Using Corporate Governance as a Tool to Ensure Compliance With Constitutional Environmental Rights in Kenya

Abstract

This study examines the application of corporate governance as a tool for ensuring corporate compliance with the constitutional environmental rights in Kenya. The rationale for this assessment is founded on the need to balance the regulation of corporate environmental impact with the important role of companies in the economy and society hence the need to sustain their operations. The thesis argues that environmental regulation as traditionally applied in Kenya under the framework law, Environmental Management and Coordination Act (EMCA) and as buttressed by sectoral legislation on the environment, presents two problems in relation to corporations. Firstly, the law as has been implemented has failed to control corporate environmental degradation as evidenced by the persistence of such degradation demonstrated in this study. This signifies inadequacy in the legal framework thereof. Secondly, the framework law presents potential harm of purely external (command-and-control) regulatory approach which can drive corporations out of business and even the market entirely. This is detrimental to the economy. If unaddressed, this approach may be transited into the implementation of the right to clean and healthy environment under the Constitution of Kenya, 2010 which is yet to take root. This situation therefore justifies an alternative approach for the actualization of the constitutional environmental rights. The balance required, the study argues, can be achieved by innovatively addressing the implications of constitutional environmental rights on corporate governance through the internalizing the former in the latter as the alternative approach. In pursuing its objective, this study examines the recognition of the right to a clean and healthy environment, and its potential challenges and implications on corporate governance in Kenya. The thesis proceeds from the organizing hypothesis that constitutional environmental rights have fundamental legal implications on corporate governance. It argues that such implications have to be considered as external costs which must be internalized by corporations to meet the demands of constitutional environmental rights in Kenya. This internalization marks the optimal interaction between corporate governance and constitutional environmental rights in Kenya. The hypothesis is proved by assessing data obtained through library, documentary and Internet research. The findings indicate that, optimally, the constitutionalization strengthens the framework law on environmental protection. It also strengthens corporate law in relation to corporate environmental management and compliance. Particularly, the right, if optimally internalized, shall contribute to corporate environmental management in Kenya by: enhancing the enforcement of environmental law; ensuring environmental accountability; improving access to information; public participation in environmental decision-making and access to environmental justice. Furthermore, the thesis incorporates arguments suggesting a positive relationship between explicit constitutional environmental rights and corporate environmental performance. On this aspect, the study argues that constitutionally compliant corporations in Kenya will have minimal, if any, negative environmental impact and rank higher on comprehensive environmental indicators. In conclusion, the thesis argues that constitutionalizing environmental protection represents a potentially transformative process, capable of reconfiguring legal systems and processes on environmental protection and corporate governance to place priority on corporate sustainability. The thesis argues that constitutionalizing environmental rights in Kenya has the broader implication of requiring internalization thereof as externalities in corporate governance. The thesis thus makes proposals for optimal internalization and corporatization of the constitutional environmental rights. Such proposals include: corporate environmental management systems, disclosure and reporting requirements, responsible investment, restructuring for environmental management, review and enforcement of the framework law as well as corporate law.