46 terms

Chapter 8

Ethics and the Environment
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The Tragedy Of the Commons
Underlying belief is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation
Recommended "management" solutions to the tragedy of the commons is to
Privatize resources, Have polluters pay for their damage, Have government regulations to control the use of natural resources
You CAN be considered a stakeholder without a
voice
The following resources used link the natural environment as a stakeholder with firms:
manufacturing of a product, energy used to run a plant, the disposal of waste products
The competitive business strategies a firm uses to convert the natural environment into a competitive advantage:
Strategy 1: Ecoefficency
Strategy 2: Beyond Compliance Leadership
Strategy 3: Ecobranding
Strategy 4: Environmental Cost Leadership
Strategy 1: Ecoefficiency Focus
productivity is the key element for companies to gain an environmentally competitive advantage,
Waste products are considered to be an inefficient use of resources
Strategy 2: Beyond Compliance Leadership
The firm makes a conscious effort to acknowledge the demands of its stakeholders,
Firm are able to provide "proof" to their stakeholders pertaining to their commitment to the natural environment
Strategy 3: Ecobranding
Firms use their proactive environmental commitments in an attempt to differentiate their products and services for their customers,
Allows potential customers to consider the natural environment when they are purchasing products and services
Strategy 4: Environmental Cost Leadership
Firms that compete on low price can offset their environmental investments,
Firm would concentrate on radical product innovation such as material substitution and/or using fewer materials to yield cost savings
Top 5 Ways to be Voluntarily Compliant:
1. Release an environmental policy that is available for all stakeholders to review,
2. Establish specific targets and benchmarks to be evaluated annually,
3. Implement a system to reduce the level of fossil fuel use,
4. Implement a system to reduce the use of unsustainable products,
5. Recycle
The U.S. Environmental Protection Agency (EPA)
Has the power to impose sanctions and fines against firms who violate environmental laws
Example of EPA Power
Charged DuPont in 2005 with hiding information about the dangers caused by one of the chemicals, perfluorooctanoic acid, used to make Teflon.
DuPont paid $16.5 million in fines and research and education funds
Johnson & Johnson's Worldwide Environmental Policy committed to: (8)
1. Operating beyond compliance
2. Maintaining an environmental accountability structure
3. Integrating environmental goals
4. Striving for zero waste
5. Utilizing innovative technologies
6. Fostering an environmental ethic
7. Building relationships with appropriate stakeholders
8. Enhancing corporate social responsibility
Three types of environmental initiatives that can be generated from an employee (as environmental stakeholders):
1. Initiatives that decrease the environmental impact of the company through the policies of reuse and recycling
2. Initiatives that solve an environmental problem such as hazardous substance use reduction
3. Initiatives that develop a more ecoefficient product or service that uses fewer resources and/or less energy
NGOs as Environmental Stakeholders: (4)
Greenpeace
Sierra Club
Environmental Defense Fund
Friends of the Earth
Greenpeace
Focuses on climate change and has offices in 40 countries
Sierra Club
Oldest and largest environmental group in the US
Environmental Defense Fund
Made up primarily of scientists and economists
Friends of the Earth
International advocacy group for a variety of environmental concerns
Stanwick & Stanwick's Research
Found there was a relationship between a firm's environmental disclosures and its financial performance.
Also found that firms that had a medium level of financial performance had the highest incidences of environmental policies.
Concluded that firms in the "middle of the pack" financially were usually most environmentally committed.
Clean Air Act (1970)
Amended Clean Air Act of 1963 by establishing national air quality standards and statutory deadlines for compliance.
Environmental Protection Agency (1970)
Federal Agency established to protect human health and safeguard the natural environment- air, water, and land; consolidated in one federal agency activities for researching, setting standards, monitoring, and enforcing environmental protection.
National Environmental Policy Act (1970)
Required environmental impact studies for all federal government projects
Clean Water Act (1972)
Created a permit system to regulate water pollution point sources for industrial and agricultural facilities
Endangered Species Act
Protected species at risk of extinction, and the ecosystem they depend on, due to economic growth and development.
Montreal Protocol (1987)
Signed by President Ronald Regan. International agreement to phase out chlorofluorocarbons that erode the ozone
Ky0to Protocol- (1997)
Established a goal of reducing worldwide greenhouse emissions by 5% below the 1990 level by 2012. U.S. did not sign the Kyoto Protocol due to economic concerns.
Cap and Trade
Combines federal controls that limit the amount of pollution permitted with the establishment of a market in which businesses can trade licenses to pollute.
Each company has a certain amount of emissions (cap). Any unused portion can be sold to other companies who are going over their limit (trade).
While supported by President Obama, legislation has not passed Congress.
Some U.S. states and city governments has signed their own versions of the
Kyoto Protocol
More than 850 U.S. majors representing 80 million Americans have signed the
U.S. Conference of Mayors Climate Protection Agreement
American College and University Presidents Climate Commitment
Goal is to reduce carbon emissions of its members to zero.
USM is a member
Benefits to companies who participate (7)
1. Cost savings
2. Increased profits
3. A cleaner environment
4. Access to technical assistance
5.A framework and strategy for improving environmental performance
6. A network of business and industries interested in becoming better environmental stewards
7. Public recognition
Environmental Auditing
As defined by the EPA, is a periodic, objective and documented assessment of an organization's operations compared to audit criteria.
Allows management one measure of ensuring that they are in compliance with environmental regulations
Environmental Justice
Can be defined as the systematic equal allocation of environmental benefits and burden.
Environmental Justice evolved from the perception that lower- income areas with minority ethnic groups within a community:
would receive a disproportionate amount of environmental burdens and a disproportionately low allocation of environmental benefits
Environmental Sustainability
The ability of an organization or country to protect the use of future resources by properly maintaining and protecting the resources that are currently being used
Three major components of Environmental Sustainability
A system to ensure the sustainable management,
The development of social and institutional structures,
Changes in the economic framework so it would support the sustainable management of the earth's natural resources
Three different types of countries addressing sustainability:
Survival economies
Emerging economies
Developed economies
Survival economies
(Haiti, Afghanistan, central African countries)
High levels of pollution/lack of sanitation
Emerging economies
(India, Russia, China)
Overexploitation of renewable resources
Developed economies
(U.S., UK, Germany)
Significant greenhouse gases
Firms whose assets are directly affected by weather patterns must plan for fundamental
changes in the global climate
Firms involved in insurance, real estate, agriculture and tourism will be impacted by
shifting climate patterns
Types of risks to the firm due to the impact of climate change
Regulatory risk
Supply chain risk
Litigation risk
Reputational and physical risk
A Firm's Carbon Footprint
Refers to the amount of carbon via GHG emissions that have been generated by a firm.
Based on the total annual GHG emissions that are a direct result of the firm's operations.
Practical Steps to Sustainability (8)
1. Use reusable bags for shopping
2. Use reusable water bottles
3. Wash clothes in cold water
4. Use wash cloths instead of paper towels
5. Run a fully loaded dishwasher
6. Check tire pressure regularly
7. Recycle
8. Set home thermostat to 68 degrees in winter and 78 degrees in summer