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Chapter 10 - Ecology and sustainable development in global business. In this chapter, you learned to: Understanding how business and society interact within the natural environment; defining sustainable development; assessing the major threats to the earth’s ecosystem; recognizing the ways in which population growth, inequality, and economic development interact with the world’s ecological crisis;...
Chapter 10 Ecology and Sustainable Development in Global Business McGrawHill/Irwin Copyright © 2014 by The McGrawHill Companies, Inc. All rights reserved Ch 10: Key Learning Objectives Understanding how business and society interact within the natural environment Defining sustainable development Assessing the major threats to the Earth’s ecosystem Recognizing the ways in which population growth, inequality, and economic development interact with the world’s ecological crisis Examining common environmental issues that are shared by all nations and businesses Analyzing the steps both large and small businesses can take globally to reduce ecological damage and promote sustainable development 102 Business and Society in the Natural Environment Business and society operate within constraints of the planet and its resources For human society to survive over time it must operate sustainably: in a way that does not destroy or deplete these natural resources for future generations Preserving our common ecosystem (or unified natural system) and assuring its continued use is an urgent imperative for governments, business, and society 103 Figure 10.1 Business, Society and the Natural Environment: An Interactive System 104 Sustainable Development Development that “meets the needs of the present without compromising the ability of future generations to meet their own needs” Protecting the environment will require economic development focused on poverty alleviation Economic development cannot occur at the expense of degrading the forests, farmland, water, and air that must continue to support life on this planet Sustainable development is about fairness 105 Threats to the Earth’s Ecosystem Sustainable development requires that human society use natural resources at a rate that can be continued over an indefinite period Renewable resources (water, forests) can be naturally replenished Nonrenewable resources (such as fossils fuels like oil, coal) once used are gone forever Examples of natural resources that are now being depleted or polluted at well above sustainable rates Water resources Fossil fuels Arable land 106 Forces of Change Accelerating Ecological Crisis Pressure on the earth’s resource base is becoming increasingly severe Three critical factors have combined to accelerate the ecological crisis facing the world community and to make sustainable development more difficult Population explosion World poverty and income inequality Rapid growth of many developing nations 107 Figure 10.2 Population of the World and Major Areas 108 Figure 10.3 Share of the World’s Private Consumption by Income Fifths 109 The Earth’s Carrying Capacity The Earth’s resource base is essentially finite, or bounded Limits to growth hypothesis suggests human society is overshooting Earth’s carrying capacity, with drastic consequences if changes are not made 1010 Ecological Footprint One method of measuring the Earth’s carrying capacity The amount of land and water a human population needs to produce the resources it consumes and to absorb its wastes, given prevailing technology 1011 Restoring the Balance of Earth's Carrying Capacity This is without a doubt one of the great challenges facing the world’s people Any solution will require change on many fronts: Technological innovation – Develop new technologies to produce energy, food, and other necessities of human life more efficiently and with less waste Changing patters of consumption – Individuals and organizations concerned about environmental impact could decide to consume less or choose less harmful products and services “Getting the prices right” – Some economists have called for public policies that impose taxes on environmentally harmful products or activities 1012 Global Environmental Issues Commons a shared resource, such as land, air, or water that a group of people use collectively The paradox of the commons is that if all individuals attempt to maximize their own private advantage in the short term, the commons may be destroyed, and all users, present and future, lose The only solution is restraint, either voluntary or through mutual agreement Tragedy of the commons: freedom in a commons brings ruin to all 1013 Global Environmental Issues Ozone Depletion Ozone is a bluish gas, composed of three bonded oxygen atoms, that floats in a thin layer in the stratosphere between and 28 miles above the planet Since mid-1970s, scientists have understand that chlorofluorocarbons (CFCs), manufactured chemicals formerly widely used as refrigerants, insulation, solvents, and propellants in spray cans, could react with and destroy ozone in the upper atmosphere In 1987, world leaders negotiated the Montreal Protocol, agreeing to cut CFC production 1014 Global Environmental Issues Climate Change changes in the Earth’s climate caused by increasing concentrations of carbon dioxide and other pollutants produced by human activity Global Warming phenomenon where the average surface temperature of the Earth has risen and continues to rise over time 1015 Figure 10.4 Global Warming 1016 Causes of Climate Change Fossil Fuels the burning of fossil fuels such as oil, natural gas, and coal releases carbon dioxide Black carbon the sooty smoke that is created by the incomplete combustion of diesel engines and wildfires is the second largest contributor to climate change, responsible for as much as 18 percent of global warming Deforestation Trees and other plants absorb carbon dioxide and remove it from the atmosphere; therefore cutting down trees contributes to global warming Beef production Methane, a potent greenhouse gas, is produced as a by-product of the digestion of some animals, including cows CFCs Destroy the ozone and are also considered greenhouse gases 1017 Global Climate Change Initiatives Kyoto Protocol Multination agreement in 1997, went in to effect in 2005 Requires industrial nations to reduce greenhouse gas emissions 5% below 1990 levels European Union has taken lead on reducing emissions As of 2012, 193 nations had ratified U.S., which was responsible for 18 percent of the world’s carbon emissions has not ratified 1018 More Global Environmental Issues Decline of biodiversity Refers to the number and variety of species and the range of their genetic makeup Scientists estimate that species extinction is occurring at 100 to 1,000 times the normal, background rate due to pollution and habitat destruction A major reason for the decline in the earth’s biodiversity is the destruction of rain forests Only half of the original tropical rain forests still stand Rain forests destruction is ironic because they may have more economic value standing than cut 1019 More Global Environmental Issues Threats to marine ecosystems Refers to oceans, salt marshes, lagoons, and tidal zones that border them, as well as diverse communities of life they support Salt water covers 70 percent of the earth’s surface and supports many species Key categories of threats to these ecosystems • • • • Fish populations Coral reefs Coastal development Ocean acidity 1020 Response of the International Business Community Since so many ecological challenges cross national boundaries, the international business community has a critical role to play in addressing them Numerous voluntary initiatives are being undertaken by companies around the world to put the principle of sustainable development into practice 1021 Voluntary Business Initiatives Life cycle analysis Involves collecting information on the lifelong environmental impact of a product, from extraction of raw material to manufacturing to its distribution, use, and ultimate disposal Industrial ecology Refers to designing factories and distribution systems as if they were self-contained ecosystems Extended product responsibility Companies have a continuing responsibility for the environmental impact of the products and services, even after they are sold Carbon neutrality An organization or individual produces net zero emission of greenhouse gases; this is usually accomplished by a combination of energy efficiencies and carbon offsets 1022 Codes of Environmental Conduct Some of the leading universal codes include the following: Business Charter for Sustainable Development – developed by the International Chamber of Commerce CERES Principles – developed by the Coalition for Environmentally Responsible Economies ISO 14000 – a series of voluntary standards developed by the ISO, an international group based in Switzerland The Equator Principles – a set of environmental standards developed by the financial services industry Many executives are championing the idea that corporations have moral obligations to future generations 1023 ... system) and assuring its continued use is an urgent imperative for governments, business, and society 10 3 Figure 10. 1 Business, Society and the Natural Environment: An Interactive System 10 4... both large and small businesses can take globally to reduce ecological damage and promote sustainable development 10 2 Business and Society in the Natural Environment Business and society operate... not made 10 10 Ecological Footprint One method of measuring the Earth’s carrying capacity The amount of land and water a human population needs to produce the resources it consumes and to absorb