Performance-Based Regulation and Corporate Social Responsibility

Recently, I've been doing a lot of research on performance-based regulation in health law for a class at uni, mainly in relation to childhood obesity and tobacco addiction. Performance-based regulation is basically a type of regulation that provides certain targets to be met by regulated industries, and according to Stephen Sugarman in his 2005 article 'Let's Try Performance-Based Regulation to Attack Our Smoking and Obesity Problems', is a legal strategy that seeks to avoid the shortcomings of traditional 'command-and-control' regulation. (at 30)

An example of performance-based regulation is to tell McDonalds Corp, for example, to reduce obesity rates by say, 10 percent. Why McDonalds? The idea of performance-based regulation is that it is targeted towards companies that are considered to be the greatest contributors towards the problem at hand - in this case, obesity. McDonalds could then choose any way to reduce those obesity rates, via direct methods such as introducing healthier options in their restaurants, or indirect methods, such as sponsoring community sports projects.

Performance-based regulation is therefore a form of corporate social responsibility in that it ensures that companies that make money out of people's unhealthy habits do something to help reverse the effects of their products on public health.

A big issue that perturbs me is the issue of tobacco addiction in Malaysia. As the daughter of a respectable cancer specialist, throughout my life I have been aware of the dangers of tobacco addiction, and have watched helplessly as most of my male friends in Malaysia succumb to the smoking gun, so to speak. In one of my previous blog posts, I observed that 80% of Malaysian males from 15-40 smoke. Although cigarette prices have increased throughout the years in Malaysia, I can quite confidently say that rates of smoking are still through the roof, and re-addiction to cigarettes in Malaysia is ubiquitous.

Should the Malaysian government target companies like British American Tobacco (Malaysia) and other such tobacco companies using performance-based regulation? Why not? Corporate social responsibility-wise, BAT has taken steps to tell its customers about the dangers of smoking and how to quit. On its website at http://www.batmalaysia.com/group/sites/BAT_7RYJ8N.nsf/vwPagesWebLive/DO7SUKJF?opendocument&SKN=1/, they state that they believe that people can quit provided the motivation is there. The website also contains a section on health risks of smoking and their views on smoking. BAT's view on smoking is interesting: Our business is not about persuading people to smoke; it is about quality brands to adults who have already taken the decision to smoke. (Ibid)

I am inclined to hurl, like many of you out there, but one thing we have got to realise is that tobacco companies are not inherently satanic; like any other company out there, they have revenue and profit targets to meet. They provide jobs to Malaysian citizens. Their managers and directors and employees alike have kids at home who they want to protect from the evils of tobacco smoking and passive smoking.

It is wonderful that BAT has taken the steps to inform the consumers of their products of risks etcetera, but is this only a pretty little facade? That is a question for another day. What is pertinent for us to consider is whether performance-based regulation could be implemented succesfully in Malaysia to target companies such as BAT, McDonalds, and Coca-Cola, among others. It's an interesting notion, that's a given. As far as how companies will respond to it with regard to budgetary issues remains to be seen, but what is clear is that the best point of performance-based regulation is with regard to its flexibility.