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Week2LectureMGMT2004SubasAugust8th2016-2.ppt*
At the end of this lecture you will:
- Have gained an understanding of the meaning of sustainability and sustainable development
- Be able to differentiate between weak and strong sustainability, and
- Be able to see the importance of viewing business management with a lens of sustainability
Environmental Issues in Business 201
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Lecture 1
Environmental Issues in Business 201
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Lecture 1
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The 15 Global Challenges provide a framework to assess the global and local prospects for humanity. The Challenges are interdependent:
an improvement in one makes it easier to address others; deterioration in one makes it harder to address others. Arguing whether one is
more important than another is like arguing that the human nervous system is more important than the respiratory system.
Can you see why there is a growing desire to shift away from the economic paradigm of development?
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- Silent Spring – warned of toxicity of chemicals
Carson, R 1962, Silent Spring, Penguin Books, New York.
- Tragedy of the Commons – warned of demise of open access resources
Hardin, G 1968, 'The tragedy of the commons', Science, vol. 162, pp. 1243-8.
- Population Bomb – warned of overpopulation
Ehrlich, P 1970, The Population Bomb, Ballantine Books, New York.
- Limits to Growth – warned about the cost of unlimited economic growth
Meadows, D, Meadows, D, Randers, J & Behrens, W 1972, The Limits to Growth: A Report to the Club of Rome's Project on the Predicament of Mankind, Pan, London.
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Hardin (1968) suggested that excessive population growth and exploitation of natural resources leads to the:
‘tragedy of the commons’
When nobody owns a particular resource, it gets exploited to the extent that the resource becomes unusable for everybody
e.g. The Tragedy of the Commons
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So, is sustainability a new concept?
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June 1962:
Rachel Carson’s Silent Spring is published. Acclaimed as the catalyst of the sustainability movement
Greater focus on environmental awareness and the need for paradigm shift away from economic emphasis
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Source NASA: http://www.nasa.gov/multimedia/imagegallery/image_feature_1249.html
December 1968:
The crew of Apollo 8 took the first photo of the Earth from lunar orbit - The Earthrise
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Sustainable Development (WCED, 1987 p. 43)
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What about in Western Australia?
Antecedents to environmental movement in WA dates back to the late 19th century e.g.
- The Natural History Association estd. in 1880s
- Community activism saved Kings Park in 1950s
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Greater Focus on Participation and Local Solutions to existing and emerging problems
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The 1992 Earth Summit: Rio, Brazil
http://www.youtube.com/watch?v=TQmz6Rbpnu0&feature=share&list=PLD940256D2E56A15F
Miss Suzuki - The girl who silenced the world for 5 minutes …
The 2016 Olympics: Rio, Brazil
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Social and environmental problems are interrelated with economic challenges and they all need to be addressed together
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2015 +: 4th Era?
- Paradigm shift towards Sustainable Development for all not just selected few
- 189 countries adopted the UN Millennium Declaration and committed to the Millennium Development Goals (MDGs) in 2000
- MDGs reflect on a shared vision for reducing poverty around the world
- The central goal is to reduce by half the proportion of people living on less than US$1.25 a day by 2015 relative to 1990
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http://www.abc.net.au/worldtoday/content/2011/s3154334.htm
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Paradigm - a framework for observation and understanding the patterns that influences what we think and how we want to solve problems e.g. theory, norm, common sense.
So paradigm shift is a change from one of way of thinking/examining to another
http://janefriedman.com/2012/05/11/distinguishing-between-straight-up-advice-and-paradigm-shift/
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“to sustain”:
Support
Keep in being
Keep in certain state
Keep at proper level or standard
So, “sustainability” has something to do with:
continuance
maintenance, and
the ability to continue an activity or maintain a certain condition indefinitely
Source: Eckersley (1998)
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Shift towards Sustainability
“to develop”:
Improve
Get better
Progressive transformation of economy and society
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Inter-species equity : Making sure that other species and their habitat can co-exist
Intra-species equity: Making sure that all of us have the same rights and opportunities now and in the future (includes inter-generational)
Precautionary principle: Making sure that the lack of scientific certainty doesn't compromise common sense to minimize risks
If an activity is said to be sustainable: it should be able to continue forever. SD = development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987, p.43)
Sustainability or Sustainable Development?
