1. Environmental Problems
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Ozone Depletion - harmful UV radiation
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Global Warming - greenhouse effect based
upon carbon in the atmosphere (see next slide)
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Acid Rain - poisons forests, rivers,
lakes and seas
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Population Increases – pressures on
resources
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Timber - depletion/deforestation
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Toxic air emissions - disasters or
gradual effects
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Waste - biodegradeability
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Water – increased demand/ overfishing
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World population in numbers
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1 billion- 1804
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2 billion- 1927
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3 billion- 1959
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4 billion- 1974
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5 billion- 1987
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6 billion- 1999
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7 billion- 2011
UK Approach to Carbon Issue
The Stern Review
from The Ecologist Dec 07/ Jan 07
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Global temperatures have risen by 0.7° in last
century and are still rising (with a commitment to 1.6° already). This
correlates with increasing concentrations of GHGs in the atmosphere.
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Sea levels have risen 0.2m as polar ice caps and
land glaciers melt
Stern sets out 3
scenarios:
It would be catastrophic to carry on with business as usual
– not a viable option
2. Stabilising atmospheric C02 at 450 ppm
(currently 430ppm and rising by 2.3ppm annually -) – the only reasonably “safe”
option – gives 50/50 chance of stopping temperatures from rising by more than
2°. Such a rise would cause polar caps to melt making 200m to flee their homes.
Rainforests would die. Cost? 3% of world
GDP annually
3. Stabilising atmospheric C02 at 500-550 ppm -
Cost $1 trillion annually which is 1% of world GDP
Stern goes for option
3
What are the implications?
What are the implications?
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Increased temperatures around 2.5°
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A 66-99% probability that climate change is
irreversible – ie beyond a tipping point!
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If we lose this “bet” the Ecologist says, “ we
lose Africa, Bangladesh, the Amazon, the Maldives, and most of the Netherlands.
We see agriculture collapse, water shortages, and floods. Two hundred million
migrants on the march from coastal areas...”
Sterns recommends carbon pricing
If carbon priced sufficiently high then it should have the
effect of re-localising economies. Markets for low-carbon energy products
likely to be at least $500bn per year by
2050
2. Legal/Political
regulatory Issues UK
Government response
Climate Change Act 2008
Climate Change Act 2008
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This UK Act (in force since November 2008) puts
into statute the UK's targets to reduce carbon dioxide emissions through
domestic and international action by at least 80 per cent by 2050, against a
1990 baseline.
•
This
target will be reviewed, based on a report from the new independent
Committee on Climate Change on whether it should be even stronger still,
and the implications of including other greenhouse gases and emissions from
international aviation and shipping, in the target. The Committee will report
its findings by December this year.
•
Five-year carbon budgets, which will set
binding limits on carbon dioxide emissions ensuring every year’s emissions
count. Three successive carbon
budgets (representing 15 years) will always be in law – providing the
best balance between predictability and flexibility. These budgets will be
backed by strong annual accountability and independent scrutiny.
•
Emission
reductions purchased overseas may be counted towards the UK’s targets, consistent
with the UK’s international obligations. This ensures emission reductions can
be achieved in the most cost effective way, recognising the potential for
investing in low carbon technologies abroad as well as action within the UK to
reduce the UK’s overall carbon footprint.
Global Environmental Problems require Global Political Initiatives – Attempts to Address Climate Change
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Rio Declaration (1992)
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Kyoto Protocol (1997) – reduce global greenhouse
gas by 5.2% of 1990 level by 2012 and then by 50% by 2050 – USA and Australia
withdrew
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Johannesburg World Summit (2002)
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UN Conference on Climate Change Buenos Aires
(2004) – India and China join USA re Kyoto 2
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Prospects for UN Bali Summit in December 2007 –
“roadmap” without specific targets leading to expected agreement in Copenhagen
2009. USA agrees in the end.
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Copenhagen (2009)
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Cancun (2010)
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Durban (2011) Watch this space!?
What about our holidays?
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Fisher & Lovell (2006, p. 339) Business Ethics & Values
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“At the present time it is impossible to
see the adjustments required to move to a globally sustainable position
on natural resource usage without major adjustments being made to people’s
perceptions of acceptable ways of living….”
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…”However, it has to be recognised that, at the
present time, with ethical egoism such an apparently powerful
descriptive theory of human behaviour, for a political leader to claim that
their policies will lead to fundamental adjustments and, some might argue,
reduced standards of living would be political suicide.”
•
However, there was obviously considerable
difference between UK and US on this issue!
What ethical perspectives might be applicable?
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Pollution is wrong because each human has a right
to a liveable environment (WT Blackstone 1974) – but there is limited
legislation that imposes absolute bans on pollution. Although various
environmental Acts such as the Environmental Protection Act 1990 are based on the idea of the polluter paying
they are often allowed to continue to pollute due to acceptance of the argument
that the costs of reducing pollution to zero would be too great for them to
bear.
DEFRA
WEBSITE: BATNEEC - Best Available Techniques Not Entailing Excessive
Cost:
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“These techniques are used to prevent, and where
that is not practicable, to minimise release of certain substances (prescribed
in regulations) into any environmental medium (air, water, land); and to render
harmless both any such substances which are released and any other substances
which may cause harm if released into any environmental medium. BATNEEC is
usually expressed as emission limits for the prescribed substances released by
the process.”
Utilitarian view
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Pollution is a market defect – market prices
need to properly reflect the true costs of production – “society as a whole is harmed as its
overall economic welfare declines” (Manuel Velasquez 1982)
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In this and many other industries there are many
polluting firms which don’t pay for the environmental damage caused by their
pollution
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The previously mentioned EPA 1990 does introduce
the principle of polluter pays … but fines can be small.
