Conclusion In Australia and other countries in the world, the environmental issues are perceived to be one of the critical topics. Its significance is expected to increase considering the current increasing global temperatures, reduction in the natural resources, energy prices being on the rise and the institution of pressures of carbon trading (Braithwaite and Drahos, 2000). Even though arguments may be raised regarding the action of government, organizations ought to face the challenge of striving towards an economy that has low carbon and is efficient environmentally. Today, organizations that are keen in observing environmental legislation have increased opportunities of being in a position that is competitive in the future. Majority of stakeholders knows the significant role played by legislation in safeguarding the environment. However, few individuals and organizations perceive the environmental legislation as being adequate. Stakeholders are willing to participate and observe the legislation. However, majority of the stakeholders insist that the government ought to play a key role especially in funding environmental protection. This is because majority of the individuals do not perceive the environment to be a significant issue in comparison with other matters that are social and economic. In my view the introduction of environmental legislation is not justified. Considering the potential effects of such laws it might negatively affect individuals, and organizations’ current and future businesses. It is clear that with environmental legislation in place the country will experience increased revenues. Regulations mostly are introduced to help in the amendment of environmental externalities. Hence, with regulations in place, most organizations costs of running business will be accountable for nature utilization. The accountability to the environment would be both as raw materials source and as waste depository. It true to say that the country’s economic position will improve since the government will not incur unnecessary expenses to correct the damages on environment caused by irresponsible individuals and organizations. Nonetheless, considering the potential effects of the introduction of environmental legislations increased losses will be incurred as well. Australia is viewed as an attractive location for investors and various business operators hence, its strong economy. Individuals and organizations that are currently operating various businesses and those planning to start in future require a legal system that is friendly and mature to their operations. For several decades, the business flow between Australia and different nations in the Asia-pacific area has greatly developed. In addition, the country is highly desired to be the base for various businesses due to low costs such as rentals, services, salaries and the cost of living in general. Therefore, several international businesses in most cases prefer to make Australia their regional headquarters. Considering all this opportunities for the country, environmental legislations being introduced might be perceived as being too demanding and costly. In addition, the required processes required to be observed before conducting certain actions is demanding and failure to do this result in unnecessary penalties. This may discourage the present and future investors in the country. Most businesses already have outlined objectives and time limit to implement their plans. A number of things are clearly reflected regarding the matters of environmental and pollution. First, extensive legal threats are encountered by businesses in relation to environmental matters of legislation. This mostly falls under different environmental legislatures classified as state and federal. Secondly, state regulation is becoming tougher than ever before. In majority of the Australian states, Environmental Protection Acts have been given the capacity to authorize clean-up and rectification. Hence, disclosure obligation is considerably stiffer. Significantly, every director and officers will possibly be held responsible for various violations. In most cases they receive penalties for violating existing environmental legislations mainly due to failure to willingly report pollution activities of their organization. Finally, it is possible that individuals who are environmental regulators will enforce considerable rectification costs. Such costs will not only be incurred by the original individuals or organizations that caused pollution, but also the present owners, companies of origin and even leaseholder. All these tendencies possess risk management insinuations that are significant. Considering all these effects due to tight and unfriendly environmental legislations, most businesses location might shift to other countries or even minimize their usual activities due unaffordable costs to be incurred. As a result, of all this increased losses might greatly affect the country’s stable economy. References Braithwaite, J,& Drahos,P 2000, Global Business Regulation, Cambridge University Press, UK. Christie, E 2008, Finding Solutions For Environmental Conflicts: Power and Negotiation, Edward Elgar Publishing, UK. Cole, D 2002, Pollution and Property: Comparing Ownership Institutions for Environmental Protection, Cambridge University Press, UK. Doyle, T 2000, Green Power: The Environment Movement in Australia, UNSW Press,Sydney. Elliott, M, & Thomas, I 2009, Environment Impact Assessment in Australia: Theory and Practice, Federation Press, Sydney Harding, R, &Fisher,E 1999, Perspectives on the Precautionary Principle, Federation Press, Sydney. Hardman Reis, T 2011, Compensation for Environmental Damages Under International Law, Kluwer Law International, The Hague, Holder, J, &Lee, M 2007, Environmental Protection, Law and Policy: Text and Materials Cambridge University Press, UK. Hussen,A 2012, Principles of Environmental Economics and Sustainability: An Integrated Economic and Ecological Approach,Routledge, UK. Macintosh, A ,Australia’s National Environmental Legislation:A Response to Early, Taylor & Francis Group, LLC, Vol 12, Issue 3, 2009. Journal of International Wildlife Law & Policy,12:166-179,2009. Millennium Ecosystem Assessment, 2005, Ecosystems and Human Well-Being: Policy Responses: Findings of the Responses Working Group,Island Press, Sydney. Richardson, B 2002, Environmental Regulation Through Financial Organisations: Comparative Perspectives on the Industrial Nations, Kluwer Law International, Netherlands. Thomas,I 2007,Environmental Policy: Australian Practice in the Context of Theory, Federation Press, Sydney. Walker, K 1994,The Political Economy of Environmental Policy: An Australian Introduction, NewSouth Publishing, Sydney. Wang, M 2011, Do Regulations Really Kill Jobs Overall? Not So Much, 21 Sept, viewed 14 December 2012, . Year Book Australia, 2003, Issue 85ContributorAustralian Bureau of Statistics, Aust. Bureau of Statistics. Read More