Sustainability = Goal | Sustainable Development = Objective
Ethics
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Critical thinking …
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- Sustainability was first conceived as an environmental issue only
- Sustainability meant nature conservation
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- Today, sustainability stands for the balancing of many issues and dimensions
- Sustainability now encapsulates ethical, political, social and cultural as well as environmental and economic concerns
What are the implications of this changed understanding???
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… Sustainable Everything?
• Sustainable advertising
• Sustainable architecture
• Sustainable art
• Sustainable business
• Sustainable city
• Sustainable communities Plan
• Sustainable community
• Sustainable design
• Sustainable fashion
• Sustainable fisheries management
• Sustainable forest management
• Sustainable industries
• Sustainable landscape architecture
• Sustainable living
• Sustainable packaging
• Sustainable procurement
• Sustainable reporting
• Sustainable tourism
• Sustainable transport
• Sustainable urban drainage systems
• Sustainable urban infrastructure
• Sustainable yield
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The sustainability notion has become a buzzword
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Critical reflection …
My best friend!
Best meal in Vietnam
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Source: Hopwood et al. (2005, p.41)
Pessimists
Optimists
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The Optimists
Ecosystem integrity
Climate integrity
Carrying capacity
Biodiversity
Growth
Shareholder value
Efficiency
Innovation
Empowerment & Equity
Social mobility
Social cohesion
Cultural identity
Institutional development
Sustainable
Growth
social objectives
environmental objectives
objectives
economic
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The Pessimists
Source: Meadows, Randers & Meadows (2008, p.169)
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Optimists vs. Pessimists
Who is right?
Ecosystem integrity
Climate integrity
Carrying capacity
Biodiversity
Growth
Shareholder value
Efficiency
Innovation
Empowerment & Equity
Social mobility
Social cohesion
Cultural identity
Institutional development
Sustainable
Growth
social objectives
environmental objectives
objectives
economic
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Maintenance of high standard of living through the maintenance of various forms of capital
Substitutability of natural capital
Natural capital can be substituted
Anthropocentric
Emphasis on human needs and values
Mechanistic worldview
All can be measured and explained
If you cannot measure it, it does not exist
Nature is ascribed utilitarian values only
Nature only matters when useful to humans (resources)
Optimist and Strong faith in:
technology
science technology and science will save the day
human ingenuity
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Anthropocentric (planet is for people to exploit)
Optimistic (science & technology can fix problems)
Economic rationality (substitutability of capitals)
This view suggests that man-made capitals cannot serve as a substitute for (critical) natural capital
Pessimistic assumptions
Focuses on precaution and carrying capacity
Ecocentric worldview
Nature matters in its own right
Challenges entrenched structures and beliefs
Rejects economic rationality and technocracy
Calls for radical social, political, and economic reform
Trans-scientific / multi-disciplinary
New approach to science based on integration and holism as opposed to sole reliance on single disciplines
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Diesendorf & Hamilton (1997, p.79)
- Ecocentric (planet has its ecological limits)
- Pessimistic (no prospect of finding solutions)
- Holistic rationality (natural capital can’t be substituted)
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Triple Bottom Line Paradox
Achieving that ideal balance: to accumulate financial capital, maintain or strengthen social capital, and in the process not degrade natural capital remains paradoxical
Society
Environment
Economy
Env
Economy
Soc
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Practice Tutorial Question:
Discuss the notion of sustainability in the context of weak vs strong debate.
Forms of Capital
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Forms of Resource or Capital
| Capital | Descriptions | Contextual indicators |
| Built | Physical assets including material infrastructure and man-made assets (Flora et al., 2004) | Usability of business facilities e.g. offices, factories |
| Cultural | The way people understand the world and how they interact with it as well as their history and traditions (Throsby, 1999) | The way of life, differences in the way business operates in various places |
| Financial | Money or wealth that facilitates productivity (Goodwin, 2003) | Profits, Stock gains, capital gains |
| Human | Skills and competencies that make people act in productive ways (Coleman, 1988) | Management capacity, Educational qualification |
| Natural | Resources that reside in a certain place (e.g. land, water, organisms) which provide societal benefits through ecosystem services (e.g. forests, wetlands) services such as clean air and fresh water, or aesthetic pleasure (Costanza et al., 1997) | The environment that businesses depend on |
| Political | Ability to access power, connect to resources and power brokers in order to voice concerns and be heard (Aigner et al., 2001) | Representation of business interests in politics and policies |
| Social | Features of social organisations, such as trust, norms and networks, that can improve the efficiency of society by facilitating coordinated actions (Putnam, 2000) | Relationships within, between, and outside firms e.g. bonds, bridges, and linkages |
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Can we substitute natural capital in reality?
