Business Leaders Weigh In on Environmental Regulations

Everyone knows environmental regulations are bad for business. Maybe not.

Last Wednesday I found myself in Washington D.C., at a meeting of the Council on Competitiveness for the launch of its U.S. Manufacturing Competitiveness Initiative.

At a press conference before the meeting the council released the results of a global business survey of some 400+ international executives used by the council to develop an index of the factors that influence manufacturing competitiveness.

Following the release, and armed with the results of the survey, we began work on the new initiative — aimed at developing a road map to make America more competitive in manufacturing in the global marketplace.

U.S. Lagging Behind in Competitiveness

There was a lot of handwringing over the fact that the United States was ranked fourth in overall competitiveness behind China (first), India (second), and South Korea (third), and was projected to fall to fifth in five years with Brazil taking over the #4 slot.

As noted in the press release, there was also a lot of discussion over the fact that “access to talented workers who are capable of supporting innovation is the key factor driving global competitiveness at manufacturing companies — well ahead of ‘classic’ factors typically associated with competitive manufacturing, such as labor, materials and energy.”

Another aspect of the index that I found noteworthy but that was largely ignored by the group is worth bringing up here. It relates to business leaders’ perception of the role of environmental regulations in affecting manufacturing competitiveness.

Do Environmental Regs Really Depress American Competitiveness? What CEOs Say …

I don’t know how many times I’ve heard people bemoan all the environmental regulations imposed on U.S. industry — gripes claiming regulations increase costs, depress efficiency, and are a hassle to comply with, and eventually chase manufacturers out of the country to locales less environmentally restrictive. (See here, here and here) Really? Let’s see what the chief executive officers polled in the survey had to say.

American CEOs and other executives were asked in the poll to identify the government policies that give the United States a competitive advantage or disadvantage in manufacturing relative to other nations. At the top of the advantage list were U.S. laws that protect intellectual property, and in the disadvantage list were government intervention and ownership of companies and corporate tax policies.

But what about those supposedly nasty, purportedly bad-for-business environmental regulations? The CEOs said they were not a significant factor: they neither enhanced competitiveness nor significantly detracted from it. So much for that long-lived, widely spread myth.

China’s Green Movement and Competitiveness

Another interesting statistic came from the survey of Chinese business leaders on the policies that enhance their nation’s competitiveness. Near the top of their list on competitive advantages: their government’s “sustainability policies,” i.e., China’s push to develop and manufacture renewable energy technologies.

And I thought subsidies and government programs that artificially push green technologies were supposed to be bad for business. (See here and here.) Seems China’s CEOs think not.

Now I’m sure there’ll be folks who will challenge these results. That’s fine. Just bear in mind that your beef is with the CEOs of the world, not with this humble academic.

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