Chapter 4: The Ecological Footprint PDF

Chapter 4: The Ecological Footprint Sustainable Business Management The current state of the planet – Introduction • Since the 21st century, ecological concerns have been higher on the agenda • The effects of climate change are starting to become visible • Governments and businesses have shown a...

Chapter 4: The Ecological Footprint Sustainable Business Management The current state of the planet – Introduction • Since the 21st century, ecological concerns have been higher on the agenda • The effects of climate change are starting to become visible • Governments and businesses have shown a willingness to act • Not everyone is convinced yet • Some governments are not participating • In developing economies, ecological degradation will first rise (Kuznet’s curve) Sustainable Business Management The current state of the planet – The planetary boundaries • To measure the “state of the planet”, 9 planetary boundaries have been defined Sustainable Business Management The current state of the planet – The planetary boundaries 1. Stratospheric ozone depletion • The ozone layer protects us against high levels of UV radiation • Certain gases and chemical substances (CFC’s) are breaking down the ozone layer • Efforts have been made and the hole in the ozone layer has been shrinking again 2. Loss of biosphere integrity • • • • The impact of human activity on natural ecosystems Looks at biosphere loss and extinction rate of species (both animal and vegetal) Caused by demand for resources and living space This boundary is irreversible Sustainable Business Management The current state of the planet – The planetary boundaries Sustainable Business Management The current state of the planet – The planetary boundaries 3. Chemical pollution and the release of novel entities • Novel entities: things created and introduced in the environment by human beings that could have a disruptive effect on the earth’s systems (synthetic, radioactive material, genetically modified organisms,…) • Because of industrialisation, amount of chemical and synthetic substances has risen • Impact on the biosphere: pollution, decrease in fertility,… • Real impact is still unclear 4. Climate change • Global warming due to the rise of CO2 in the atmosphere, causing our atmosphere to act as a greenhouse • The amount of CO2 can be lowered but the consequences are irreversible Sustainable Business Management The current state of the planet – The planetary boundaries Sustainable Business Management The current state of the planet – The planetary boundaries 5. Ocean acidification • 25% of CO2 emissions will dissolve in the ocean, changing the acidity of the water • Coral and plankton is impacted and therefor many sea species • The acidity has already increased with 30% over the last 100 years 6. Freshwater consumption and the global hydrological cycle • Level of freshwater is decreasing due to the melting of the ice caps • Humanity has increased the amount of hard surfaces so the natural flow of water has been disturbed as well • By 2050, water will become scarcer and more people will suffer from ”water stress” Sustainable Business Management The current state of the planet – The planetary boundaries 7. Land system change • Land use has been structurally changed by humanity: agriculture, urbanisation and industrialisation • Results in biodiversity loss and changes in the natural flow of water • Deforestation Sustainable Business Management The current state of the planet – The planetary boundaries 8. Nitrogen and phosphorus flows to the biosphere and oceans • Nitrogen and phosphorus are the basic elements in fertiliser • Only a small amount is absorbed by plants, the rest is left in the water, soil or air • Results again in biodiversity loss and pollution 9. Atmospheric aerosol loading • • • • Aerosols are microscopic liquid or solid particles that enter the atmosphere They are critical to natural water flow as they affect cloud formation They have an impact on the amount of solar radiation that is reflected/absorbed They can be dangerous to all species as they breath in these particles Sustainable Business Management The current state of the planet – The sceptics 1. “We are heading for another ice age anyway” • Natural cycles of warmer and colder periods due to the gravitational shifts caused by other planets: poles become colder, adding more ice and reflecting more sunlight • We will run out of fossil fuels anyway, so global warming due to CO2 increase will eventually halt. • Predicted to happen in 50-300 years • The earth will absorb the remaining CO2 and the cooling process will start again • Will global warming solve itself? • Yes probably but it will only happen in a distant future • The effects in the next 100 years will be dramatic for humanity • Neither global warming nor the next ice age is a solution for humanity Sustainable Business Management The current state of the planet – The sceptics 2. “The weather has been colder than ever” • Over the last year, we have seen more extreme weather conditions than ever • Also extremely cold weather (US 2019) • Summer of 2023 in Southern/Northern Europe • Weather and climate are not the same • Weather: local occurence • Climate: long term average weather pattern in a region • Humanity is changing natural water flows • The extreme cold in the US was caused by a change in the polar vortex due to rising temperatures in the Arctic region • Colder weather in the US but other regions were experiencing warmer weather Sustainable Business Management The current state of the planet – The sceptics 3. “It’s because of the sun” • Cycle of solar activity of 11 years: the level of solar energy fluctuates Sustainable Business Management Environmental impact – IPAT equation • The IPAT equation measures the ‘environmental