Lecture Business and society - Chapter 15: Sustainability and The Natural Environment

Contents: 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?

© 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

environmental problems.

4 Discuss the roles that business and

government play in environmental issues.

5 Explain the concept of environmental ethics Explain the concept of environmental ethics

© 2015 Cengage Learning 3

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

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

© 2015 Cengage Learning 5

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 destroyed © 2015 Cengage Learning 6

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 short-term hedge-fund

managers, banned quarterly earnings

reports, and embarked on a 10-year plan

As of 2012, Unilever had:

• 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%

© 2015 Cengage Learning 7

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© 2015 Cengage Learning 8

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© 2015 Cengage Learning 9

Glossary of Environmental

Terms

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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.

© 2015 Cengage Learning 12

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

© 2015 Cengage Learning 14

• 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 © 2015 Cengage Learningwater bankruptcy . 15

Biodiversity and Land Use

inside an ecosystem, serves as a key indicator

of its health It is being lost at an

•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.© 2015 Cengage Learning 16

Chemicals, Toxics and Heavy

•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.© 2015 Cengage Learning 17

•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

© 2015 Cengage Learning 18

Waste Management

© 2015 Cengage Learning 19

Waste Trends in the U.S.

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(CFCs) and other chemicals.

•The ozone hole in our atmosphere has

been greatly reduced since 1993

© 2015 Cengage Learning 21

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

© 2015 Cengage Learning 22

• 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

© 2015 Cengage Learning 23

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

© 2015 Cengage Learning 24

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

which the firm obtains resources and to which

it bears responsibility for its impacts, both

positive and negative © 2015 Cengage Learning 25

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 action is taken.

•A NIMBY attitude avoids or denies the root

•One popular cartoon pictures a stream of

polluting, honking cars passing along the

highway in front of a billboard that reads:

• “Honk if you love the environment.”

© 2015 Cengage Learning 26

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

© 2015 Cengage Learning 27

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© 2015 Cengage Learning 28

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

© 2015 Cengage Learning 30

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

annually all of their releases into the

environment of any of more than 500 toxic

chemicals

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•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© 2015 Cengage Learning 32

International Government

Environmental Responses (1 of 2)

• United Nations Environmental

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

© 2015 Cengage Learning 33

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 most widely used

standard in the world ; outlines principles and indicators that organizations can use to measure and report their economic,

environmental and social performance © 2015 Cengage Learning 34

Other Environmental

Stakeholders

© 2015 Cengage Learning 35

Environmental Interest Groups –

•A collection of nonprofit membership and tank organizations has moved the world in the

think-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