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We need to take a broader; more integrated look at the range of environmental programs available to us, with an eye toward finding the most efficient and effective way to reduce risk.
-William K. Reilly, Environmental Protection Agency Administrator
Work with an associate. Look at the opening photo and on a sheet of paper, write your answers to the following questions.
The following articles are about environmental issues that have caused debates between environmentalists and businesses. Before you read, form a business team to discuss how to deal with the following situations.
BUSINESS AND ENVIRONMENT
There are some of the environmental issues we face today:
According to 2007 research pollution could cause 40% of all death worldwide.
Companies are making their operations do more than just "no harm." They are performing an integral part of nature’s functioning.
We like to believe that the challenges we face--climate destabilization, natural resource depletion, waste accumulation--are unique to the human species. But nature was here first, providing a catalog of nontoxic materials, a playbook of clean manufacturing techniques, and ultimately a model for sustainable systems from its 3.8 billion years of R&D. Here are some inspiring solutions to our thorniest technological and systemic sustainability challenges through the idea of business ecology, the idea that businesses are part of the ecosystem and can only be sustainable by acting like a functioning part of nature.
There are many environmental moral issues relevant to business. They include
a) ecology,
b) traditional business attitudes towards the environment,
c) problems involving environmental abuse,
d) environmental protection,
e) methods to pay for environmental protection,
f) other issues involving environmental ethics.
Key environmental issues affecting business include industrial waste, sustainable development of raw materials and water and air emissions. These issues affect business because laws require businesses to change equipment and procedures to meet imposed standards, which costs businesses money. Many businesses undertake stricter changes in an effort to preserve the environment. These businesses pay for the protective and proactive environmental measures and attempt to recoup the expenses through consumer good will or the added consumer base gained from an environmentally friendly policy.
Businesses that manufacture products create, at some point in the manufacturing process, manufacturing waste. Environmental laws and good environmental citizenship prohibit the indiscriminate dumping of manufacturing byproduct, so businesses must decide how best to dispense with it. Many implement recycling programs, others sell what they can of the waste to other manufacturers who use it in their own manufacturing processes as raw material. Either way, the effect is additional cost to the business in man hours, procedures, equipment and handling all specific to moving the waste products out of the business manufacturing process and facilities.
Manufacturing processes often generate air and/or water emissions, which include particle or chemical-filled smoke, ash and particles and chemicals that seep into ground water through run-off. Environmental protection laws require businesses to protect the environment from exposure to these emissions. Remedial process include placing screens of specified gauges over smoke stacks, filtration of waste water and lining of retention ponds with clay and poly liners. New regulations are implemented frequently that require retrofitting of manufacturing facilities with increased protections, such as screens of even finer gauges and pond liners of newer and safer materials. All of these measures are costly to business and affect businesses first by decreasing profit margins.
The importance of environmental destruction is recognized by every theory of justice and every moral theory. Destroying the environment often violates our right to non-injury and endangers our health. Additionally, some people also think that it’s morally preferable to protect rather than harm nonhuman animals. Any moral system that is unable to admit that animals should be protected could be flawed.
Businesses have traditionally shown egregious indifference towards the environment. Environmental protection was rarely seen as an issue. A company would harm the environment to whatever extent was profitable, and they often harmed the environment despite the fact that it was unwarranted to do so. In particular, people saw the “natural world as a ‘free and unlimited good’”. People at one point thought that the world’s resources could be taken without end and without any morally significant harm done. Pollution could damage the environment, but the damage done was considered to be insignificant because the world was seen as such a large place.
In recent years growing public concern regarding environmental matters has caused many businesses to rethink their stand on environmental issues and to adopt environmentally responsible policies.
All businesses, regardless of owners' views on environmental protection, have a legal obligation to follow federal, state and local environmental laws. For example, the Clean Water Act limits the amount of waste businesses can produce that end up in water. Some businesses must follow additional regulations. For instance, oil companies must get approval for new offshore oil wells, and coal companies must provide information to the government about environmental and safety practices.
Green energy is any energy that reduces the impact on the environment by decreasing waste or reducing the use of fossil fuels. Wind turbines, electric cars and solar energy are examples. Businesses frequently can save money by instituting green policies, and some green energy remodeling projects can make your business eligible for a tax deduction. When businesses institute green energy systems, they serve as role models to their customers and increase awareness of environmental issues.
Businesses tend to produce large quantities of waste. From excess packaging to uneaten food, this waste extracts a huge environmental toll through increased deforestation, greater use of energy and filling up landfills. By using recycled products, businesses can reduce their environmental impact. Policies that encourage customers to reduce their waste -- such as offering a discount for using reusable bags or providing a recycling bin at the business -- can help businesses become leaders in the environmental protection movement. Offering disincentives for waste, such as charging a fee for plastic bags, also is helpful.