impact’ of the following factors/variables: • population growth • economic growth • natural resources required for the production of all goods and services consumed • I=PxAxT • • • • I stands for environmental impact P stands for population A stands for consumption per capita or affluence T stands for ‘throughput’ or the natural resources used per unit of consumption. It is largely dependent on the technology used in the production of goods and services Sustainable Business Management Environmental impact – Population • Life expectancy is one of the parameters that indicate a good life, next to parameters as income and level of education • Over the past centuries, life expectancy has increased in all parts of the world • This fuels an ever-increasing population which has put a strain on the earth’s resources Sustainable Business Management Environmental impact – Affluence • Affluence stands for consumption per capita and can be measured through the GDP – we assume that all goods and services that are produced are also consumed • Also a “positive” relationship between affluence and environmental impact • More production and consumption means more need of resources and more waste Sustainable Business Management Environmental impact – Throughput • Throughput stands for the natural resources that are used per unit of consumption • In most definitions the T stands for Technology • If we look at technology alone, it will not tell you whether there is a positive or a negative relationship • When technology improves, a company can decide to create the same amount of products with less resources or more products with the same amount of resources • “Positive” relationship between throughput and environmental impact Sustainable Business Management Environmental impact – Areas of environmental impact • Cities • Changes in land-use • Create sustainable spaces where people can work, live and relax together • Energy • The carbon footprint caused by CO2-emission is responsible for 60% of the total ecological footprint • Most of the increase in CO2-emission is caused by the use of fossil fuels as our main source of energy Sustainable Business Management Environmental impact – Areas of environmental impact • Food • Food production and waste of food • Animal based food uses a significant higher amount of resources than plant based food • One third of global food production is wasted Sustainable Business Management Environmental impact – Areas of environmental impact • Planet • Planetary boundaries • Focusing on replenishing the earth’s resources • Population • Overpopulation causes most of the problems with planetary boundaries • Social problems • Not easy to “control” Sustainable Business Management Eco-efficiency vs Eco-effectiveness • Eco-efficiency aims to promote a transformation from unsustainable development to sustainable development. It is based on the concept of creating more goods and services while using fewer resources and creating less waste and pollution (EcoCation, 2023) • Maintain the level of goods produced and consumed but lower the ecological damage • Fuel car vs electric car Sustainable Business Management Eco-efficiency vs Eco-effectiveness • Eco-efficiency has some pitfalls: • The eco-efficient solutions still need resources and will create waste • Can cause a “rebound-effect”: consumers use the “profit” they made from ecological improvements to increase their consumption in other ways • For example: spend the money saved on fuel for a car on a long-distance flight to travel • Measures do not necessarily change consumer behaviour • Eco-effectiveness aims at achieving the same result by eliminating all waste and use of fossil fuels • Circular economy (Chapter 9) • New solutions to fulfill customer’s needs Sustainable Business Management Eco-efficiency vs Ecoeffectiveness • Difference between ecoefficiency an eco-effectiveness • Timespan: short-term results vs. long-term results • Changing consumer behaviour Sustainable Business Management Policies and regulations – Taxes and subsidies • Taxes will make sure that negative externalities are taken into account in the price • Leads to lower consumption and lower production • Taxes create additional income for the government • Used to minimize the effects of the externalities • Subsidies can enhance the positive effects of externalities as well Sustainable Business Management Policies and regulations – Regulations and restrictions • Emission rights: each company has the right to emit a certain amount of CO2 • Emission rights can be traded • Lower the production/consumption • Example plastic bags • Usually two measures are combined • Low-emission zones Sustainable Business Management Policies and regulations – International initiatives • The Stern review (2006) • First report (at least from the economics camp) where the problem of global change is seen as a real threat to humankind, and not “just” an economic cost-benefit problem among others. • Most important points: • We should not overestimate the positive effects of climate warming • New modelling indicates that the total economic impact of climate warming will be higher than earlier studies show • Cutting emissions will not be free: estimate of the annual costs of 1 percent of the global GDP by 2050 Sustainable Business Management Policies and regulations – International initiatives • Kyoto-protocol • The protocol became effective in February 2005 when 55 parties ratified it, representing over 55% of the total carbon dioxide emissions • The commitment period for the Kyoto-protocol was 2008 - 2012, for which the Kyoto-protocol defines individual countries’ emission targets • The goal in total is to reduce emissions of 6 greenhouse gases by 5 percent from the 1990 levels • ‘Emission trading’: The idea is that countries that find it