Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.1 Defining Environmental Ethic and Sustainable Development Environmental ethic: the set of values or principles that govern a corporation’s practices relating to the environment. Sustainable development: development ensuring that the use of resources and the impact on the environment today does not damage prospects for the use of resources or the environment by future generations.

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.2 Environmental Concerns in Business and Society Acid rain Air pollution Ecosystems Energy production and consumption Nature and wildlife (destruction of habitat, loss of biodiversity) Ozone Other pollution (noise, aesthetic) Waste management (e-waste) Water quality and abundance Climate change/ global warming

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.3 Government’s Influence Government departments and agencies:  Environment Canada  Canadian Council of Ministers of Environment  National Roundtable of the Environment and the Economy  Canadian Environmental Assessment Act Agency Regulation:  Canadian Environmental Protection Act, Canadian Environmental Assessment Act, (Kyoto Protocol)  Aspirational goals: APEC 2007

APEC Statement on Global Warming APEC Leaders Adopt Global Warming Statement By VOA News 08-September-2007 Australian Prime Minister John Howard said the 21 economies on Saturday agreed to adopt what he called "aspirational" goals to reduce emissions, with all nations contributing according to their own capacities. They did not adopt firm emission-reduction targets. Environmentalists had called on the Asia-Pacific Economic Cooperation group to set some firm reduction targets, instead of non-binding goals. But many governments -- including the United States, China and Australia -- opposed such an agreement. Their statement, also called the "Sydney Declaration," sets a target for reducing what is known as "energy intensity" by 25 percent by Energy intensity is a measure of the energy efficiency of a nation's economy. 4

Betting on Science: Carbon Capture & Storage CCS (sometimes ‘Sequestration’) allows firms to continue to produce GHGs, but they must capture them before they are released to the atmosphere. CO 2 is then stored underground. Some limited use of the technology in place (Encana injects CO 2 to raise oil). Science is largely unproven, very costly and CCS seen by some as a stall. Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.5

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.6 Betting on the Market: Cap & Trade Emissions trading: A system whereby corporations set targets for greenhouse gas reduction; if one corporation cannot meet the target, it purchases credits from those that have met their targets. Ex: Ontario Registry.Ontario Registry Offsets: Credits purchased from other corporations or organizations to mitigate greenhouse gases released into the environment. Ex: Bullfrog Power.Bullfrog Power

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.7 Dissenting Views on Environment / Sustainability According to some business journalists:  Concepts difficult to define and understand  Means stopping or constraining economic development (Ex: GHG release limit vs. intensity)  Implies capitalism is unsustainable  Apparent misunderstanding of how markets work  Are executives being misled as to severity / reality of some issues (An Inconvenient Truth?)

GHG / Climate Change Issues Summary Is global warming / climate change real? Did human activity cause it? Social & economic trade-offs: Simply reducing current GHG emission levels will stagnate economies and cost jobs. Options: 1) Reduce intensity, 2) CCS, 3) Cap & Trade, 4) Non-GHG energy production (wind, solar), 5) Reduce energy consumption Combine options: = Reduction Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.8

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.9 Environmental NGO Influence Environmental non-governmental organizations (ENGOs): groups that hold shared values or attitudes about the challenges confronting the natural environment and advocate for changes to improve the condition of the environment. Such groups (e.g., Greenpeace) influence corporations through protests, blockades, boycotts, and annual shareholder meetings.Greenpeace

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.10 Managing Responses to Environmental Concerns Token response (e.g., ‘greenwashing’) Compliance with laws and regulations Comprehensive environmental management (gaining a competitive advantage) Sustainable development

Six Sins: Telling Green from Greenwashing 1)Hidden Trade-off: eco-friendly product shipped world-wide 2) No Proof: Not tested on animals? Prove it. 3) Vagueness: ‘Chemical-free’ makes no sense. 4) Irrelevance: ‘CFC- free’ is just following the law 5) Lesser of Two Evils: Hybrid SUVs 6) Fibbing: no such thing as ‘certified organic’ Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.11

City of Lethbridge Initiatives Sustainable development of the city Links to provincial and federal environment sites Environmental Tips Office of Environmental Management and Urban Sustainability Office of Environmental Management and Urban Sustainability Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.12

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.13 The “Greening” of Business Functions Financial management (environmental accountability, SRI funds Marketing (green product marketing) Human resources (environmental awareness in workplace, recruitment) Production (pollution, packaging waste, design for reuse, recycle or safe disposal)

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.14 Measuring and Reporting on Environmental Sustainability Type and amount of materials used Source of energy and efficiency of use Source and quality of water Impact on biodiversity Reduction of emissions, effluents, and waste Product design that minimizes impact Compliance with environmental laws Use of efficient transportation Source: Global Reporting Initiative, 2006

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.15 The Environment: Corporate Opportunities Reputations likely enhanced Customers attracted Investors attracted Costs reduced through recycling/conservation More competent staff attracted Better integration with local community New technologies or expertise developed More efficient ways of producing products found

Chapter 14 Copyright © 2008 McGraw-Hill Ryerson Ltd.16 The Environment: Corporate Threats Corporate image may deteriorate Revenues may suffer if customers are lost Investors may decide not to invest Material and production costs may increase Financial penalties increasing Insurance premiums can increase Potential alienation from local community Government may enact stricter legislation