Business promotions that raise awareness of environmental issues don't just help the environment; they also can improve business. Try having a weekly promotion offering customers a free or discounted item for bringing in a recyclable bag or box. Sponsor a community garden, or offer classes on environmental issues. The right promotion for you depends upon the precise nature of your business, but events or options that draw in customers can cause them to patronize your business both because they're there and because environmentally conscious customers are more likely to patronize green businesses.
The environment is one of the most important moral issues not only because harming the environment often violates our right to noninjury, but also because environmental damage has been incredibly harmful to both people and other animals. Not to mention that many environmental issues can create even more devastation in the future, such as the possible depletion of the world’s resources to future generations.
The importance of the environment not only shows traditional failures of business ethics of the past and present, but it also helps clarify the importance of externalities and animals. Businesses traditionally saw no need to pay for externalities, but we now know that externalities are of grave importance and are often a matter of life and death. Businesses traditionally saw no need to respect animals, but many moral philosophers no longer see any reason to value ourselves over other animals at any cost.
Discuss such issues:
What are possible ways to encourage companies not to pollute the environment?
Who should pay the costs?
No one wants to have to personally pay the costs to protect and restore the environment. Most people think that either those who are responsible for environmental damage or those who benefit from it should pay the costs. Consider each possibility:
Cost allocation
After we decide who should pay for protecting and restoring the environment, it’s still not clear how it should be paid: Through regulations, incentives, pricing mechanisms, and/or pollution permits. We will discuss these ways to allocate the costs to protect and restore the environment.
Regulations
“Agencies such as the EPA, set environmental standards, which are then applied and enforced by those agencies, other regulatory bodies, and the courts”. Sometimes a company is limited in how much it’s allowed to pollute and a company might have to install machines that help reduce the pollution. The main advantage is that such regulations are legally enforceable and companies that are caught cheating can be fined. However, there are also disadvantages:
One, regulators have to know how much pollution to expect from companies and whether or not it’s possible for them to reduce pollution, but this requires extraordinary amounts of research and expertise. There are several different kinds of manufacturers and it can be difficult to know so much about them all.
Two, regulations often ignore differences between industries and manufacturers and require them all to be regulated in exactly the same way, even when it might not make sense to do so. For example, “the courts required two paper mills on the West Coast to install expensive pollution-control equipment, even though their emissions were diluted effectively by the Pacific Ocean and it took a special act of Congress to rescue the mills”.
Three, regulation can cause displacement. First, companies can go out of business if the regulations will cost too much. Second, a company might move somewhere else where regulations are less severe. Either way, it can suddenly leave many employees without a job. Sometimes a town can greatly rely on a company for employment and everyone will have to find another place to live after the company moves on.
Four, companies might be able to reduce pollution below the regulated requirements, but have no incentive to do so.
Incentives
The government can reward companies in various ways for reducing the harm they do to the environment. For example, the government can offer tax breaks for buying equipment to reduce pollution or offer grants to companies to install the devices (407). At one point the EPA offered good publicity and trophy-like rewards to companies that voluntarily reduces pollution. Incentive programs require minimal government interference and they don’t harm companies or cause displacement. However, there are disadvantages to incentive programs:
One, progress will likely be slow and environmental problems that need quick solutions will probably continue.
Two, many incentives are subsidies for polluters and rewards companies that were already doing something harmful rather than benefiting those who are harmed.
Three, it seems unjust to pay a company not to pollute just like it’s wrong to pay people to be moral for any other reason. It could be a form of coercion to be forced to pay a company money to stop polluting, and offering a company money to stop polluting doesn’t seem a whole lot better.
Pricing mechanisms
We can charge a company for the amount they pollute. Such pricing could be based on the area and time. Places that already have too much pollution could raise the price of pollution because the total pollution we encounter can reach dangerous levels, and places with very little pollution could lower the cost because the pollution done there might do very little harm.
Pricing mechanisms encourage companies to find ways to pollute less, they don’t put a company out of business unless it is likely causing the world more harm than good, and it allows companies to pay the public for certain externalities.
Pollution permits
Companies could be charged money to get a license or “permit” to pollute. This can be done in different ways such as:
Permits have been successful in the past, but their success depends on certain criteria (ibid.). First, the pollution should be easy to monitor. Second, the number of firms involved should be manageable. Third, the environmental goals should be clear and widely accepted.
Economists tend to favor pricing mechanisms and pollution permits, but it’s not obvious that those are the most moral solutions. One, the pollution costs might be arbitrary. Two, areas with strict environmental controls could put companies out of business or require the company to relocate. Three, areas with strict environmental controls could give certain businesses an unfair disadvantage. Four, these forms of pollution control legalize pollution and might imply that polluting isn’t immoral—even when the polluting is egregious and entirely unnecessary.