particularly expensive to reduce emissions at home can pay for cheaper emissions cuts elsewhere Sustainable Business Management Policies and regulations – International initiatives • EU Emissions Trading System (EU ETS) • Greenhouse gases, especially CO2 emissions, are linked to pressure on planetary boundaries. • Emission reduction is crucial for ensuring habitability of the planet in the future. • The European Union Emissions Trading System (ETS) is the world's largest cap-and-trade system for greenhouse gas emissions. • • • • Cap and trade involves setting a total CO2e emissions limit for participants in the ETS. The limit decreases over time to incentivize emission reduction. Participants receive allowances, allowing specific CO2e emissions. Companies emitting more than their allowances must purchase more on the market. • Successful emission reduction leads to excess allowances, which can be sold. • Allowance prices are market-driven; currently around 100€ per tonne CO2e (2023). • With decreasing emission allowances, prices for excess emissions are expected to rise. • This increase aligns with internalizing externalities. • Failure to buy additional allowances results in fines for companies. Sustainable Business Management Policies and regulations – International initiatives • Greenhouse Gas Protocol • International accounting tool for measuring and reproting GHG emissions • 3 categories of emissions: • Scope 1: Emissions that companies make directly. • combustion of fossil fuels on-site (e.g., in boilers, furnaces or vehicles) • process emissions (e.g., chemical reactions) • fugitive emissions (e.g., leaks from pipelines or equipment) • Scope 2: Emissions that companies make indirectly, associated with the consumption of purchased electricity, heat or steam by the organisation. • Scope 3: All the emissions associated not with the company itself, but for which the organisation is indirectly responsible, through the whole value chain • • • • • business travel and employee commuting purchased goods and services transportation and distribution of products waste disposal the entire lifecycle emissions of products or services Sustainable Business Management Policies and regulations – International initiatives • Greenhouse Gas Protocol • Scope 1 and 2 are most in control of the company • Information is easy to find within the company • Reduction can be achieved by on site investments • Scope 3 is a bigger challenge • Information and sources are outside the company • 70% of the carbon footprint of a company is caused by scope 3 Sustainable Business Management Policies and regulations – International initiatives • 3 ways of reducing CO2emissions • Avoid: replace fuel engines by electric engines • Reduce: Making processes more efficient • Capture: capture CO2 before it is emitted and store/reuse it afterwards Sustainable Business Management Policies and regulations – International initiatives • Paris Agreement • Global warming goal of well below 2°C on pre-industrial averages • All countries need to set more ambitious targets • Profound changes to economies are necessary • • • • More communication between the different countries An emphasis on the process rather than on the goals Recognition of the differences in development of the different countries Goals need to be translated in concrete actions • Form: it is a treaty as a matter of international law, the participating countries are bound to one another • 4 complementary functions: 1. It provides the framework for the agreement 2. It contains guidance on pre-2020 climate action 3. It regulates and organizes action to be taken before the agreement enters into force 4. It contains detail and guidance on how to develop NDCs (NDC = Nationally Determined Contributions) Sustainable Business Management Policies and regulations – International initiatives • Paris Agreement • Goal: Keep global temperatures well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1,5°C • Not only more ambitious than before but also a legally binding agreement • The peak in temperature rising has to be reached as soon as possible and rapid emission reductions should follow • Two types of actions: • 1. Reduce greenhouse gas emissions • 2. Find options to sequester greenhouse gas emissions (natural and by technology) Sustainable Business Management Policies and regulations – International initiatives • Paris Agreement • National action: each country shall prepare, communicate and maintain successive NDCs • A new NDC needs to be communicated every 5 years • Developed countries need to adopt economy-wide absolute emission reduction targets immediately • Each NDC needs to show progress to the one before • Implementing the NDC is not part of the Paris Agreement • Countries are allowed to cooperate in achieving their goals • Joint NDCs • Voluntary partnerships • Private and public entities can support mitigation projects => Trading mechanisms are still possible! Sustainable Business Management Case: Electric cars (p.131-132) 1. Do you think this measure will have the intended effect on CO2emissions and other areas of ecological impact? 2. Are there any other concerns that should be addressed before the implementation of this measure? 3. In Norway 80% of the new vehicles sold are already electric (without a ban on sales of combustion engines). What is the difference between the Belgian situation and the Norwegian? Can the Belgian government find some inspiration in Norway to smoothen the transition? Sustainable Business Management Case: Carbon Dividend (p.132-133) 1. Do you believe this plan could really work? 2. Do you see any shortcomings in the current plan? What could be the barriers? 3. Compare this plan to your local carbon tax regulation: how is it different? Will it work better or worse? Sustainable Business Management