Business & Society Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition Archie B. Carroll Ann K. Buchholtz © 2012 South-Western, a part of Cengage Learning 1

Chapter 15 The Natural Environment as Stakeholder © 2012 South-Western, a part of Cengage Learning 2

Learning Outcomes © 2012 South-Western, a part of Cengage Learning 1.Discuss the concept of sustainability. 2.Describe ten major natural environment issues. 3.Describe the NIMBY environmental problem. 4.Discuss the roles that business and government play in environmental issues. 5.Explain the concept of environmental ethics. 3

Chapter Outline The Sustainability Imperative A Brief Introduction to the Natural Environment Impact of Business upon the Natural Environment Responsibility for Environmental Issues The Role of Governments in Environmental Issues Other Environmental Stakeholders Business Environmentalism The Future of Business: Greening and/or Growing? Summary Key Terms 4 © 2012 South-Western, a part of Cengage Learning

The Sustainability Imperative Externalities Side effects or by-products of actions that are not included in standard cost accounting systems. Businesses used to label the environment an externality and paid no attention to the damage they caused.  Businesses still pose hazards to the environment, in spite of much effort. © 2012 South-Western, a part of Cengage Learning 5

The Sustainability Imperative (continued) Sustainability Business that meets the needs of the present without compromising the ability of future generations to meet their own needs.  Focuses on the creation of a good quality of life for both current and future generations of humans and nonhumans. © 2012 South-Western, a part of Cengage Learning 6

Six Principles of Sustainable Success 1.Your business is part of a much larger system. 2.The culture of your business is determined by the context you create for it. 3.The soul of a business is found in the hearts of its people. 4.True power is living what you know. 5.You can’t predict the future, but you can create it. 6.There is a way to make an idea’s time come. 7 © 2012 South-Western, a part of Cengage Learning

Introduction to the Natural Environment Humans are part of their natural environment. The environment is extremely complex. 8 © 2012 South-Western, a part of Cengage Learning

Important and Helpful Environmental Terms 9 © 2012 South-Western, a part of Cengage Learning EnvironmentCycle Carbon NeutralThreshold Carrying CapacityPollution EntropyIrreversibility EcosystemSustainability Niche

Top Ten Environmental Issues 1.Climate Change 2.Energy 3.Water 4.Biodiversity and Land Use 5.Chemicals, Toxics, and Heavy Metals 6.Air Pollution 7.Waste Management 8.Ozone Layer Depletion 9.Oceans and Fisheries 10.Deforestation 10 © 2012 South-Western, a part of Cengage Learning

Climate Change Climate change Also known as global warming Greenhouse effect The prevention of solar heat absorbed by our atmosphere from returning to space.  Nearly all legitimate scientists fear the possibility of swift and radical climactic changes 11 © 2012 South-Western, a part of Cengage Learning

Global Carbon Dioxide Emissions © 2012 South-Western, a part of Cengage Learning 12

Energy  A major environmental issue is energy inefficiency, wasting nonrenewable sources of energy. Addressing energy efficiency Use as little energy as possible Shift to renewable sources Solar Wind Hydroelectric Biomass 13 © 2012 South-Western, a part of Cengage Learning

Water Degradation of oceans and waterways Municipal sewage Industrial wastes Urban runoff Agricultural runoff Atmospheric fallout Overharvesting Dam sedimentation Deforestation Overgrazing Over-irrigation  The world is facing water bankruptcy 14 © 2012 South-Western, a part of Cengage Learning

Biodiversity and Land Use Biodiversity The variation of life forms inside an ecosystem.  Because of human activity, biodiversity is being lost at 1,000 times higher than the natural rate. 15 © 2012 South-Western, a part of Cengage Learning

Land Use Land degradation from human use Desertification Deforestation Overgrazing Salinization Alkalization Soil acidification Urban sprawl Soil sealing 16 © 2012 South-Western, a part of Cengage Learning

Chemicals, Toxics and Heavy Metals Toxic substances Chemicals or compounds that may present an unreasonable threat to human health and the environment. Two main problems: 1.We are not always aware of the effects of exposure to chemicals. 2.Toxic substances can be associated with industrial accidents, causing unforeseen widespread biological damage. 17 © 2012 South-Western, a part of Cengage Learning

Air Pollution Effects of air pollution Acid Rain Global Warming Smog Depletion of the ozone layer Serious respiratory illnesses 18 © 2012 South-Western, a part of Cengage Learning

Waste Management 19 © 2012 South-Western, a part of Cengage Learning

Waste Trends in the U.S. © 2012 South-Western, a part of Cengage Learning 20

Ozone Depletion Ozone depletion Ozone is harmful near the surface of the earth, but vital in the atmosphere. It blocks dangerous ultraviolet radiation from the sun. Decrease in stratospheric ozone comes from human use of CFCs and other chemicals. 21 © 2012 South-Western, a part of Cengage Learning

Oceans and Fisheries Watershed An area that drains to a common waterway. Business activities are associated with significant damage to a number of coastal ecosystems, including salt marshes, mangrove swamps, estuaries, and coral reefs. The oceans are running out of fish to meet human needs. Conservation efforts have helped some species recover. 22 © 2012 South-Western, a part of Cengage Learning

Deforestation Adds to soil erosion problems and is a major contributor to the greenhouse effect. Costs money. Plays a key role in global warming. 23 © 2012 South-Western, a part of Cengage Learning

