Abstract
This paper aims to show that sustainable behavior by firms may be impaired by regulatory restrictions. We challenge the assumption that regulation aimed at curbing greenhouse gas emissions (GHG) in the form of a target to meet the Country’s GHG emissions commitments will promote sustainable corporations. We argue that, in fact, such regulation may impair sustainability practices because it creates unintended consequences. This paper tackles the efficiency of the institutional framework chosen through the lenses of the analytical themes of fit, scale, and interplay, then we use a systems dynamic approach to represent how regulation in the arenas of energy efficiency and GHG emissions reduction may withhold competitive business outcomes and corporate sustainability schemes. We exemplify and simulate a single regulation scheme: a clean energy target for firms; and found that as a result of such scheme, the system is dominated by negative feedback processes resulting in lesser outcomes that would be better tackled by firms not being subject to the restrictions imposed by the regulation.
Highlights
Energy sustainability, as defined by the World Energy Council, is the balance between energy security, social equity, and environmental impact mitigation [1]
We address a single regulatory scheme, the Energy Transition Law, in a systems dynamic framework to show that regulatory constraints have unintended consequences in the non-market strategy of corporate sustainability in firms as a result of the feedback mechanisms that occur in complex socioeconomic systems
One hashas to to appreciate thethe optimism that businesses areare projecting towards thethe energy reform
Summary
As defined by the World Energy Council, is the balance between energy security, social equity, and environmental impact mitigation [1]. This definition is aligned with the concept of sustainable development, which aims to find a balance between economic, environmental, and social systems. The development of energy schemes that are stable, affordable, and environmentally viable is not simple, and solutions to this problem are complex. The number of stakeholders involved is large and quite diverse; any scheme to facilitate the balancing of these systems must consider that there are interconnections between the public and private productive sectors, governments, and regulators [1,2]. The state would maintain ownership and control of subsoil hydrocarbon assets [3]
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