What’s a Business Environment (and why do we have to take this class)? BA 385: What’s a Business...
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BA 385: What’s a Business What’s a Business Environment Environment (and why do we have to take this class)? (and why do we have to take this class)? Introduction to the course and Chapter 14: The Natural Environment as a Stakeholder of Business Decision-Making
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Transcript of What’s a Business Environment (and why do we have to take this class)? BA 385: What’s a Business...
BA 385: What’s a Business Environment What’s a Business Environment (and why do we have to take this class)?(and why do we have to take this class)?
Introduction to the course and Chapter 14: The Natural Environment as a Stakeholder of Business Decision-Making
What does business add to society?
What does business take away from (or destroy within) society?
What responsibilities do we have as “people of business”?
How do we go about realizing our responsibilities while still being profitable?
What do you care about in your life?
Should your work life represent what you care about or is that separate?
Structure and Flow of Book
1. The Business and Society Relationship2. Corporate Citizenship: Social Responsibility,
Responsiveness and Performance3. The Stakeholder Approach to Business
Part One
BUSINESS, SOCIETY, AND STAKEHOLDERS
STRATEGIC MANAGEMENT FOR CORPORATE STAKEHOLDER PERFORMANCE
4. Strategic Management and Corporate Affairs5. Issues Management and Crisis Management
Part Two
6. Business Ethics Fundamentals7. Personal and Organizational Ethics8. Business Ethics and Technology9. Ethical Issues in the Global Arena
10. Business, Government and Regulation 11. Business’s Influence on Government and
Public Policy12. Consumer Stakeholders: Information Issues
and Responses13. Consumer Stakeholders: Product and Service
Issues14. The Natural Environment as Stakeholder15. Business and Community Stakeholders
EXTERNAL STAKEHOLDER ISSUES
Part Three
Part Four
INTERNAL STAKEHOLDER ISSUES
16. Employee Stakeholders and Workplace Issues17. Employee Stakeholder: Privacy, Safety, and
Health18. Employment Discrimination and Affirmative
Action19. Owner Stakeholders and Corporate
Governance
Part Five
Chapter 1 • The Business/Society Relationship
Syllabus Review
Contact informationTextbook and Reading MaterialAssignments and GradingReadingsPersonal Info Form How to Succeed in This Class (next slide)
Four Habits of Highly Successful Students
1.) Good psychological research continuously demonstrates that attitudes often follow behaviors. If you simply force yourself to act like a great student (engage in the BEHAVIORS) you'll find that the ATTITUDES will follow.
2. ) Write multiple drafts of any assignment. If you write a first draft and let it sit for a day or two, you will allow time to rethink and rework the assignment. When you sit down to revise it, you'll have a fresh perspective and better ideas. You'll also catch mistakes.
3. ) USE your peers. Two, three, or four heads are better than one. Be brave and invite someone you don't know to a study group.
4.) Be kind to your instructor. Wait a minute. That's actually not necessarily related to success in this class….
Business and Sustainability and Chapter Fourteen: The Natural Environment as a Stakeholder of Business
History of the Earth
present4.5 billion
Earth formed
7 millionpresent
First humans
10,000 BC present
First agriculture
History of the Earth – cont.1750 ADIndustrial Rev begins
1776Wealth of Nations(Adam Smith)
1804World popreaches 1 B
1908FordModel T
1999World popreaches 6 B
2200World popReaches 10 B
Inputs, Outputs, and Waste - U.S. example
ResourcesFossil fuels
WaterMetals
MineralsWoodOther
Products
WastesGasesLiquidsSolids
Consumed
5%
95%
Annual waste in U.S.15 B tons
Production Mostly a Linear Process
Note: numbers are approximate –from Craig Diamond of the Climate Trust
Labor and Resource Productivity1750: “unlimited” natural resources made labor much more
expensive relative to resources
Since Industrial Revolution – huge gains in labor productivity (e.g., farming, manufacturing)
In future, huge gains in resource productivity will be required
Environmental Economics – The Basics
Tragedy of The Commons …a type of impossible societal trap, often economic, that expresses society’s conflict over finite resources between individual interests (such as b and the common good of society.
(Garrett Hardin, Science, 1968)
Externalities …unintended negative side effects of production such as pollution, job losses, changes in society (suburbs, loss of rural lifestyle), and so on.
