1. What’s a Business Environment (and why do we have to take this class)? BA 385: What’s a Business Environment (and why do we have to take this class)? Introduction to the course and Chapter 14: The Natural Environment as a Stakeholder of Business Decision- Making

2. What does business add to society?

3. What does business take away from (or destroy within) society?

4. What responsibilities do we have as “people of business”? How do we go about realizing our responsibilities while still being profitable?

5. What do you care about in your life? Should your work life represent what you care about or is that separate?

6. Structure and Flow of Book 1.The Business and Society Relationship 2.Corporate Citizenship: Social Responsibility, Responsiveness and Performance 3.The Stakeholder Approach to Business Part One BUSINESS, SOCIETY, AND STAKEHOLDERS STRATEGIC MANAGEMENT FOR CORPORATE STAKEHOLDER PERFORMANCE 4.Strategic Management and Corporate Affairs 5.Issues Management and Crisis Management Part Two

7. 6.Business Ethics Fundamentals 7.Personal and Organizational Ethics 8.Business Ethics and Technology 9.Ethical Issues in the Global Arena 10.Business, Government and Regulation 11.Business’s Influence on Government and Public Policy 12.Consumer Stakeholders: Information Issues and Responses 13.Consumer Stakeholders: Product and Service Issues 14.The Natural Environment as Stakeholder 15.Business and Community Stakeholders EXTERNAL STAKEHOLDER ISSUES Part Three Part Four

8. INTERNAL STAKEHOLDER ISSUES 16.Employee Stakeholders and Workplace Issues 17.Employee Stakeholder: Privacy, Safety, and Health 18.Employment Discrimination and Affirmative Action 19.Owner Stakeholders and Corporate Governance Part Five Chapter 1 The Business/Society Relationship

9. Syllabus Review Contact information Textbook and Reading Material Assignments and Grading Readings Personal Info Form How to Succeed in This Class (next slide)

10. Four Habits of Highly Successful Students 1.) Good psychological research continuously demonstrates that attitudes often follow behaviors. If you simply force yourself to act like a great student (engage in the BEHAVIORS) you'll find that the ATTITUDES will follow. 2. ) Write multiple drafts of any assignment. If you write a first draft and let it sit for a day or two, you will allow time to rethink and rework the assignment. When you sit down to revise it, you'll have a fresh perspective and better ideas. You'll also catch mistakes. 3. ) USE your peers. Two, three, or four heads are better than one. Be brave and invite someone you don't know to a study group. 4.) Be kind to your instructor. Wait a minute. That's actually not necessarily related to success in this class….

11. Business and Sustainability and Chapter Fourteen: The Natural Environment as a Stakeholder of Business

12. History of the Earth present4.5 billion Earth formed 7 million present First humans 10,000 BC present First agriculture

13. History of the Earth – cont. 1750 AD Industrial Rev begins 1776 Wealth of Nations (Adam Smith) 1804 World pop reaches 1 B 1908 Ford Model T 1999 World pop reaches 6 B 2200 World pop Reaches 10 B

14. Inputs, Outputs, and Waste - U.S. example Resources Fossil fuels Water Metals Minerals Wood Other Products Wastes Gases Liquids Solids Consumed 5% 95% Annual waste in U.S. 15 B tons Production Mostly a Linear Process Note: numbers are approximate –from Craig Diamond of the Climate Trust

15. Labor and Resource Productivity 1750: “unlimited” natural resources made labor much more expensive relative to resources Since Industrial Revolution – huge gains in labor productivity (e.g., farming, manufacturing) In future, huge gains in resource productivity will be required

16. Environmental Economics – The Basics Tragedy of The Commons … a type of impossible societal trap, often economic, that expresses society’s conflict over finite resources between individual interests (such as b and the common good of society. (Garrett Hardin, Science, 1968) Externalities …unintended negative side effects of production such as pollution, job losses, changes in society (suburbs, loss of rural lifestyle), and so on.