Responsibility for Environmental Issues Wicked problems Problems with characteristics such as interconnectedness, complexity, uncertainty, ambiguity, conflict, and societal constraints. Tragedy of the commons A “commons” is a plot of land available to all. Constraints must be placed on the use of the commons (i.e., our environment) because self- interest is likely to lead individuals and organizations to behave in ways that will not sustain our shared resources. 24 © 2012 South-Western, a part of Cengage Learning

The NIMBY Problem Not in my Backyard: NIMBY Human denial of responsibility for misuse of the environment. Entities causing environmental pollution are not identified as the sources of the problem. A NIMBY attitude avoids or denies the root cause of the damage. 25 © 2012 South-Western, a part of Cengage Learning

The Role of the U.S. Government in Environmental Issues U.S. Government Response Environmental impact statements (EISs) Reports of studies explaining and estimating the environmental impacts of questionable practices and proposing alternatives to these practices. National Environmental Policy Act (NEPA) Environmental Protection Agency (EPA) 26 © 2012 South-Western, a part of Cengage Learning

Air Quality Legislation  Clean Air Act Emissions trading (Cap and trade) Intended to reduce a particular pollutant over an entire industrial region by treating all emission sources as if they were beneath one bubble. A business can increase its emissions in one part of a plant or region if it reduces its pollution by as much or more in another part of the plant or region. 27 © 2012 South-Western, a part of Cengage Learning

Water Quality and Land-Related Legislation Water quality legislation  Clean Water Act Land-related legislation  Toxic Substances Control Act  Superfund (Comprehensive Environmental Response, Compensation, and Liability Act of 1980) 28 © 2012 South-Western, a part of Cengage Learning

Endangered Species Protection 15,000 species are considered to be threatened with extinction.  Endangered Species Act (ESA) Stakeholders argued that the ESA was weakened under the Bush administration. Obama has been more ESA-friendly than Bush was. 29 © 2012 South-Western, a part of Cengage Learning

International Government Environmental Responses  United Nations Environmental Programme (UNEP)  Montreal Protocol  Global Waters Assessment  Global Compact  Global Reporting Initiative (GRI) 30 © 2012 South-Western, a part of Cengage Learning

Other Environmental Stakeholders 31 © 2012 South-Western, a part of Cengage Learning

Other Environmental Stakeholders (continued) Green consumers Actual and potential customers of retail who express preferences for products, services, and companies that are perceived to be more environment friendly than competitors. Green employees Employees play a major role in promoting environmentalism at work. Green investors A growing number of mutual funds, stock and bond offerings, money market funds, and other financial instruments have included environmental components. 32 © 2012 South-Western, a part of Cengage Learning

CERES Principles 1.Protection of the biosphere 2.Sustainable use of natural resources 3.Reduction and disposal of waste 4.Energy conservation 5.Risk reduction 6.Safe products and services 7.Environmental restoration 8.Informing the public 9.Management commitment 10.Audits and reports 33 © 2012 South-Western, a part of Cengage Learning

Business Environmentalism Responsible environmental stewards  Patagonia  3M Company 34 © 2012 South-Western, a part of Cengage Learning

Business Case for Sustainability 1.The upside benefits: Innovation and entrepreneurship that can help a firm gain a competitive edge. 2.The downside risks: Companies that do not care for the environment risk incurring society’s wrath. 3.The right thing to do: Sustainability is the only option. 35 © 2012 South-Western, a part of Cengage Learning

Cost-Benefit Analysis Cost-benefit analysis Costs are totaled and compared with overall benefits. If benefits are sufficiently greater than costs, the project is given the go-ahead; if not, it is shelved, revised, or scrapped. Helps managers decide which projects to undertake and which to forego. Is used frequently in natural environment policy decisions. 36 © 2012 South-Western, a part of Cengage Learning

Triple Bottom Line Triple Bottom Line (TBL) A form of reporting that covers social and environmental performance in addition to economic performance.  Forces corporations to focus not only on financial performance but also on the ways in which the company either adds to or detracts from society and the environment. 37 © 2012 South-Western, a part of Cengage Learning

Systematic Business Responses to the Environmental Challenge  Crisis management  Issues management  Stakeholder management  Sustainability  Strategic environmental management 38 © 2012 South-Western, a part of Cengage Learning

Future of Business: Greening or Growing?  How much is enough? The pressures on the environment come from many directions. Global population growth Increased demand for resources Growing popularity of consumptive lifestyles. 39 © 2012 South-Western, a part of Cengage Learning

Key Terms Acid rain Air pollution Biodiversity Carbon neutral Cap and trade Ceres Principles Clean air act Clean water act Climate change Cost-benefit analysis Deforestation Ecoterrorists Emissions trading Endangered Species Act (ESA) Energy inefficiency Environment Environmental Impact Statements (EISs) Environmental Protection Agency (EPA) Externalities Fossil fuels Global Compact Global reporting initiative © 2012 South-Western, a part of Cengage Learning 40

Key Terms (continued) Global warming Green values Greenhouse effect ISO Montreal Protocol NIMBY Ozone Strategic Sustainable Management (SEM) Superfund Sustainability Toxic substance Toxic substances control act Tragedy of the commons Triple Bottom Line Watershed Wicked problems © 2012 South-Western, a part of Cengage Learning 41