Business in Society: Business and the Environment

Business in Society: Business and the Environment

• Businesses have extensive responsibilities toward the environment.
• Governments play a role in addressing environmental concerns.
• Environmental NGOs (ENGOs) influence corporations.
• Market-driven environmentalism uses economic incentives.
• Corporations react to environmental concerns through their main business functions.
• Sustainability measures and standards exist, and corporations are aware of industry initiatives to report on environmental responsibilities.

Learning Outcomes

• Understanding the extent of business responsibilities concerning the environment.
• Describing the government's impact on environmental concerns.
• Defining ENGOs and their influence on corporations.
• Explaining market-driven environmentalism approaches.
• Describing corporations' responses to environmental issues within business functions and the government's influence on these issues.
• Listing sustainability measures and standards, and becoming familiar with corporate and industry initiatives to report on environmental responsibility.

Remember 3E/3P

• The environment is crucial to CSR.
• Ethical considerations impact environmental and economic factors.
• The people-planet-profit model is useful.
• This course focuses on: Ethics, Environment, Stakeholders, and Globalization.

Business, Stakeholders, and the Natural Environment

• Environmental issues affect corporations' operations, from resource input to product sales.
• Managers must implement planning, organizing, leading, and controlling all environmental aspects of business.
• Any resource used as though it is a shared resource (commons) is subject to environmental concern. Examples: Air, water, and natural animal populations.

Environmental Ethic and Sustainable Development

• Environmental ethic is a set of principles that guide a corporation's environmental practices.
• Sustainable development ensures that today's resource use and environmental impact does not compromise future generations' ability to use resources.
• Corporations should implement business strategies that meet today's needs without jeopardizing future human and natural resources.
• Adopting business strategies and activities to meet the needs of the organization and stakeholders, while protecting, sustaining, and enhancing natural and human resources, is a priority.

Environmental Concerns in Business

• Acid rain
• Air pollution
• Ecosystems
• Energy production and consumption
• Nature and wildlife
• Ozone depletion
• Pollution
• Waste management
• Water quality
• Climate change / global warming

Government's Influence

• Extensive government involvement exists in regulating and formulating policies.
• Agencies exist to regulate corporate activities and help corporations meet environmental performance targets.
• Examples: Environment Canada, Canadian Council of Ministers of the Environment, National Roundtable for the Environment and the Economy, Canadian Environmental Assessment Agency/Impact Assessment Agency.

Responses by Government

• Canadian Environmental Protection Act (Canada) – Federal level
• Impact Assessment Act (Canada) and Air Quality Legislation (Provincial) – Federal and Provincial
• Water Quality Legislation (Federal)
• Canada Water Act, Fisheries Act, Navigable Waters Protection Act, Arctic Waters Pollution Prevention Act, Canada Shipping Act, Dominion Water Power Act, and Land-Related Legislation
• Kyoto Protocol

Environmental NGO Influence

• ENGOs hold shared values and attitudes about environmental challenges.
• ENGOs influence corporations through protests, blockades, boycotts, and shareholder meetings.
• Greenpeace is an example of an ENGO.

The Power of NGOs

• CERES organization was formed in 1989 before the Exxon Valdez oil spill.
• CERES formulated ten principles of environmental sensitivity.
• Major companies (e.g. Coca-Cola, American Airlines, General Motors, Sunoco) have endorsed these principles.

Why Do ENGOs Target Certain Firms

• ENGOs target firms having significant environmental impact.
• ENGOs consider the consequences of firms' actions.
• Connections and relationships influence target selection.
• EnGOs assess the influence of targeted firms within their industries
• ENGOs are concerned with firms’ activities in the supply chain.

Influence of Market-Driven Environmentalism

• Standard environmentalism emphasizes government regulation.
• Market environmentalism prioritizes economic incentives.
• Economic growth, free trade, and property rights are key market principles.

Differences Between Standard and Market Environmentalism

• Economic growth is viewed differently.
• Free trade is viewed as either part of the problem or of the solution.
• Property rights and regulation are crucial considerations.

Market-Driven Environmentalism (cont'd)

• Carbon pricing is a financial instrument for reducing emissions.
• Cap-and-Trade, imposing a fee, and an output-based price system are carbon-pricing methods.
• Each method has different elements.

Carbon Tax – The Misunderstood Solution

• Goal: Reduce carbon footprints.
• Method: Implementing a carbon tax on products.
• Disincentive tax: People may choose less carbon intensive products.
• Funds are placed in a special account.
• Businesses use funds to reengineer processes.
• Taxpayers receive refunds for hardships.
• Reality: funds aren't always used for intended purposes.
• Costs are often passed on by producers.

