Law and morality in the business and society

Junior (College 3rd year) ・Management ・MLA ・5 Sources

Law and morality in business and society Due to war and the influence of different ideologies, political philosophies, and value judgments throughout the 20th century, the state's economic frontiers have fluctuated between contraction and expansion. The largest country in the world served as a night watchman, maintaining law and order as well as providing defense, prior to the First World War (Helm, 1986). The state now plays a significant role in providing mental and physical health, education, social security, and other decisions related to resource allocation. Nevertheless, in recent years, the government has become more involved in the economy. The most recent development has been linked to the global financial crisis, which has made room for more state growth. for instance nationalization of a financial institution, automotive sector bailout in the US and synchronized fiscal stimulation by G20 nations account for 1.2%  of their GDP (Bowen and Stern, 2010). 

Also, there has been stating capitalism with governments controlling the oil companies and profits invested by sovereign wealth fund to deliver political influence and financial returns (Bremmer, 2009). The western democracies’ financial crisis is temporary making state contraction imminent due to weak public balance sheets. Most governments are expecting to reduce spending and re-evaluating the priorities of public expenditure, including environmental aspect, which is necessary and inevitable. Therefore, contraction and expansion of the state significantly affect the environmental policy, triggering the examination of the suitable scope and government’s role in environmental protection (Financial Times, 2009). The problem strongly emphasizes on considering the government and market failure, which calls to examine the role of markets and government during economic growth and downturns.

The paper focuses on the design of the National Environmental Policy Act, outlining the role of the market and the state government. The next part provides the history and current situation of the Environmental Act and why it is essential and implications of the act. The other section traces the implementation of the Environmental Act in a state’s consumers and firms as well as addresses the market and government failures. Also, the research focuses on the impact of the policy on the business and society. In the analysis of the act, the paper discussed the weaknesses and strengths of the act. This section also recommends actions that can improve the environmental outcomes. The final section concludes by summarizing the main points discussed in the research.

The History and Current Situation of the National Environmental Policy Act 

The National Environmental Policy Act (NEPA) was among the primary laws written to establish the great national structure for guarding the environment. The fundamental plan of NEPA is to ensure that all government divisions provide appropriate contemplation to the situation before assuming major state actions, which considerably affects water, air, and land. The requirements of the act are raised when buildings, parklands purchases, airports, highways and military complexes are proposed. The policy requires that all federal agencies conduct environmental impact statements (EISs) and environmental assessments (EAs) to evaluate the possible impacts from all alternative courses of action.

The establishment of NEPA was fueled by the increased concern and appreciation of the environment, resulting from the Santa Barbara Oil spill in 1969. After the event, the environmental movement and interest groups emerged after the Rachel Carson released her book ‘Silent Spring’ in 1962. The book also assisted in passing the clean air, clean water, and wilderness Acts. The other major event that motivated enacting of NEPA was the highway revolts in the 1960s, which were various protects by American cities that were caused by an act of bulldozing the ecosystems and communities in the US as the government constructed the interstate highway system (Anderson, 2013). The 1960s was the time environmental awareness was invented, connecting the regulatory measures with the information collected from assessments. The USA National Environmental Policy Act of 1969 explicitly binds the ecological data and politics.

Since the passage of NEPA, the act has been employed on major projects of the local or federal level, which involve work done, funded or permitted by the federal government or agency. The NEPA requirements are also expanded by the decisions of the court relating to the environmental studies. It includes the actions funded and managed entirely by the private sectors and permitted by the federal agency. This action is fulfilled because the federal agency needs more than one employee such as contractors to approve and process the application for the permit. As a result, the federal funds that are used to support the actions proposed, although the finances are not allocated directly by the government to implement the action.  

The NEPA’s preface emphasizes that the national policy encourage the enjoyable and productive harmony between environment and man. It also mentions the promotion of efforts that eliminate and prevent environmental and biosphere damages as well as stimulation of human welfare and health. Also, it includes the need to enrich the insight regarding the natural resources and ecological systems that are of national importance. Moreover, the Act has three main sections and the first consist of environmental goals and policies (Anderson, 2013). The second contains the provisions for the federal agencies regarding enforcing the goals and policies, and the third section establishes the Council on Environmental Quality (CEQ) in the executive office of the President who advises the president on issues of the environmental state and policy.

