In the old days, U.S. regulators forced environmental rules on unhappy corporations. In recent years, things have changed as companies weigh reputational risk and preserve brand image. Firms themselves have imposed their own social and environmental standards, said a recent Washington Post column. For example, in the wake of global warming – and the rise of issue-conscious consumers -- Wal-Mart has vowed to double the efficiency of its vehicles and has cut its stores’ energy consumption by 30 percent. Meanwhile, both BP and GE have adopted environmentally friendly policies.
The trickle-down effect on companies in emerging markets is clear to see. The furniture-making industry is a case in point. Most developing countries do not, as yet, have regulation related to the exploitation of forests for furniture-making. But American firms that want to protect their brands are adamant on certification from the Forest Stewardship Council.
Because brands do not face the bureaucratic red tape generated by governments, they can more easily set their own social and environmental standards. Brands, in fact, are ahead of the curve and have become a kind of "shadow government." They are of course not the real thing. But, says the Washington Post, they are better than nothing.
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