Global Environmental Challenges
Global Climate Change
Pollution and accumulation of toxics
Destruction of forests
Diminishing supplies of clean drinking water
Declining fisheries
Deterioration of soil quality in agriculture
Accelerating growth of mega-cities
Extraction and Accumulation
Build-up inEnvironment
Carbon Dioxide
combustion
com
bust
ion
Global Climate Change
Carbon Cycle
Rise ingreenhouse gas concentration inatmosphere causingtemperature to rise
Carbon dioxideis the majorgreenhouse gas
Global Climate Change
Natural Resource Depletion Example: Degrading Agricultural Soil
Unsustainable PracticesHeavy use of pesticides and fertilizers
Tilling
Planting same crop year after year
Result in….Depleted soil nutrients
Increased resistance to pesticides
Increased reliance on pesticides/fertilizers
Water/soil pollution
Global Social Problems
Social ChallengesPoverty: approximately 50% of the world’s
population lives in poverty or near-poverty conditions
Reliance on dirty fuels (e.g., manure) and unsafe drinking water
Environmental conditions (air and water pollution in particular) worse in underdeveloped areas
Growth of Wealth GDP per capita (real$, in 1,000s)
0
10
20
30
40
50
60
70
80
1870 1970 2004 2034 est
India
China
U.S.
India China U.S.
1970 0.55 0.83 0.21
2004 1.10 1.32 0.30
2034* 1.49 1.44 0.37
Population(in billions)
*Est.
Definitions of Sustainability
Sustainable development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.-Brundtland Commission Report, 1987 Economy
EnvironmentEquity
“3-Legged Stool”or
“Triple Bottom Line”
Sustainability:
The characteristic of an entity, such as an economic or environmental system, that is related to its ability to exist and flourish over an acceptably long period of time. – Your textbook
The Sustainability DilemmaNeed to slow or stop growth in EB, but….
Need to increase wealth to address global poverty and population growth, and
Population will continue to rise
EB = P x A x TEB = environmental burden
P = world population
A = affluence (consumption per capita)
T = technology (means of production)
Sustainability is a Huge Business Opportunity
EB = P x A x TEB = environmental burden
P = world population
A = affluence (consumption per capita)
T = technology (means of production)
To slow or stop the growth environmental burden (EB), huge advances in technology (T) will be needed. This is the role of business.
History of Environment and Business in the U.S.
Early 1900s: laws to protect forests, natural areas
1950-1970: growing pollution concerns
1970: U.S. Environmental Protection Agency established
1970-1990: several environmental laws passed and implemented
1990s-present: growing recognition in business and government of need to go “beyond compliance” (voluntary actions)
Progression of Environmental Management Approaches
DescriptionEnvironmental issues viewed as….
Role in Business
Compliance Comply with federal, state, local regulations
Cost center/risk Operational
Eco-Efficiency
Same products, minimize inputs (energy, materials) and waste
Cost center/risk, but with ability to cut costs
Operational
Product Design Change
Same/similar products with environmentally preferable design
Cost center/risk, but also source of competitive advantage
Strategic
New ProductsNew products to address sustainability marketplace needs
Source of competitive advantage
Strategic
Progression of Environmental Management ApproachesExample: Agriculture
ComplianceComply with regulations inregard to pesticide useand clean water
Eco-EfficiencyEliminate unnecessary useof pesticides and otherchemicals, or use less toxicones
Product DesignOrganic farming, IntegratedPest Management
New ProductsGrow crops for use inenergy production(biomass)
Progression of Environmental Management ApproachesExample: Auto Manufacturing
Compliance (plant focus)Comply with regulations for air, water, solidwaste, hazardous waste; “CAFÉ” standards
Eco-Efficiency (plant focus)Reduce use of energy andmaterials, reduce solid andhazardous waste
Product Design (auto focus)Hybrid electric vehicles
New Products (auto focus)Cars for disassembly;FlexCar (car sharing)
Progression of Environmental Management ApproachesExample: Electric Utility (currently based on fossil fuels)
Compliance Comply with regulations for air, water, solidwaste, hazardous waste
Eco-Efficiency Maintain efficient power plantto avoid wasting fuel inputs (coal, natural gas, oil); min. releases to air, water, land
Product Design Advanced coal plant with near-zero emissions;renewable sources
New Products Innovative waysto deliver electricity(“Smart Grid”)
The Natural Step
Business framework, based on scientific principles, for understanding what sustainability means for an organization
4 System Conditions for sustainability: In order for a society to be sustainable, that society cannot systematically....
1. Build up concentrations of materials taken from the earth’s crust
2. Build up concentration of materials produced by society
3. Degrade natural resources and ecosystems
4. Fail to meet human social/economic needs
Concept of Industrial Ecology
ResourcesFossil fuels
WaterMetals
MineralsWoodOther
Products
“Wastes”
Consumed
Nothing is wasted, as in
natural ecological cycles
Minimized useover time
Chapter 14 THE NATURAL ENVIRONMENT as
STAKEHOLDER
ThresholdThreshold
PollutionPollution
IrreversibilityIrreversibility
CycleCycle
SustainabilitySustainability
Important Important EnvironmentalEnvironmental
TermsTerms
Important Important EnvironmentalEnvironmental
TermsTerms
CarryingCapacity
CarryingCapacity
EntropyEntropy
EcosystemEcosystem
EnvironmentEnvironment
NicheNiche
CarryingCapacity
CarryingCapacity
EntropyEntropy
EcosystemEcosystem
EnvironmentEnvironment
NicheNiche
Broadly, anything that is external or internal to an entity. For humans, it can include external living, working, and playing spaces and natural resources, as well as internal physical, mental and emotional states.