The Implementation of NEPA 

The purpose of the National Environmental Policy Act of 1969 is the foundation of the environmental laws of the Nation and was passed to safeguard data about the environmental effects arising from the stated funded projects is accessible to the citizens and communal officials before making judgments or taking actions. The Council on Environmental Quality (CEQ) as founded by the act assists the federal government in implementing the provisions in the planning and execution phases of any federal projects. The regulations combined with the implementation procedures of the NEPA federal agency assist in ensuring that environmental impacts arising from the proposed decisions are considered thoroughly, and proper actions are carried out to prevent or mitigate any potential environmental damages. 

The implementation of the Act is affirmed by encouraging the federal agencies to apply for the process of NEPA in the early stages of the project to ensure that the actual and potential environmental impacts are considered. According to the Section 102 (A) of the NEPA, a project requires following the interdisciplinary and systematic approach by examining the social and natural sciences as well as the environmental design arts, which should be employed during the decision making, planning and evaluation of any project (Anderson, 2013). Many agencies issue the procedures of the NEPA implementation. They describe the key actions that call for preparation of the environmental impact statement (EIS).

Activities that are included have the permission to conduct an environmental assessment, which can result in two ways. The first one is finding No Significant Impact (FONSI). The second option is preparing a formal environmental impact statement (Anderson, 2013). When the officials decide to formulate an EIS, the federal register publishes the notice of intent (NOI). It provides an invitation to every involved group and agencies together with the interested party to take part in the process of governing the issues as well as the scope addressed in the Statement regarding the environmental impacts.  

Impact of the Act on Business and Society

Since the enactment of the first environmental regulation in the 1970s, there has been an issue concerning the potential impacts on the society and business. The management balance amid environmental constraints and economic and social impacts have been a continual dilemma (Haklay, 2003). The global financial crisis together with the high competition from the economies that are emerging has increased the complexity of the debate particularly on the issue of climate change and the suitable policies.

According to the traditional economists believe that environmental regulations increase the cost to organizations and reduce productivity. Therefore, rules concerned with the environmental issues affect the competitiveness of the local industry, especially is policies are different in various countries. It implies that some companies are disadvantaged by their foreign competitors. Alternatively, a view that embraces environmental regulation fosters innovation that develops technologies that are friendly to the environment (Bremmer, 2009). Such regulated firms attain technological leadership and boost extensive economic growth. These perspectives have been considered as important aspects by the policymakers that can boost the economy, especially during the current financial downturn.

The other critical environmental issues that affect the society and business include waste, air and water emissions and sustainable raw material development. They affect the society and industry as the laws need the people for change to procedures and equipment that meet the set standards, which can cost a lot of money. For some people, they protect the environment by undertaking strict changes with the aim of preserving the environment by doing the right things (Haklay, 2003). Such individuals and companies pay for proactive and protective measures and try to recover expenses via added consumer base or consumer goodwill to gain a policy that is environmentally friendly. 

Companies manufacture using raw materials to produce the good that can be used by people in the society. When raw materials are extracted naturally such as wood, the good environmental nationality and laws call for the people in the community and business to adhere to the measures of replacing already used resources. For instance, sellers buy the Christmas tree from growers harvesting and replanting them to prevent depletion of the whole forests of pine tree that occur naturally. 

Also, the business is affected regarding the cost of the purchases raw materials, and in the previous example, the supplier will increase the cost to cover for restocking and replanting the raw materials (trees) for the natural environment. Similarly, other environmental issues such as water and air emissions have laws for protecting the environment that requires companies to avoid exposing people to hazardous conditions. When regulations are implemented, they require the manufacturing facilities to retrofit as well as safer materials. These new measures to prevent pollution of air and water add extra costs to the business, which can decrease the profit margin.

Market or Government failure

The environmental policy is designed to address both market and government failures. It considers the role of the market and government in economic growth and downturns. It is incredibly challenging to support that free market can control itself to offer environmental safeguard that is more high-class than provided the state regulations. Before the global financial crisis of 2008 to 2009, it was viewed that showed the business regulation was unnecessary because the private parties regulate the risks in the financial markets (Greenspan 1994). Although it seems evident that people require government policy during environmental protection, it is essential to understand how far markets can offer environmental protection without interventions of the state.