Market-Driven Environmentalism (cont'd)

• Offsets are credits purchased to neutralize greenhouse gas emissions.
• Carbon capture and storage (CCS) captures and stores emissions.

Business Responses to Environmental Issues

• Management positions and committees should be established to deal with environmental issues.
• Top management commitment is crucial for effective strategies.
• Environmental efforts must be integrated with operations.
• Professionals are encouraged to meet the increasing environmental standards.

Business Responses to Environmental Issues (cont'd)

• Token responses focus on damage control.
• Compliance is a concern stemming from lawsuits and prosecutions.
• Comprehensive environmental management prioritizes the company’s stance and competitive advantage.
• Sustainable development integrates sustainability into business strategies and environmental policies.

Business Responses to Environmental Issues (cont'd)

• Corporations need comprehensive environmental policies and programs, (EMS).
• EMS integration into overall strategy is important for success.
• EMS advantages include cost reductions, meeting investor demands facilitating regulation, and meeting consumer demands.

Managing Responses to Environmental Concerns

• Raise awareness about environmental impacts
• Assess and manage risks and opportunities
• Build climate resilience across enterprise.

Financial Management

• Environmental factors are considered in financial management practices.
• Accounting principles have guidelines.
• Eco-insurance is available.
• Businesses need environmental assessments for financial performance.
• Investments are evaluated for environmental performance.

Marketing

• "Green Marketing" sells environmentally friendly goods.
• Consumers consider eco-labels.
• Third-party certifications increase trust in eco-labels.
• Consumer willingness to pay higher prices for green products is a key question.

Caution

• Some customers are willing to pay higher prices for eco-friendly products, (e.g., organic produce, Toyota Prius).
• There are limits to consumer acceptance of higher prices.
• The balance between consumer needs and environmental concerns is crucial.

Human Resources

• Practices include recycling programs, conservation, and promoting public transport.
• Sustainability programs involve incentivizing environmentally friendly behaviors and practices.
• Creating sustainable workplace practices.

Operations

• Businesses implement eco-friendly processes and technologies.
• Waste management, pollution reduction, and energy conservation are common in operations.

IT Operations

• Cooling and server use significantly impact electricity.
• IT departments have a culture of continually acquiring new technology.
• IT infrastructure has grown significantly and efficiently with newer technologies.
• Current technologies require more energy input than past technology and greater maintenance.

Small Datacenter Electricity Cost

• Locations and costs vary for small datacenters.
• Data usage in datacenters is high and varies significantly by location.

Example: IBM "Big Green"

• IBM recognized sustainability as an imperative, going beyond their own costs.
• They made existing products more environmentally sound.
• They created new solutions and streamlined operations, including creating standardized tools, processes, and procedures.

Measuring and Reporting on Environmental Sustainability

• Using performance indicators for measuring progress.

Environmental Sustainability Measures and Standards

• Coalition for Environmentally Responsible Economies (CERES)
• International Organization for Standardization (ISO) 14000
• International Institute for Sustainable Development (IISD)
• Canadian Sustainability Indicators Network (CSIN)
• Environmental and Sustainable Development Indicators Initiative (ESDI)

Dissenting Views on the Environment

• Not all agree that corporations should play a leading role in environmental protection.
• Critics challenge the definition and understandability of sustainability concerns.
• Some argue that sustainability initiatives restrain economic growth, or are morally flawed.
• Concerns exist regarding the misleading nature of how executives respond to the topic.

The Environment: Corporate Opportunities

• Enhanced reputations; greater staff recruitment and retention; greater customer appeal; and investor confidence.
• Recycling and conservation lower costs.
• Integration with the community improves relations and cooperation.
• New technologies yield higher revenues.

The Environment: Corporate Challenges

• Negative perception shifts regarding environmental sustainability issues may damage reputation.
• Revenue loss resulting from customer attrition due to environmental damage.
• Difficulty in attracting investor interest with potential environmental risks and costs to the business.
• Increased materials and production costs.
• Potential for increased financial penalties associated with environmental violation fines and penalties.
• Concerns with premiums, and alienation from communities due to environmental or corporate issues.
• Potential for stricter environmental legislation.

From a Linear to a Circular Economy

• A shift from one-time use to one of reuse in production and consumption.
• Circularity has restorative and regenerative design aspects.
• EPR (extended producer responsibility) fosters life cycle concepts and considerations.

Resources

• Books and articles relating to the topic of sustainability.

This quiz explores the intricate relationship between businesses and environmental responsibilities. Participants will learn about the roles of governments, environmental NGOs, and market-driven approaches to sustainability. Examine how corporations respond to environmental concerns and the standards they adhere to in their business practices.