Business and society ethics sustainability and stakeholder management 9e chapter 15

Chapter Outline• The Sustainability Imperative • The Natural Environment • A Brief Introduction to the Natural Environment • The Impact of Business upon the Natural Environment • Respons

© 2015 Cengage Learning 1

Chapter 15

Sustainability

and The Natural Environment

Learning Outcomes

1 Discuss the concept of sustainability, and compare

and contrast it with environmentalism.

2 Describe ten major natural environment issues.

3 Describe the NIMBY and its impact on

Chapter Outline

• The Sustainability Imperative

• The Natural Environment

• A Brief Introduction to the Natural Environment

• The Impact of Business upon the Natural Environment

• Responsibility for Environmental Issues

• The Role of Governments in Environmental Issues

• Other Environmental Stakeholders

• Business Environmentalism

• The Future of Business: Greening and/or Growing?

• Summary

• Key Terms

Sustainability and the Natural Environment

Sustainability

-•Business that meets the needs of the present without compromising the ability of future generations to meet their own needs

•Akin to walking lightly on the earth, taking only what’s needed, and leaving behind enough for future

generations to have access to the same resources

•Sustainability means running the global environment – Earth, Inc – like a corporation: with depreciation,

amortization and maintenance accounts

•Keeping the asset whole, rather than undermining

your natural capital

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The Sustainability Imperative (1 of 2)

• Businesses used to label the environment an

externality and paid no attention to the damage

they caused Now, it requires action, both a

necessity, and an opportunity CERES identifies

several key drivers:

Competition for resources - demand is growing more

quickly than they can be replaced

Climate change - business must be prepared to

respond to new policies regarding emissions, and to take advantage of new technology

Economic globalization - wide disparities in social and

environment standards bring risks and

opportunities

Connectivity and communications - stakeholders can

monitor and react to sustainability efforts more

quickly Reputations are quickly built and

The Sustainability Imperative (2 of 2)

• A leading advocate of business sustainability is

Unilever The CEO sought out long-term

investors as shareholders, rather than term hedge-fund managers, banned quarterly earnings reports, and embarked on a 10-year plan As of 2012, Unilever had:

short-• Health & Hygiene – reached 224 million people

• Improving nutrition – a majority of products

met national standards, with 18% meeting

highest nutritional standards

• Greenhouse gases – impact was reduced by 6%

• Waste – impact per consumer was reduced by

7%

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The Natural Environment

• For years, businesses conducted their operations

with little concern for environmental

consequences They consumed significant amounts

of materials and energy, causing waste

accumulation and resource degradation

• They caused major air, water and land pollution

problems They looked the other way, labeling the negative consequences of their actions as

externalities – side-effects or by-products not

intended, and often disregarded

• Any environmental effort usually came from

compliance or efficiency Businesses would stop

damaging the environment only when it became

illegal or unprofitable to do so

• Now, environmentalism is becoming profitable.

A Brief Introduction

to the Natural Environment

• This chapter focuses on the natural environment –

what it is, why it is important, how it has become a major concern, and what businesses and other

organizations have done to it or for it

• The environment has become one of the most

significant societal issues of our time

• To help you make environmental business decisions

in the future, we’ll describe the variety of responses humans and businesses have developed to address these issues, and present facts and figures

• The emphasis is on two themes:

• Humans are part of their natural environment

• The environment is complex, defying simple

analyses

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Glossary of Environmental Terms

The Impact of Business

on the Natural Environment The Top Ten fundamental environmental

issues:

1.Climate Change

2.Energy

3.Water

4.Biodiversity and Land Use

5.Chemicals, Toxics, and Heavy Metals

6.Air Pollution

7.Waste Management

8.Ozone Layer Depletion

9.Oceans and Fisheries

10.Deforestation© 2015 Cengage Learning 11

Climate Change

Climate change global warming creates the:

Greenhouse effect - the prevention of solar heat

absorbed by our atmosphere from returning to space, causing an unprecedented rate of warming

•Hurricane Katrina, a European heat wave, and

starving polar bears are all signs of warming

•The probability that humans are changing the climate

is greater than 90%.