Market Failures and Environmental Protection

Two arguments show that companies can take some actions to safeguard the environment devoid of government regulation. The first view is if the customers are informed regarding the environmental issues and are nobly ready to bear the cost of protecting the environment, then companies can deal with environmental problems through serving their clients with satisfying preferences. Furthermore, by doing so, firms will increase their profits. For example, a voluntary market that is flourishing in carbon offsets because the people voluntarily pay companies to retire credit and reduce emissions on their behalf has grown exponentially recently and was in 2008 worth more than $400 million (Ecosystem Marketplace, 2009). Environmental protection that is led the consumer does not need corporate social responsibility (CSR), which is forego returns to cater for social interests (Reinhardt and Stavins, 2010) since companies are delivering services and goods that consumers demand. 

Even though some consumers can willingly adopt their externalities, most of them are not kind. For that reason, voluntary markets meant for environmental protection can remain margin when compared with government initiatives in the absence of cultural shift, which is unlikely to happen. The government has dwarfed the voluntary carbon markets by crafting emission marketing approach, which companies are lawfully forced to conform. Although the optional market was valued at $400 million, the compliance with carbon markets in 2008 was worth about a thousand times more at $120 billion (Capoor and Ambrosi, 2009). According to Reinhardt and Stavins (2010), argues that since most clients are unwilling to voluntary pay for externalities, the firms should consider the CSR limits. They should legally sacrifice their profits for the sake of public interests. When market imperfections offer companies with rent that help then make these sacrifices by sustainability, managers will be willing to devote part of the shareholder's returns to protect the environment voluntarily. 

The prove implies that clients and shareholders are reluctant to voluntary sacrifice pay and profits respectively to safeguard the environment. Therefore, environmental challenges cannot be solved by solutions led by markets of the free market. Nevertheless, people that are not willing to sacrifice individually may be prepared to act as a group or collectively (Sen, 1967). However, the actions can occur if the government provides coordination via mechanisms for real enforcement such as policies and laws that force people and firms to comply with particular standards.

Government Failures and Environmental Protection

The free market that is unaided cannot be depended on to protect the environment; thus, there is the need for the government to assist in developing controlling the environmental markets. A common mechanism that states have used is the emission trading schemes that offer firms with the flexibility of the way they can meet environmental objectives. Therefore, the government sets the objectives, which the market should deliver. However, the government, just as a market, is not a perfect planner. The first reason is that government does not have complete information. Stern (2009) outlines that there is so much information about imperfect economies; thus, there is the need to explore optimal policy as people introduce imperfection in the perfect economy.

Incomplete information is one of the imperfections that are critical and pervasive. Different areas of the environmental policy require optimal and substantial information. Optimum is determined by aggregating multifaceted scientific information about the damages, consumer preferences, which can be valued regarding money and obtain detailed information regarding the aggregated abatement costs of the private sector. Such information relies on the price based approach that balances the benefits and the cost of an action or method. According to Dietz and Fankhauser (2010), there have been uncertainties regarding pricing of climate changes; thus, pragmatic and best ways are used to address the uncertainties. The planning based intervention requires the government to understand the abatement cost function of every firm, which is not easy to obtain. 

The other reason for the failure is that the government consists of people who are exposed to manipulation, promoting and influence by people with the incentive to shape laws that benefit them. The considerations of political economy such as regulatory capture usually prevent the government using interventions meant to generate something that resembles optimal policy (Anthoff and Hahn, 2010); Helm, 2010). Besides being aware of the rent-seeking issues do not assist the government to overcome this problem. The US policymakers have the benefit of looking for emission trading schemes, which are inefficient because powerful incumbents are paying a large amount of money to emit more emissions. Other policy instruments; for instance, environmental taxes can even work better than schemes. Therefore, the government needs to focus on realistic taxes and trading schemes that touch on the issues observed from most interest groups that are likely to manipulate the policies.

Policy Analysis

There is the need to generate knowledge about the environmental problem to be able to interact with the surrounding and make it continue providing amenities and resources for humans of the current and future generations. The task is difficult as the atmosphere; ecological systems, sun, oceans, and earth are individually complex, making their interactions more complex. The national environmental policy action has been the legal tool that ensures these complex interactions are understood and that the environment is protected. However, this tool has both its strengths and weaknesses, which need to be addressed.


