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41.         Imposing heavy penalties on those who pollute or destroy the environment is one
way to preserve our environment. But it is not the only way; nor is it the best way.
Penalties may elicit grudging compliance, but other approaches—those that instill a
sense of genuine commitment—are likely to be more effective in the long term.
      Admittedly, motivating compliance with environmental regulations by way of
penalties will serve environmental goals up to a point. The deterrent effect of these
remedies cannot be denied. Yet it should not be overstated. Some businesses may
attempt to avoid punishment by concealing their activities, bribing (lobbying) legislators
to modify regulations, or moving operations to jurisdictions that allow their
environmentally harmful activities. Others might calculate the trade-off between
accepting punishment and polluting, budget in advance for anticipated penalties, then
openly violate the law. My intuition is that this practice is a standard operating mode
among some of our largest manufacturers.
      A better way to ensure environmental protection is to inculcate a sense of genuine
commitment into our corporate culture—through education and through shareholder
involvement. When key corporate executives become committed to values, the
regulations associated with those values become a codification of conscience rather than
obstacles to circumvent. The machinations and maneuverings described earlier will
thereby be supplanted by thoughtful concern about all the implications of one's actions.
Moreover, commitment-driven actions are likely to benefit the environment over and
above what the law requires. For example, while a particular regulation might permit a
certain amount of toxic effluents, businesses committed to environmental protection
may avoid harmful emissions altogether.
      Instilling a genuine sense of commitment through education and shareholder
action is not just a better approach in theory, it is also less costly overall than a
compliance-driven approach. Regulatory systems inherently call for legislative
committees, investigations and enforcement agencies, all of which adds to the tax
burden of the citizens whom these regulations are designed to protect. Also, delays
typically associated with bureaucratic regulation may thwart the purpose of the
regulations, since environmental problems can quickly become very grave.
      In sum, penalties for violating environmental-protection laws are essentially
expensive band-aids. A commitment-based approach, involving education and
shareholder activism, can instill in corporate culture a sense an environmental
conscience, resulting in far more effective environmental protection.