Shaw argues that all of these solutions have strengths and weak points and other possible solutions aren’t taken very seriously at this point in time (such as banning pollution entirely), so we have little choice but to use one or more of them.
Supplementary material
Read the article and be ready to discuss such questions:
Environmental Business
Environmental Business looks at ways in which businesses can operate in an eco-friendly way and still remain profitable.
Achieving a green economy involves transforming what we produce and how we produce it, responding to changes in both supply and demand. We need a balanced and environmentally sustainable economy that will support strong business investment and new opportunities in order to be able to meet long term challenges.
It is crucial for natural assets to be managed sustainably and used efficiently across all sectors of the economy. It is important to reflect their value in all production and consumption decisions.
In order for this transition to take place, business and consumers must take advantage of the benefits of resource efficiencies. The economy will need to grow, but this must be within the context of reduced environmental impact and a greater resilience to future environmental challenges, which will include climate change, material scarcity and any emergencies related to securing energy supplies and food security.
From a business point of view going green might not always appear to be economically efficient, but in many cases companies will have no option since government policy and subsequent legislation will compel them to follow certain lines of action.
There will obviously be costs involved. Buying eco-friendly equipment, packaging and materials can be expensive. Initial costs can be higher, even if the variable costs work out cheaper in the long run. Light bulbs are a good example. Environmentally friendly bulbs can cost three times as much as conventional bulbs, but they last much longer. The initial cost can be offset by long-term savings, provided the company stays in business for long enough to reap the benefit.
Most consumers claim to be really environmentally conscious, with a genuine belief in the need to reduce their carbon footprint, but product cost is often uppermost in their minds. If for instance, they have a choice of an organic all-natural bar of soap that costs twice as much as a standard bar, many will instinctively opt for the cheaper one.
Businesses must consider very carefully how much of their market research represents genuine consumer willingness and how much is simply lip service. Consumers can be very fickle, having different standards for different products. Someone who would only buy organic food might not be at all concerned that their car was not eco-friendly.
Effective marketing is very important if a company wishes to sell green products. Well informed sales staff are also necessary because customers are not always equipped to recognise what makes a product green.
The traditional manufacturing process never considered the disposal of products once they had come to the end of their useful lives. In this environmentally conscious age that is all changing. The simple dumping of unwanted goods and materials is no longer acceptable. Packaging is being made recyclable and many products are now being made in ways that make recycling very much easier.
It is also important to look at supply chains when considering environmental business issues. A garment made of organic cotton might appear to be very environmentally friendly, but this would definitely not be the case if it was made using child labour in a far eastern sweatshop.
On a much larger scale it is possible for major companies to save money by taking environmentally friendly action. The Chinese global shipping company COSCO cut the number of its distribution centres from 100 to 40. Service levels to clients remained the same, but costs were reduced by 23% and CO2 emissions fell by 15%, equating to 100,000 tonnes a year.
In another example, in 2000 IBM set targets for saving water in its various microelectronic manufacturing operations. Within eight years the company had achieved a 2.4% savings rate, equivalent to 1.2 million cubic metres of water.
Not only are these savings good for the environment, but they can make sound economic sense for a company. Organisations worldwide, from government agencies to retailers and financial institutions are now looking at the current and future impact of their activities.
Areas under consideration include:
energy management;
waste management;
carbon management;
water management;
sustainable procurement of raw materials;
ethical labour standards within the supply chain;
product composition
eventual disposal at the end of the lifecycle.
Although the majority of companies might express enthusiasm for most of these areas, the reality is that for quite a number of them the balance sheet and the potential for profit and loss are still the overriding factors.
In a highly competitive world, if savings can result from more efficient management of energy or waste, this is more likely to find favour than the procurement of raw materials from a sustainable, but more expensive source since that will simply lead to an increase in the cost of the finished product.
Of course not all companies take that view and there are a great many who take their Corporate Social Responsibility (CRS) very seriously. In fact many companies take the view that promoting themselves as being socially responsible gives them a significant commercial advantage.
Although consumers can be very fickle and the price of a product is often a major factor, when given a choice, many consumers will opt for a product that is environmentally friendly.
As time moves on and the world gets more used to a greener lifestyle, consumers and producers alike will have to make adjustments. Many businesses have already adopted the environmental agenda with great enthusiasm, but there remain a significant number where progress has been slow. These businesses will need to review their policies if they are to survive.
Government action can only do so much. It can produce policies, drive forward a ''zero waste'' agenda, support development to reduce environmental impact and pass laws, but the only way that businesses can remain viable is by meeting consumer demand.
The combined effects of climate change and decreasing world resources are leading to an increase in environmental awareness. Customers are responding to this and businesses must take note and act accordingly.