Race to the Bottom: Sustainability Lessons from Financial Regulation

In the wake of the recent economic downturn, many industries have taken a much harder look at their core business functions.  Initiated by compliance and/or business sustainability necessity, today’s executives can no longer accept ‘business as usual’.  Beginning with reform in financial monitoring and reporting, there are many lessons that can now be applied to other core sustainability-driven functions.   Covered in the Chicago Tribune article, Geithner warns other countries about light regulation, U.S. Treasury Secretary Timothy Geithner warned against “regulatory arbitrage”.  Foreshadowing “another race to the bottom around the world”, Gartner painted a picture of companies seeking out the jurisdictions with the slackest regulation in order to push the envelope on allowable activities.   Applying the same dynamic to environmental and social regulation and reform, there could be a race to the depths of the ‘Triple Bottom Line’.  Companies feeling the pressures to compete would be faced with threats of unregulated competition.  However, avoiding sustainability performance standards is not the answer.  Click here to read more about sustainability and financial regulation.     

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