Sometimes the carrot motivates better than the stick - Michigan's Clean Corporate Citizens

"Preliminary econometric analysis indicates that current and anticipated regulations and market forces, e.g., investor pressures, exert significant influences on environmental practice use. The findings suggest that a combination of regulatory sticks and market carrots are fostering voluntary business environmental management." - Prof. David E. Ervin, Professor, Environmental Studies, Portland State University

Given the state of the environment in the 1960s and 1970s, it became quite evident that businesses would not or could not regulate themselves to provide a safe environment.  The air was filled with pollutants; waters burned from all the toxins floating in them.  So, Congress was compelled to pass command and control environmental regulation to force industry to make their activities more environmentally sound.  Much of the reporting about environmental law since then focused on the negative effects on the regulated community when it fails to comply with the complex myriad of environmental laws and regulations.  Release a chemical into the environment, and one is liable for the costs of cleanup and potential fines and penalties, for example.  What one rarely reads about are the incentives that operate to encourage and reward good behavior.  In Michigan, the Clean Corporate Citizen program is an example of the carrot approach to incentivize a cleaner Michigan.

The Michigan Department of Environmental Quality (MDEQ) recently announced that Louisiana-Pacific Corporation in Newberry, Michigan became the 175th company to become designated as a Clean Corporate Citizen.  The rules for achieving the status as a Clean Corporate Citizen describe a process whereby an applicant must demonstrate first that it does not have a history of bad environmental behavior, like violations, fines or settlements related to enforcement activity.

The applicant will need to establish an "environmental management system," which will look like or meet ISO 14001:2004 standards.  Briefly, the ISO standard is an international system that companies use to establishes programs that minimize environmental harm during manufacturing, maintain compliance with environmental laws, establish lines of communication so that responsible employees and officers are identified and can be made accountable for compliance, and require periodic review of progress so that the systems can be revamped if necessary.  For those familiar with sustainability, the process follows the Plan-Do-Check-Act-Review means of operating.  The ISO standard is a requirement for all companies that do business in Europe, so the adoption of it is quite common for Michigan companies who have an international presence.

Companies (and municipal entities) seeking to obtain the Clean Corporate Citizen designation will have their applications available for public notice and comment.  At that point, the public may comment on the application.  If approved, there are annual reporting obligations and the need to renew every two years.

So, why would a company go through this process or, in other words, what is the reward for doing so?  In essence, approved entities have their burden for regulatory oversight and reporting reduced.  In addition, the time for waiting for certain approvals is reduced.  The MDEQ provides a list of benefits on its webpage.

Although in general the Clean Corporate Citizen program is looked upon favorably by citizens and corporations alike, some have criticized it as providing a way to avoid scrutiny over some potentially adverse environmental results.  But, overall, providing incentives to become a better environmental steward, instead of always relying on enforcement, is a welcome means to achieve a cleaner Michigan.  Given the number of companies and municipalities that have developed or are developing sustainability initiatives that are consistent with the goals of the Clean Corporate Citizen program, we are like to see significantly more than 175 entities on the list in the not too distant future.

The author, Saulius Mikalonis, is an environmental attorney with over 25 years of experience in the Bloomfield Hills offices of Plunkett Cooney.  He is also the author of The Green Blawg, in which he writes about environmental law issues for the non-lawyer.  In addition to practicing law, Mr. Mikalonis is an adjunct professor at the Thomas M. Cooley Law School, Auburn Hills Campus, at which he teaches a course entitled "Sustainable Development Law & Policy" and a former Board Member of the Detroit Regional Chapter of the United States Green Building Council (USGBC).
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