•The U.S Chamber of Commerce opposes controlling

emissions which contribute to climate change Some CEOs felt so strongly about this that they quit the U.S Chamber

•Nearly all legitimate scientists fear the possibility of

swift and radical climactic changes.

Global Carbon Dioxide Emissions

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• A major environmental issue is energy inefficiency,

wasting nonrenewable sources of energy

• Fossil fuels such as coal, oil and natural gas were

formed millions of years ago under unique

conditions; once they are depleted, they will be

gone forever

• Because such fuels are not equally distributed

around the world, disastrous armed conflicts result

• Businesses should use as little non-renewal energy

as possible, and shift to renewable sources such as solar, wind, hydroelectric, biomass

• Energy represents a challenge and an opportunity;

firms that succeed in this area will reap big profits

• Both quality and quantity of water

endangered

Quality – Degradation of oceans & waterways

• Municipal sewage, Industrial wastes

• Urban runoff, Agricultural runoff

• Atmospheric fallout, Overharvesting

• Dam sedimentation, Deforestation

• Overgrazing, Over-irrigation

• More than a billion people lack clean water

• Quantity –

• Earth is a closed system with a fixed water

supply; growing populations use more water

• The world is facing water bankruptcy .

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Biodiversity and Land Use

ecosystem, serves as a key indicator of its health It

is being lost at an unprecedented rate

•Ecosystem and habitat destruction, pollution,

other excesses in individual and organizational

activities are responsible.

•The current rate of extinction is 1,000 times

higher than the natural rate

•Land degradation threatens the livelihood of more than one billion people , especially in Africa, the

continent most affected by drought.

Chemicals, Toxics and Heavy Metals

Toxic substances -

•Chemicals or compounds that may cause

damage to the nervous system, reproductive and developmental problems, cancer and

genetic disorders - & the environment

•Can be intentionally or unintentionally

created.

•Two main problems -

1 We are not always aware of the effects of

exposure to chemicals.

2 Toxic substances can be associated with

industrial accidents, causing unforeseen widespread biological damage.

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•Depletion of the ozone layer

•Serious respiratory illnesses

Indoor Air Pollution –

•Comes from oil, gas, kerosene, coal, wood and tobacco products, building materials & furnishings, damp

carpets, household cleaning products and lead-based paints

•Long term effects , respiratory diseases, heart disease and cancer, can be fatal

Waste Management

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Waste Trends in the U.S.

•The ozone hole in our atmosphere has been greatly reduced since 1993

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Oceans and Fisheries

Watershed - an area that drains to a common

waterway We all live in a watershed

•Trillions of gallons of sewage & industrial waste are dumped into marine waters each year

•These & other pollutants do significant damage

coastal ecosystems, resulting in shellfish bed closures, seafood-related illnesses, and reduced shoreline

protection from floods and storms

•Once inconceivable, now 85% of the world’s fisheries

are at capacity, over capacity or have collapsed The oceans are running out of fish to meet human needs

•Conservation efforts have helped some species

recover, and such efforts continue

• Humans depend on forests for building

materials, fuel, medicines, chemicals, food,

employment and recreation.

Deforestation -

• Adds to soil erosion problems

• Plays a key role in global warming; Felled trees

can no longer absorb carbon dioxide Dead trees release it into the atmosphere

• Accounts for 20% of global carbon emissions –

more than the world’s trains, boats and planes combined

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Responsibility for Environmental Issues

• Wicked problems - (smog, toxic waste and acid

rain) are problems with complexity, uncertainty,

interconnectedness, ambiguity, conflict, and societal constraints When no one takes responsibility -

• Tragedy of the commons – is likely to occur

• A “commons” (our environment) is a plot of land

available to all

• Constraints must be placed on the use of the

commons because self-interest is likely to lead

individuals and organizations to behave in ways that will not sustain our shared resources

Environmental Ethics

• Humans must consume at least some plants and

water to survive What level is ethical? Which

school of environmental thought should we

apply?

• Kohlberg – levels of moral development

• Utilitarianism – greatest good for greatest number

• Integrating sustainability into a firm’s philosophy

is a natural extension of stakeholder theory,

including as a stakeholder the ecological system

from which the firm obtains resources and to

which it bears responsibility for its impacts, both positive and negative

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The NIMBY Problem

Not in my Backyard: NIMBY -

•Reflects human denial of responsibility for misuse

of the environment.