Fisher & Lovell (2006) p 355
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“It is almost impossible to envisage how the
price mechanism would incorporate the views of future generations, other than
perhaps taxes.. to pay for “clean-ups” etc”
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But the authors go on to say that maybe what
future generations might really have argued is `don’t do it!’
Use of market mechanisms
EU Emissions Trading Scheme
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Started 1st Jan 2005
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Kyoto Protocol commits EU members to cut GHG
emissions by 8% by 2012 (w/ UK agreeing to 12% by 2010)
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Each country to agree a National Allocation
Plan. Any individual organisation which thinks its allowance will be exceeded
needs to “buy credits” from those not needing them due to energy efficiency
steps
But will the price of extra credits be sufficiently high to
encourage the transfer to energy efficient plant? Fisher & Lovell say many
may choose to be fined for exceeding maximum limits – so Governments need to
ensure fines are “high, even punitive”
3. So what might responsible companies do in respect of the environment?
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Many of the remaining slides come from the wave
of “green-ness” in the early 1990s
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There is obviously greater urgency about these
matters now and we can expect lots of focus on reducing carbon footprints
Company responses ?
Senge P, Smith B, Kruschwitz N ,(2008), The Next Industrial Imperative, Strategy & Business, Issue 51 pp1-13
Senge P, Smith B, Kruschwitz N ,(2008), The Next Industrial Imperative, Strategy & Business, Issue 51 pp1-13
•
DuPont – shifting much of its product line from
petroleum-based to bio-based feedstocks – in 2007 around 17% of profit from
sustainable products
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CocaCola 2007 partnership- with WWF with goal of replacing “every drop
of water we use in our beverages and their production”.
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Nike has reduced carbon footprint by more than
75% since 1988 – “having to completely rethink how we design, produce and
distribute our products and how we recover them at the end of their lifetime”
(Darcy Winslow)
Problem Industries?
“Cement Industry Takes Stock of its Impact at Summit” – GreenBiz.com, 15 Oct 2007
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Burn coal to heat kilns to 2,700 degrees
Fahrenheit
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Decomposition of limestone releases CO2
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In October 2007 18 companies, representing 40%
global production met to develop voluntary goals to reduce energy intensity –
in advance of legislation
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Cement Sustainability Initiative - in partnership with World Business Council
for Sustainable Development – working on energy efficiency, formulae and ways
of reducing emissions
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“Out of 236 companies in the FTSE 350 index,
just 15% have set emissions reduction targets that stretch beyond 2020. This is
despite the UK target of 80% emissions reduction, from 1990 levels, by the year
2050…..
•
There are though, some encouraging signs. Those
companies that have set absolute reduction targets have pledged to reduce
emissions by 3.8% per year, a higher level than the 1.7-2.6% annual reductions
set out in the carbon budgets”.
Kleiner (1991) identified 3 key components of green companies
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have developed a mechanism for placing a
monetary value on the complete lifecycle of a range of alternative
product/packaging proposals. Such "cradle to the grave accounting"
will assist in the development of products and limit environmental impact;
•
record and publish environmental data. Possibly
thereby averting environmental disasters and improving community relations as a
result;
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be committed to reducing waste at source, for
example, via some form of TQM (Total Quality Management) programme.
(What Does It Mean to be Green?, HBR, July-August
Roome (1992) sets out a continuum of 5 possible
environmental options for organisations:
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non-compliance;
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compliance;
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compliance plus;
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commercial and environmental excellence;
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leading edge.
•
(Developing Environmental Management Systems,
Business Strategy and the Environment, Spring, part 1)
The Importance of the Organisation's Environmental Context
Azzone & Bertele (1994)
Suggest that decisions on positioning a company in the
context of ecological factors has to be linked with a broader environmental
context. They outline five such contexts which relate either to national
context or to the situation prevailing in certain product/service markets:
–
stable context
–
reactive context
–
anticipative context
–
proactive context
–
creative context
(Exploiting
Green Strategies for Competitive Advantage, LRP, vol 27, no 6, pp.69-81)
Self Regulation
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Organisations involved in such schemes will, at
a minimum, fall into Roome's `compliance plus' category - if not one of the two
most proactive categories.
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Considerable stress is placed on:
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-plans to achieve continual improvements
and
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-integrating environmental issues with those
concerns of general management.
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Self-regulation schemes typically involve:
Self-regulation schemes typically involve:
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-making information available to the public
(principally via an environmental policy statement)
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-setting clear targets and objectives needed to
meet the policy
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-environmental audits which monitor and collect
detailed information in order to judge whether improvement has been achieved.
Can we turn an arguably unsustainable position to a sustainable one?
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Many take the view that no amount of additional
laws or corporate “greening” will turn the problem around
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Feminists have, for example, argued that often
“testosterone fuelled” search for continued company growth is the key problem
Shrivastava, P. (2000), “Ecocentering strategic management”, Society for Business Ethics,
Environmental Challenges to Business:
Ruffin Series No. 2, pp. 23-43.
His model of “eco-centered” strategic management requires
the following key shifts in the values of a business shift from:
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preoccupation with economic growth and profit towards
strong regard for global sustainability and quality of human life, while
continuing to derive returns for shareholders that are sufficient to retain
their investment;
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objectives of maximising shareholder wealth to
maximising stakeholder welfare;
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anthropocentric to eco-centric
perspectives, thus embracing the concept of Earth as a stakeholder; and
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total reliance on rational processes based on
information to allow inclusion of intuitive processes based on wisdom
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