- 1.27 ha structure originally built as a dome or an artificial enclosed ecological system in Arizona (USA)
- The dome aimed to mimic nature and contained: rainforest, ocean with a coral reef, a mangrove wetlands, grassland, agricultural system & human habitat
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- Due to falling oxygen and rising CO2 levels, 8 scientists needed to be evacuated only after a few months... If we have hard time figuring out the dome for 8 people, how would we manage to keep 7 billion (and counting) people alive and at what cost?
- The cost of the built capital i.e. Dome that (marginally) regulated life-support systems for 8 People over two years was about $150 million, or $9,000,000 per person per year.
- These ecosystem services i.e. Natural capital are provided to you and me more-or-less cost-free by natural processes, if we were to be charged for such services, the total invoice (sans GST ) will run into many quintillion dollars for one generation alone!
Lesson Learned from Biosphere 2
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Homer Simpson accidentally pollutes the Lake Springfield with pig manure and the government decides to encase the whole town in a dome....
....Inside the Dome
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Mission: Obtaining unobtainium
... Outside the Dome
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Sustainable development requires:
Inter-species, Intra-species and Inter-generational equity considerations; and the adoption of the precautionary principle in the context of weak or strong sustainability thinking
However, many unanswered questions remain:
How should decision-makers address trade-offs?
E.g. jobs vs. few trees; subsidy for cheap energy vs. action on climate change
How do we deal with sustainability paradox?
Socially and environmentally just development? Where is the successful model?
Difficult institutional/behavioural changes? Are we ready?
What is the specific role of business in resolving global pressing problems?
There is little guidance on how to make sustainable development a reality. There are no laws and no agreement on what this should look like.
Yet, many reasons exist for businesses to take it seriously.
This we will explore in more detail in weeks to come…
Concluding Remarks
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Environmental Issues in Business 201
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Barbier, E. B. (1987). The concept of sustainable economic development. Environmental Conservation, 14(2), 101-110.
Carson, R. (1962). Silent Spring. New York: Penguin Books.
Diesendorf, M., & Hamilton, C. (Eds.). (1997). Human ecology, human economy. Ideas for an ecologically sustainable future. St Leonards: Allen & Unwin.
Eckersley, R. (1998). Measuring progress: is life getting better? Collingwood, Victoria: CSIRO Publishing.
Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine, 13, 32-33, 122-126.
Giddings, B., Hopwood, B., & O'Brien, G. (2002). Environment, economy and society: fitting them together into sustainable development. Sustainable Development, 10, 187-196.
Hanley, N., Shogren, J. F., & White, B. (1997). Environmental economics in theory and practice. Oxford: Oxford University Press.
Hopwood, B., M. Mellor, and G. O'Brien. 2005. Sustainable development: Mapping different approaches. Sustainable Development 13 (1): 38-52.
LaRouche, L.H. Jr. 1982. There are no limits to growth. Club of Life: Wiesbaden
Lowe, I. (2002). Social behaviour and incentives for sustainability. Retrieved 7th July, 2003, from http://www.coastal.crc.org.au/coast2coast2002/presentations/Plenary/Social_behaviorincentives_for_sustainability.pdf
Meadows, D. Randers, J. & Meadows, D. (2008). Limits to growth. The 30-year update. London: Earthscan.
Spangenberg, J. (2001). Sustainable development: from catchwords to benchmarks. In M. Charter & U. Tischner (Eds.), Sustainable solutions: developing products and services for the future (pp. 24-74). Sheffield, UK: Greenleaf.
World Commission on Environment and Development. (1987). Our Common Future. Oxford: Oxford University Press.
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Sustainability
Practical solution
or theoretical trap?
