business ethics presentation
tomiko12345
EnvironmentalSustainabilityinBusinessDecisionMaking.pptSO, WHAT IS GOING ON WITH NATURE?
Population growth: we are now 7.9 billion people
Every day +/- 300,000 people are born and 100,000 die
See http://www.breathingearth.net/
SO, WHAT IS GOING ON WITH NATURE?
Increasing consumption
- it would take 5 to 6 planets for the entire world population to consume and pollute to the standards of US citizens (and around three planets for European standards)
- We need 3 planets to feed our present average consumption
- Whilst the average biologically productive area available to each world citizen (assuming equal distribution) in 20013 was 1.8 hectares, the footprint of US citizens was 9.6 hectares, that of EU citizens was 4.8 hectares and that of low-income countries 0.8 hectares (Global Footprint Network, 20016)
So, wealthy countries are ON AVERAGE consuming way too much while less wealthy ones are consuming too little. In total, we are consuming too much.
WHAT IS THE BUSINESS COMMUNITY DOING ABOUT THIS?
- The business world tried to respond to this challenge with the concept of sustainable businesses.
Sustainability is “the integration of economic, social and environmental spheres to: meet the needs of the present without compromising the ability of future generations to meet their own needs.”
Report of the World Commission on Environment and Development: Our Common Future
Sustainable businesses would be the ones that use resources today without depleting them for tomorrow.
THE CIRCULAR ECONOMY
- A specific model proposed by businesss in this sense is the CIRCULAR ECONOMY.
- In this view we have to work to CLOSE THE LOOP by reducing, reusing, and recycling all the resources. This is opposed to the old economy of using and throwing away.
- The business community has also proposed that we do not need to worry because the economy will de-materialize. This means that in time, we will start to use less and less resources per GDP increase because the economy will be more service-based.
- So, if I make shoes I use more resources that teaching a yoga class.
- But, experts like Herman Daly, say that this is naive.
- “It is true that for some countries resource content per dollar of GDP has declined, but it is also true, yet unremarked, that aggregate resource throughput has continued to grow. Of course oil and minerals do not add value to any thing. They are natural resources, "that to which value is added“ added by labor and capital, which embody knowledge and ingenuity. It is impossible to have "value added" without something to add it to, namely resources (low entropy matter/energy) (Georgescu-Roegen 1971, Daly, 2015).
BUSINESS ATHICS AND ENVIRONMENTAL ISSUES
- The responses of the business community are still being accused of being naive because they do not attack the issue of continued economic growth.
- The econonomic paradigm of continued growth on which business is founded conflicts with the limited capacity of nature.
- Renewable resources such as water or wood can be used sustainably AS LONG AS their sustainable yield is respected.
- Non-renewable resources MUST BE SUBSTITUED BY OTHER RENWABLE ones because they are finite.
Central to these programmes and their ‘‘pragmatism’’ is the belief in the compatibility between consumer capitalism and ecological sustainability; indeed, this belief has become a hegemonic and convenient motif fuelled by faith in ‘‘eco-technology’’ and market mechanisms (Fournier, 2017)
BE AS IT MAY…..
Sustainable development is failing to tackle the environmental impacts of growth. The UN reports highlight the importance of economic growth as a cause of climate change, indicating that “the contribution of population growth between 2000 and 2010 remained roughly identical to the previous three decades, while the contribution of economic growth has risen sharply” (IPCC, 2014:8).
OUR PLANET IS WARMING
- The UN report on climate change concludes that:
- continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system”
- “limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.”
- There are specific impacts with high or very high confidence such as
- Species are changing migration patterns
- Lower water availability
- Climate-related extremes such as heat waves, droughts, floods, cyclones, and wildfires, reveal significant vulnerability and exposure of some ecosystems and many human systems to current climate variability.
- Etc, etc, etc.....
PRINCIPLES GUIDING SUSTAINABLE PRODUCT DEVELOPMENT
The Funnel Metaphor for Sustainability & Businesses Avlonas & Nassos (2013)
Approaches to sustainability in business
The Sustainability Approach
Environmental problems have a political, social and economic dimension that needs to be addressed to be realistic about the solutions.
The Sustainability Approach
- In the sustainability approach, companies assess their impact using a people, profit, planet approach. This is called the triple bottom line approach.
| Impacts on People | Impacts on the Planet | Impacts on Profit |
The Market-Based Approach
- Based on the idea that natural resources will be properly managed through efficient market forces.
- As the supply of any resources decreases, the price increases, thereby providing a strong incentive to supply more or provide a less costly substitute.
- So, for example, wood was substituted by plastic, a less expensive more abundant material.
