The myth of self-regulation

The concept of self regulation is a simple one. An industry polices itself to make sure that they comply to an agreed code of conduct. There is just a tiny problem to this plan – it’s rubbish. It reminds me of a line from the Pirates of the Caribbean when Barbossa was explaining the Pirate's Code : " The code is more what you'd call "guidelines" than actual rules."

Chances are, it would probably be in the best (short term) financial interests of the company to act against its own industry code and, because there is self-regulation, there is no need for management to weigh up the cost of contravening the code with the benefit to be obtained from ignoring it.

There is no leverage to ensure that the individual company adheres to its own code.

This was evident in the case of Hungry Jack’s in Australia contravening the industry code regarding marketing of children’s meals with too high a fat content. They weren’t supposed to, but they did it anyway.

They weighed up their commitment to self-regulation against another contractual obligation and the contractual obligation won. Why? If they didn’t, they would lose money. Unfortunately, impact to the bottom line is often the only language most corporates understand.

But consumers have the ability to influence customer behaviour. Unless we change the way we interact with companies, they will continue to heed the call for more shiny things that cost less as opposed to the call for sustainable business practices.

This is the kind of industry self-regulation that will work. If companies don’t behave in a responsible manner, stop buying from them. Immediately.

The leverage of money, spending it and withholding it, is an incredibly powerful leverage. As consumers we need to start using it.

Interesting reading and viewing :

Hannah’s rules : Rise of the ethical consumer

Building values into business

It's (still) good to be good