Preprint Article Version 1 This version is not peer-reviewed

Regulatory Limits to Corporate Sustainability: How Climate Change Law and Energy Reforms in Mexico May Impair Sustainability Practices in Mexican Firms

Version 1 : Received: 2 November 2018 / Approved: 5 November 2018 / Online: 5 November 2018 (10:53:44 CET)
Version 2 : Received: 5 December 2018 / Approved: 6 December 2018 / Online: 6 December 2018 (10:11:10 CET)

A peer-reviewed article of this Preprint also exists.

Lloret, A.; Domenge, R.; Castro-Hernández, M. Regulatory Limits to Corporate Sustainability: How Climate Change Law and Energy Reforms in Mexico May Impair Sustainability Practices in Mexican Firms. Systems 2019, 7, 3. Lloret, A.; Domenge, R.; Castro-Hernández, M. Regulatory Limits to Corporate Sustainability: How Climate Change Law and Energy Reforms in Mexico May Impair Sustainability Practices in Mexican Firms. Systems 2019, 7, 3.

Journal reference: Systems 2019, 7, 3
DOI: 10.3390/systems7010003

Abstract

This paper challenges the assumption that “state-of-the-art” regulation aimed at curbing greenhouse gas emissions (GHG) by firms is the panacea that will force firms to face the impact of climate change and create conditions that promote sustainable corporations. We argue that, in fact, such regulation, when improperly implemented, may impair sustainability practices because it creates unintended consequences. This paper tackles the design and efficiency of the institutional framework chosen through the lenses of the analytical themes of fit, scale and interplay. Then, we model a systems dynamic approach to represent how public policy in the arenas of energy effi-ciency and GHG emissions reduction may interplay with competitive business outcomes and cor-porate sustainability schemes. We found, as a result of the institutional design chosen, that the sys-tem is dominated by negative feedback processes resulting in inefficient outcomes that would be better tackled by firms not being subject to the restrictions imposed by the new laws.

Subject Areas

systems dynamics; corporate sustainability; Mexico energy reform; institutional implementation

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