- In this sense, all resources are “fungible.” They can be replaced by substitutes, and in this sense resources are infinite.
- In the market-based approach, fundamentally, environmental problems involve the allocation and distribution of limited resources. Whether we are concerned with the allocation of scarce nonrenewable resources such as gas and oil, or with the earth’s capacity to absorb industrial by-products such as CO2 or PCBs, efficient markets can address environmental challenges.
- For example, if we want water and air, we can consider striving for 100% pure and clean ones but the costs (lost opportunities) that this would entail would be too high. A more reasonable approach is to aim for air and water quality that is safe enough to breathe and drink without costing too much.
- This balance, the “optimal level of pollution,” can be achieved through competitive markets.
- Taken from Business Ethical Decision-Making, Hartman, DesJardins, McDonalds (2017) citing William Baxter, People or Penguins: The Case for Optimal Pollution (New York: Columbia University Press, 1974)
CRITQUE OF MARKET-BASED APPROACH
- They assume that all goods are fungible or substitutable but is the Amazon substitutable? Are polar bears substitutable? Is natural capital substitutable by man/woman-made capital?
- Another critique is the existence of externalities that need to be corrected. Because the “costs” of such things as air pollution, groundwater contamination and depletion, soil erosion, and nuclear waste disposal are typically borne by parties “external” to the economic exchange (e.g., people downwind, neighbors, future generations), free-market exchanges cannot guarantee optimal results.
- Another critique are market failures that occur when no markets exist to create a price for important social goods like organs or species.
THE REGULATORY APPROACH
- In this approach laws are enacted that effectively shift the burden of environmental harm to those who would cause the harm. This is the principle of “who pollutes, pays”.
- The regulatory approach sees lack of sustainability as a market failure that can be fixed by intervention.
THE REGULATORY APPROACH
- One way that the market approach deals with unsustainability is by creating markets for costs and goods that do not have one.
- Let’s look at the carbon market trade system.
- How does it work? Companies are given permits by an emitting entity (THE GOVERNMENT). The permits are for free, sold at a fixed price or auctioned.
- Once permits have been allocated,
- Some emitters are able to modify their operations at low cost and thus do not need all their permits; they seek buyers to sell their excess permits
- Other emitters are not able to adjust as easily and need more permits than they own; they seek sellers to buy additional permits
Example: Canada will implement a revenue-neutral carbon tax starting in 2022.
Start at $20/ton in 2019
Rising at $10/ton each year until reaching $50/ton in 2025.
Another way is taxing externalities.
For example, we can look at the carbon tax. How does it work?
- Every regulated emitter pays the amount of the tax set by the legislature on each ton of carbon emitted
- The tax internalizes the externality of emissions
- To implement the tax, a monitoring agency must be set up to measure emissions of each emitter
- To collect the tax, the government must set up a collection agency such as the IRS
- To amend the tax, the legislature must make an amendment to law
THE REGULATORY APPROACH
US economist William Nordhaus won Nobel prize (2018)
The Nobel committee: “the most efficient remedy for the problems caused by GHG emissions would be a global scheme of carbon taxes that are uniformly imposed on all countries.”
Nobel prize winner Jean Tirole (economist) also support a global carbon tax to fight global climate change.
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The Strategic Approach to Sustainability
D. Hitchcock and m. Willard, Axis Performance Advisors, Teaching Business Sustainability, Getting it: Understanding the Principles and Science behind Sustainability, Green Leaf Pub.
Compliance
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First, sustainability means compliance. The law requires in Catalonia, recycling used oil, for example.
Eco-efficiencies
Green Marketing
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Being sustainable companies can target the green market. Read this:
The internal market of bio products in Spain increased 12.55% from 2017 to 2018. The per capita expenditure on Bio products is of 36,33 Euros per capita on average. Bio consumption is 1.7% of the food market. Millennials appear to be driving this trend due to their high spendable income, their eco awareness and their becoming parents. The motivation is mainly because of health and absence of chemicals and taste.
The so called green consumer is realtively wealthy and highly demanding about environmental, social, and econòmic impacts of their products.
Sustainability
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Sustainability can help companies earn a competitive advantage.
For example, by using natural fibres for their bags Hemper’s bags are more durable and soft that synthetic fiber ones.
Restorative
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The highest level of sustainabiity is restorative. This is when we invest and preserve natural capital because it is OUR capital as well. For example, when tourism companies take tourists to see whales, the whales are making profit for them! Whale watching -apart from its important educational, environmental, scientific, emotional symbolic and other socioeconomic benefits — is now at least a $1 billion USD industry attracting more than 9 million participants a year in 87 countries and territories. (UN, 2001)
Investing in helping whales is taking restorative steps.
