Exclusive initiative: Negotiated Regulations

At COP26 in Glasgow, I witnessed a perfect instance of why stakeholder engagement is essential to solving the climate crisis.

At one of the side convenings, the CEO of an oil industry company described how his life had become a series of contortions. At work, he answered to the Board whose sole objective was to generate profits for investors, whatever the environmental consequences. At home, his teenage children were harassing him because of his planet-destroying job. Within himself, his moral compass was twisted between his duties and what he knew were his work’s consequences. At the end of his address, he begged the government officials present for regulations to reduce emissions that his company could bear.

That’s the clincher at the core of this initiative: given the proper process, companies would more easily comply with manageable regulations. After all, hundreds of thousands of laws, regulations, and rules are already in place, from child safety seats to cars to airplanes to buildings to foodstuffs to medical drugs. Government regulations ensure the safety of their people. Regulations are not impossible to bear, but forms of consultation and cooperation can make a difference in their integration.

Companies deliver goods and services that make life easier and more pleasant. Because of financing structures, predictability and certainty are essential to any business management and survival. When government agencies enact regulations, companies’ fiduciary obligations are not fully considered, and this creates grounds for resistance. Moreover, agencies tend to enact harsher regulations because they know they’ll be gnawed on. Worse, successive administrations may alter the regulations one way and then the other, making companies’ management a costly challenge.

Consequently, it is often easier for companies to hire lobbyists and fight the new regulations. Lobbying -the dereliction of elected officials’ responsibilities to the public- costs millions, if not hundreds of millions of dollars (*). Naturally, these costs are then included in the price of goods and services.

The solution to these ludicrous situations is stakeholder engagement and Negotiated Regulations.

Stakeholder engagement brings organizations together. All parties contribute their data, obligations, analysis, projections, and means. Shared interests are defined, core agreements are developed, and conflicts and impossibilities are morphed into innovation challenges. The product of this engagement is Negotiated Regulations. The new regulations protect the people on an agreed timetable, while businesses have the road map they need to adapt. An appreciable side benefit is reduced expenses, lowering the price paid by consumers for improved goods and services.

Going back in time to COP26 in Glasgow, I would have taken the floor and engaged that executive and the government officials, along with as many scientists and academics as present. I would have proposed to divide the immense issue of curbing fossil fuels emissions into as many segments as possible, including investors, lenders, operators, unions, regulators from all concerned agencies, lawmakers, scientists, academics, and community leaders, and go through the data and analytics. So, what new thought process can be applied? Can we separate fuel extraction issues from those in processing and refining?  Fuels from their emissions? What could be the ways to satisfy investors while letting operators manage properly? To protect jobs and the environment?

Focusing on each issue separately allows us to discern solutions that can then be integrated with others in different segments. By pressuring certain operations in the chain of events, such as emissions, to satisfy public health, businesses can evolve and find new avenues to satisfy investors by developing new opportunities. By providing education opportunities, unions, schools, and training programs can help workers evolve and benefit from new lines of work, which may be less impactful and more remunerative.

In other words, stakeholder engagement stimulates evolution and enables businesses and entire industries to evolve and develop long-term profitable and sustainable models. Surely, the magnitude of objectives such as Net Zero requires an all-encompassing, global collaboration.

At the Indo-Pacific Climate Challenge Summit & Expo, we gather stakeholders to explore and develop Negotiated Regulation techniques, objectives, and timetables. We aim to create frameworks sensitive to regional cultures, Indigenous precedence and knowledge, climate justice, gender equity, multi-generational planning, and economic development.

 

(*) Recently, a former US President and candidate for a new term sought $1 billion from a group of fossil fuel companies to suppress some regulations affecting them https://www.washingtonpost.com/politics/2024/05/09/trump-oil-industry-campaign-money/