The volume of and intensity of use by organisms that can be sustained in a particular place and at a particular time without degrading the environment’s future suitability for that use. It has limits that need to be respected for continued use.
A measure of disorder of energy, indicating its unavailability for recycling for the same use. Energy tends to break down
into lower quality with each use.
All living and nonliving substances present in a particular place, often interacting with others.
The role an organism plays in its natural community, including what it eats and the conditions it requires for survival. Habitat is a related concept.
CAN YOU MATCH THE DEFINITION TO THE TERM?
ThresholdThreshold
PollutionPollution
IrreversibilityIrreversibility
CycleCycle
SustainabilitySustainability
CAN YOU MATCH THE DEFINITION TO THE TERM?
The characteristic of an entity, such as an economic or environmental system, that is related to its ability to exist and flourish over an acceptably long period of time.
The point at which a particular phenomenon, previously suppressed, suddenly begins to be activated. For instance, when a population’s carrying capacity threshold is exceeded, the population tends to decrease or even crash as a result of increased morbidity and mortality.
The continuous looplike movement of water, air, and various nutrients, such as nitrogen, phosphorous, and sulfur, through the environment. Such cycles can be impaired in performing their roles, such as purification and sustenance, by excessive human-caused pollution and depletion.
The existence of material or energy that has gone through a transformation process and is perceived as unwanted or devalued in a particular place and a particular time.
The inability of humans and nature to restore environmental conditions to a previous state within relevant time frames. Human environment-related actions that appear this way are the destruction of a rainforest or extinction of a species.
Responsibility for Environmental Issues
“Not in my Back Yard”NIMBY
NIMBY is the human denial of responsibility for misuseof the environment
Entities causing environmental pollution are not identified as the sources of the problem
NIMBY avoids or denies the root cause of the damage
Beliefs of Environmentalists
Life on earth should continue
Human life on earth should continue
Natural justice should be done
Nonmaterial qualities of life are worth pursuing
The Role of Governments in Environmental Issues
U.S. Government Response
National Environmental Policy Act (NEPA) - 1970
Policy goals
Environmental Impact Statements An EIS should include discussions of the purpose of
and need for the action, alternatives, the affected environment, the environmental consequences of the proposed action, lists of preparers, agencies, organizations and persons to whom the statement is sent, an index and appendix.
Environmental Protection Agency (EPA)
U.S. Government Response
Air Quality LegislationClean Air Act
Emissions trading and the bubble concept
Clear Skies Initiative
The Role of Governments in Environmental Issues
U.S. Government Response
Water Quality Legislation
Clean Water ActMarine Protection, Research and Sanctuaries ActSafe Drinking Water Act
The Role of Governments in Environmental Issues
U.S. Government Response
Land-related legislationSolid Waste Disposal Act
Resource Conservation and Recovery ActToxic Substances Control ActComprehensive Environmental Response, Compensation, and Liability Act (CERCLA)Emergency Planning and Community Right-to-Know Act
The Role of Governments in Environmental Issues
U.S. Government Response
Endangered Species Act (ESA)Role of the President in environmental
regulation
The Role of Governments in Environmental Issues
International Government Response
United Nations Environmental Programme (UNEP)
Montreal ProtocolGlobal Waters AssessmentRotterdam Convention
The Role of Governments in Environmental Issues
Protection of the biosphereSustainable use of natural resourcesReduction and disposal of wasteEnergy conservationRisk reductionSafe products and servicesEnvironmental restorationInforming the publicManagement commitmentAudits and reports
CERES Principles
CERES Principles
Business Environmentalism
Systematic business responses to environmental challenges:Generic management decision-making
toolsSustainabilityStrategic environmental management
Future of Business:Greening or Growing?
TWO PRESSING QUESTIONSTWO PRESSING QUESTIONS
Can the earth support a high- consumption Western lifestyle?
Can the earth support a high- consumption Western lifestyle?
If not, what are the implications for business and how should business respond?
If not, what are the implications for business and how should business respond?
