INSTITUT Veolia Environnement

  • Home
  • Report n°2: An integrated approach to economic and social contestability in business

Report n°2: An integrated approach to economic and social contestability in business

Anticipating risks to the community is a rational business choice

From the point of view of managing threats, there is a link between economic contestability and social contestability based on health or the environment. The link is economic, and not solely ethical, because where the materials on which the established recycler's activity is based are seen as risks to the community, the threat of contestation becoming real contestation would have a negative effect on access to supplies of waste material. The recycler will therefore (i) assess potential risks in advance, and (ii) try to identify future changes to environmental regulations. The recycler's objective is in fact to preserve his access to sources of the materials he needs to satisfy the demand of his principal downstream customer. The requirements of this customer are the basis from which the recycler defines the best mix of scrap materials to collect and subsequently the best strategy to coordinate suppliers' collect efforts upstream. Where a social contestation targeting the activity arises, the relevant public authorities may change the extent to which resources are available. Regulatory changes, or even the organisation of parallel branches, would profoundly destabilize the supply of materials to the recycler. It would encourage the entry of new collectors or of new recycling operator(s) who would offer an integrated business solution to resolve the economic and environmental problems identified. The arrangements made by the recycler therefore aim to reduce the threats of both economic and social contestation, but they also erect barriers to entry.