© 2015 Cengage Learning1. Chapter 15 Sustainability and The Natural Environment © 2015 Cengage Learning2

© 2015 Cengage Learning 1

Chapter 15Chapter 15Sustainability Sustainability

and and The Natural The Natural

EnvironmentEnvironment


Learning OutcomesLearning Outcomes

1.1. Discuss the concept of sustainability, and compare Discuss the concept of sustainability, and compare and contrast it with environmentalism.and contrast it with environmentalism.

2.2. Describe ten major natural environment issues.Describe ten major natural environment issues.

3.3. Describe the NIMBY and its impact on Describe the NIMBY and its impact on environmental problems.environmental problems.

4.4. Discuss the roles that business and government play Discuss the roles that business and government play in environmental issues.in environmental issues.

5.5. Explain the concept of environmental ethicsExplain the concept of environmental ethics.


Chapter OutlineChapter Outline

• The Sustainability ImperativeThe Sustainability Imperative• The Natural EnvironmentThe Natural Environment• A Brief Introduction to the Natural EnvironmentA Brief Introduction to the Natural Environment• The Impact of Business upon the Natural EnvironmentThe Impact of Business upon the Natural Environment• Responsibility for Environmental IssuesResponsibility for Environmental Issues• The Role of Governments in Environmental IssuesThe Role of Governments in Environmental Issues• Other Environmental StakeholdersOther Environmental Stakeholders• Business EnvironmentalismBusiness Environmentalism• The Future of Business: Greening and/or Growing?The Future of Business: Greening and/or Growing?• SummarySummary• Key TermsKey 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.


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%


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© 2015 Cengage Learning 9

Glossary of Environmental Terms


The Impact of Business on the Natural Environment

The Top Ten fundamental environmental issues:1.1.Climate ChangeClimate Change2.2.EnergyEnergy3.3.WaterWater4.4.Biodiversity and Land UseBiodiversity and Land Use5.5.Chemicals, Toxics, and Heavy MetalsChemicals, Toxics, and Heavy Metals6.6.Air PollutionAir Pollution7.7.Waste ManagementWaste Management8.8.Ozone Layer DepletionOzone Layer Depletion9.9.Oceans and FisheriesOceans and Fisheries10.10.DeforestationDeforestation© 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


Energy

• 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.


Water• 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.


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 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.


Air PollutionOutdoor Air pollution - •Acid Rain •Global Warming•Smog•Depletion of the ozone layer•Serious respiratory illnessesIndoor 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


Waste Trends in the U.S.


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.

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


Oceans and FisheriesWatershed - 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.


Deforestation

• 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.


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.


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 cause of the damage.•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.”


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.


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



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.



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.



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-to-Know Act requires manufacturers to report annually all of their releases into the environment of any of more than 500 toxic chemicals



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


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.


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.

Environmental Groups Based on Cooperation with Business


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 now include environmental components. © 2015 Cengage Learning 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


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.


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


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 significantsignificant to severesevere.


• 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)


Key Terms Key Terms (1 of 2)(1 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


Key Terms Key Terms (2 of 2)(2 of 2)

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© 2015 Cengage Learning1. Chapter 15 Sustainability and The Natural Environment © 2015 Cengage Learning2