•Entities causing environmental pollution are not

identified as the sources of the problem, so no

• “Honk if you love the environment.”

The Role of Governments

in Environmental Issues

• Governments have played major roles in

environment issues:

• developed habitable lands ,

• protected, taxed and zoned natural

environment-based areas, and

• exercised regulatory control over how those

environments could be used

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Responses of Governments

in the United States (1 of 5)

National Environmental Policy Act (NEPA,

1970)

•permit required for discharge of hazardous waste into navigable waters

•requires federal agencies to prepare

Environmental Impact Statements (EISs)

Environmental Protection Agency (EPA, 1970)

•An independent agency to research pollution

problems, aid state and local government efforts, and administer many federal environmental laws

Responses of Governments

in the United States (2 of 5)

Air Quality Legislation – The Clean Air Act

•Sets standards and timetables for implementation

•Created Emissions trading ( Cap and trade )

• Intended to reduce a particular pollutant over

an entire industrial region by treating all emission sources as if they were beneath one bubble

• A business can increase its emissions in one

part of a plant or region if it reduces its pollution by as much or more in another part

of the plant or region.

• Businesses that reduce their emissions can

trade them to other businesses, earning income.© 2015 Cengage Learning 29

Responses of Governments

in the United States (3 of 5)

Water Quality Legis – The Clean Water Act

•Involves both state and federal governments

•Goal: to achieve water quality safe for humans, and protection of fish, shellfish and wildlife

•Banned discharge of pollutants into navigable

waters through pollution permit system

•Set timetables for installation of state-of-the-art

pollution control equipment

•Marine Protection , Research & Sanctuaries Act set

a similar system for coastal waters

•The Safe Drinking Water Act of 1974 establishes

maximum contaminant levels for drinking water

Responses of Governments

in the United States (4 of 5)

Land-Related Legis – Solid Waste Disposal Act

•State and local governments mainly responsible

•Resource Conservation & Recover Act set up a

regulatory system for tracking hazardous waste

•Toxic Substances Control Act requires businesses

to identify chemicals posing substantial risks

•Superfund (CERCLA) places responsibility for

remediation of hazardous waste dumps

•Emergency Planning and Community

all of their releases into the environment of any of more than 500 toxic chemicals

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Responses of Governments

in the United States (5 of 5)

Endangered Species –

•World’s species are disappearing at an alarming rate

•Nearly 11,000 species near extinction; another 2,300 are endangered; 5,000+ more are vulnerable

•There is still time to save (only) a majority if enough

resources are committed immediately

•Endangered Species Act (1973)

• Prohibits harm to endangered and threatened

species

• May require moving the species to another

location or restricting threatening business activities, resulting in intense political conflicts between business and environmental groups

International Government Environmental Responses (1 of 2)

• United Nations Environmental Programme

(UNEP) – has led the way in identifying global

environmental problems and resolutions:

• Montreal Protocol, 1987 - by which most

CFC-producing nations agreed to a quick

phase-out of these ozone-destroying

substances This was the first UN treaty to achieve universal ratification

• Global Waters Assessment – examines

problems and policy options re the problems

of shared transboundary waters

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International Government Environmental Responses (1 of 2)

• Rotterdam Convention – requires that countries

give explicit informed consent before hazardous chemicals cross their borders

• Global Compact – joins firms across the world to

support environmental and social principles

• Global Reporting Initiative (GRI) – a

collaborating center of the UNEP GRI developed

a sustainability reporting framework, now the

outlines principles and indicators that

organizations can use to measure and report

their economic, environmental and social

performance

Other Environmental Stakeholders

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Environmental Interest Groups –

•A collection of nonprofit membership and think-tank organizations has moved the world in the direction of environmental responsibility Known as “the

environmental movement,” they are responsible for the “greening” of nations

•Environmental interest groups have evolved, and

have been instrumental in significantly influencing business environmental policy

• Examples: Environmental Defense is working

with Federal Express on building a new generation of vehicles; with DuPont on developing nanotech standards; with PHHH

Arval on becoming the first carbon neutral

fleet

Environmental Groups Based on

Cooperation with Business