© 2015 Cengage Learning
1
Chapter 15
Sustainability
and
The Natural
Environment
© 2015 Cengage Learning
2
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.
© 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
Business Environmentalism
The Future of Business: Greening and/or Growing?
Summary
Key Terms
© 2015 Cengage Learning
4
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 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
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
Bio-based Product
Environment
Carbon Footprint
Carbon neutral
A product composed of biological
products or renewable agricultural or
forestry materials.
External living, working, and playing
spaces and natural resources and more.
The amount of greenhouse gases one
emits.
Maintaining a balance between
producing and using carbon dioxide.
Carrying capacity
Volume and intensity of use by
organisms that can be sustained
Entropy
A measure of disorder of energy
indicating its unavailability for recycling
for the same use.
All living and nonliving substances
present in a particular place, interacting
Ecosystem
Irreversibility
The inability of humans and nature to
restore environmental conditions to a
© 2015 Cengage Learning
previous state.
10
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
© 2015 Cengage Learning
13
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.
© 2015 Cengage Learning
14
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.
© 2015 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 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 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.
© 2015 Cengage Learning
17
Air Pollution
Outdoor Air pollution •
•
•
•
•
Acid Rain
Global Warming
Smog
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
Reduce
Re-Use
Recycle
© 2015 Cengage Learning
19
Waste Trends in the U.S.
© 2015 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.
• 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
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.
© 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 stakeholder the ecological system
from 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
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.”
© 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 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 thinktank 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
Radicals
Confrontational behaviors
Mainstreamers
Seek pragmatic reform through
cooperation and confrontation
Accommodators
Avoid confrontation, and are
more trusting of corporations
© 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 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
© 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.
© 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