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

© 2015 Cengage Learning Chapter 15 Sustainability and The Natural Environment © 2015 Cengage Learning Learning Outcomes Discuss the concept of sustainability, and compare and contrast it with environmentalism Describe ten major natural environment issues Describe the NIMBY and its impact on environmental problems Discuss the roles that business and government play in environmental issues Explain the concept of environmental ethics ethics © 2015 Cengage Learning 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 © 2015 Cengage Learning 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 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 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 shortterm 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 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 so Now, environmentalism is becoming profitable © 2015 Cengage Learning 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 Glossary of Environmental Terms © 2015 Cengage Learning 10 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 Right-toKnow Act requires manufacturers to report annually all of their releases into the environment of any of more than 500 toxic chemicals © 2015 Cengage Learning 31 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 © 2015 Cengage Learning 32 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 © 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 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 © 2015 Cengage Learning 35 Environmental Groups Based on Cooperation with Business © 2015 Cengage Learning 36 Ecoterrorists & Green People • A new category of activists are ecoterrorists They are different from the radicals, because they employ violence to achieve their goals Ecoterrorism is criminal Green consumers - actual and potential customers of retail who express preferences for environmentally-friendly products and services Green employees - play a major role in promoting environmentalism at work Green investors – people and organizations who prefer to invest with firms that are associated with environmentally-oriented companies A growing number of bond offerings, money market fund and other financial instruments © 2015 Cengage Learning now include environmental components 37 Business Environmentalism • These firms cared about the environment before caring about the environment was “cool.” • Patagonia – Recycled decades before others • • Made its outdoor gear out of old plastic soda bottles • Switched to organic cotton when it was rare; cotton sales grew 25%, and an organic cotton industry thrives today; and much more 3M Company – adopted a sustainability program • Began a pollution prevention program 30 years ago • Developed a replacement for CFCs, and profited • In 15 years, cut organic air emissions by 95%, toxic releases by 94%, and greenhouse gas emissions by 45%; and much more © 2015 Cengage Learning 38 Business and Environmental Activist Partnerships • The shift in the relationship between business and environmental activists is represented by the case of Adam Werbach, once the youngest president of the Sierra Club, and Walmart, a company he once called “a new breed of toxin.” With Werbach, Walmart lowered energy use, but the reaction to their partnership was intense Werbach, who had been a leader in the environmental community, was shunned He was fired by his small consulting firm, old friends would not speak to him and he was threatened by strangers But both parties remained committed to the partnership Werbach showed that it was possible for business and environmental activists to work together Today, examples are everywhere © 2015 Cengage Learning 39 Systematic Business Responses to the Environmental Challenge • Various management approaches are available for use in selecting or constructing an environmental strategy, including: • Crisis management – focus on prevention and contingency plans • Issues management – track public interest and develop plans to minimize problems • Stakeholder management – stakeholders for the environment can be identified, and interactions planned © 2015 Cengage Learning 40 The Future of Business: Greening and/or Growing? • The salient environmental question: • How much is enough? • • How much economic growth? How much materials and energy? • Limits on growth are not popular But the problem with unrestrained economic growth is that, unless technology or people change significantly within a generation, environment problems will change in degree from significant to severe severe © 2015 Cengage Learning 41 Key Terms (1 of 2) • • • • • • • acid rain air pollution biodiversity cap and trade carbon neutral Ceres Principles Ceres “Roadmap to Sustainability” • clean air act • Clean Water Act • • • • • climate change deforestation ecoterrorists emissions trading Endangered Species Act (ESA) • energy inefficiency • environment • Environmental Impact Statements (EISs) © 2015 Cengage Learning 42 Key Terms (2 of 2) • Environmental Protection Agency (EPA) • externalities • fossil fuels • global Compact • Global Reporting Initiative (GRI) • global warming • greenhouse effect • Montreal Protocol • NIMBY • • • • • • • • • ozone Superfund sustainability toxic substances Toxic Substances Control Act tragedy of the commons triple bottom line watershed wicked problems © 2015 Cengage Learning 43 [...]... 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 © 2 015 Cengage Learning 34 Other Environmental Stakeholders... © 2 015 Cengage Learning 15 Biodiversity and Land Use Biodiversity - The variation of life forms inside an 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...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 © 2 015 Cengage Learning 11 Climate Change Climate change global... independent agency to research pollution problems, aid state and local government efforts, and administer many federal environmental laws © 2 015 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... ambiguity, conflict, and societal constraints When no one takes responsibility - © 2 015 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... 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 © 2 015 Cengage Learning 25 The NIMBY Problem Not in my Backyard: NIMBY •Reflects human denial of responsibility... reads: • “Honk if you love the environment.” © 2 015 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 © 2 015 Cengage Learning 27 Responses of Governments in... can be fatal © 2 015 Cengage Learning 18 Waste Management © 2 015 Cengage Learning 19 Waste Trends in the U.S © 2 015 Cengage Learning 20 Ozone Depletion Ozone depletion •Ozone is harmful near the surface of the earth, but vital in the atmosphere •It blocks dangerous ultraviolet radiation from the sun •Decrease in stratospheric ozone comes from human use of chlorofluorocarbons (CFCs) and other chemicals... • 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 © 2 015 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... 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 © 2 015 Cengage Learning 32 International Government Environmental Responses (1 of 2) • United Nations ... Environmental Stakeholders Business Environmentalism The Future of Business: Greening and/ or Growing? Summary Key Terms © 2 015 Cengage Learning Sustainability and the Natural Environment Sustainability Business. . .Chapter 15 Sustainability and The Natural Environment © 2 015 Cengage Learning Learning Outcomes Discuss the concept of sustainability, and compare and contrast it with environmentalism... bring risks and opportunities Connectivity and communications - stakeholders can monitor and react to sustainability efforts more quickly Reputations are quickly built and destroyed © 2 015 Cengage