The policy has created the monitoring and institutional structures that ensure the environment is protected during projects, which are evaluated through a single assessment. Control has different types and purposes, which differ in the applications of quantity and quality. The policy has established long-term measurements of the environmental processes. For instance, the global measurements of the sea levels, atmospheric concentrations of carbon dioxide, ozone concentrations have been developed to provide long-term data that can help in alerting the people and preventing serious environmental problems.

Moreover, NEPA ensures that any federal action prepared an environmental impact statement before starting any project. There is new development in effects and large experiments that are performed on the environment of the nation. The process of EIS understands the project, thus giving the policy a full cognizance and advantage of learning the new experiments and the current problems that need to be addressed. Moreover, the EIS is intended to disclose the statement that a project is commencing legally as well as the current environmental conditions and potential impacts in every course of action. Therefore, the policy ensures that when large federal projects are in effect, any pollution on land, water and air is prevented to keep people safe.

The policy also provided the regulations that ensure continuous monitoring and one of them is the environmental impact assessment (EIA). This process ensures that vital information is generated from the projects that can help compare the environmental effects of the operation and construction predicted and the actual results and effects. It also helps in learning the type of effects that are usually not considered but have significant impacts on the environment. Therefore, such discoveries helps in revising the requirements, goals and procedures needed to ensure that the projects reduce adverse effects on people and environment.  


One of the weaknesses of the policy is the underfunding of the trend and baseline monitoring in the US. The institutions that exist are poorly designed and cannot support or strengthen the monitoring processes. Agencies that are mission oriented are usually deflected due to the crisis of mouth syndrome that draws off resources from long-term programs. Agencies that provide basic funding such as the NSF focus on long term monitoring rather than innovative proposals. Also, they only tap small amounts of the rich resource offered by talented and concerned amateurs. Amateur climatologists provide long term weather observations and their advantage is that they gather information at lower costs.

The other weakness is that the government views monitoring as a pedestrian activity that has little intellectual challenge. Therefore, it pays little or no attention to the design of statistical analysis and monitoring programs that assist in generating data. It is difficult to sustain the baseline and trend monitoring programs as they require insulation from political influence and concerns, capacity to synthesize and store data, long-term funding stability and the capability to regularly communicate produced information to users. Also, the current monitoring program lack adequate scientific credentials and ate not protected from political and environmental crisis. Therefore, some have conflicting missions meant to evaluate the environmental changes and develop and enforce regulations.

Conclusion and Recommendations

Environmental policies are meant to design both government and market failures. The national environmental policy act is one of the policies used to protect the environment from downturn arising from government and market failures. It provides the framework for conducting projects that consider the environmental aspects such as air, water and land. Through the EIS and EIA, any federal project presents the potential impacts and the means of mitigating them; therefore, all the projects are carried out in a safe manner. However, there are some weaknesses in the monitoring process that need to be improved. 

For that reason, the paper recommends that the government should include the producers and users of information during the development of the aspects of the system such as the quality control, experiments design, archiving and interpretation of the data as well as the system design that permit easy access of data. There is also the need to use standardized formats that is produced software that is user friendly to ensure users access the information easily. Additionally, the study also recommend the government to avail sufficient funds to collect and store new data that is collected as well as for monitoring process that will help in improving processes that are in use.


Anderson, F. R. (2013). NEPA in the courts: a legal analysis of the National Environmental Policy Act. New York: Routledge.

Bowen, A., & Stern, N. (2010). Environmental policy and the economic downturn. Oxford Review of Economic Policy, 26(2), 137-163

Bremmer, I. (2009). State capitalism and the crisis. McKinsey Quarterly, 1-6.Financial Times (2009). ‘Novice Treasury bones up on thrifty ways to make deep cuts’, 8 September, p. 3.

Haklay, M. E. (2003). Public access to environmental information: past, present and future. Computers, Environment and Urban Systems, 27(2), 163-180.

Helm, D. (1986). The assessment: the economic borders of the state. Oxford Review of Economic Policy, 2(2), 1-24.

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