17. Global Environmental Challenges Global Climate Change Pollution and accumulation of toxics Destruction of forests Diminishing supplies of clean drinking water Declining fisheries Deterioration of soil quality in agriculture Accelerating growth of mega-cities

18. Extraction and Accumulation Build-up in Environment Carbon Dioxide combustion Global Climate Change

19. Carbon Cycle Rise in greenhouse gas concentration in atmosphere causing temperature to rise Carbon dioxide is the major greenhouse gas Global Climate Change

20. Natural Resource Depletion Example: Degrading Agricultural Soil Unsustainable Practices Heavy use of pesticides and fertilizers Tilling Planting same crop year after year Result in…. Depleted soil nutrients Increased resistance to pesticides Increased reliance on pesticides/fertilizers Water/soil pollution

21. Global Social Problems Social Challenges Poverty: approximately 50% of the world’s population lives in poverty or near-poverty conditions Reliance on dirty fuels (e.g., manure) and unsafe drinking water Environmental conditions (air and water pollution in particular) worse in underdeveloped areas

22. Growth of Wealth GDP per capita (real$, in 1,000s) IndiaChinaU.S. 19700.550.830.21 20041.101.320.30 2034*1.491.440.37 Population (in billions) *Est.

23. Definitions of Sustainability Sustainable development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs. - Brundtland Commission Report, 1987 Economy EnvironmentEquity “3-Legged Stool” or “Triple Bottom Line” Sustainability: The characteristic of an entity, such as an economic or environmental system, that is related to its ability to exist and flourish over an acceptably long period of time. – Your textbook

24. The Sustainability Dilemma Need to slow or stop growth in EB, but…. Need to increase wealth to address global poverty and population growth, and Population will continue to rise EB = P x A x T EB = environmental burden P = world population A = affluence (consumption per capita) T = technology (means of production)

25. Sustainability is a Huge Business Opportunity EB = P x A x T EB = environmental burden P = world population A = affluence (consumption per capita) T = technology (means of production) To slow or stop the growth environmental burden (EB), huge advances in technology (T) will be needed. This is the role of business.

27. History of Environment and Business in the U.S. Early 1900s: laws to protect forests, natural areas 1950-1970: growing pollution concerns 1970: U.S. Environmental Protection Agency established 1970-1990: several environmental laws passed and implemented 1990s-present: growing recognition in business and government of need to go “beyond compliance” (voluntary actions)

28. Progression of Environmental Management Approaches Description Environmental issues viewed as…. Role in Business Compliance Comply with federal, state, local regulations Cost center/riskOperational Eco-Efficiency Same products, minimize inputs (energy, materials) and waste Cost center/risk, but with ability to cut costs Operational Product Design Change Same/similar products with environmentally preferable design Cost center/risk, but also source of competitive advantage Strategic New Products New products to address sustainability marketplace needs Source of competitive advantage Strategic

29. Progression of Environmental Management Approaches Example: Agriculture Compliance Comply with regulations in regard to pesticide use and clean water Eco-Efficiency Eliminate unnecessary use of pesticides and other chemicals, or use less toxic ones Product Design Organic farming, Integrated Pest Management New Products Grow crops for use in energy production (biomass)

30. Progression of Environmental Management Approaches Example: Auto Manufacturing Compliance (plant focus) Comply with regulations for air, water, solid waste, hazardous waste; “CAFÉ” standards Eco-Efficiency (plant focus) Reduce use of energy and materials, reduce solid and hazardous waste Product Design (auto focus) Hybrid electric vehicles New Products (auto focus) Cars for disassembly; FlexCar (car sharing)

31. Progression of Environmental Management Approaches Example: Electric Utility (currently based on fossil fuels) Compliance Comply with regulations for air, water, solid waste, hazardous waste Eco-Efficiency Maintain efficient power plant to avoid wasting fuel inputs (coal, natural gas, oil); min. releases to air, water, land Product Design Advanced coal plant with near-zero emissions; renewable sources New Products Innovative ways to deliver electricity (“Smart Grid”)

32. The Natural Step Business framework, based on scientific principles, for understanding what sustainability means for an organization 4 System Conditions for sustainability: In order for a society to be sustainable, that society cannot systematically.... 1.Build up concentrations of materials taken from the earth’s crust 2.Build up concentration of materials produced by society 3.Degrade natural resources and ecosystems 4.Fail to meet human social/economic needs

33. Concept of Industrial Ecology Resources Fossil fuels Water Metals Minerals Wood Other Products “Wastes” Consumed Nothing is wasted, as in natural ecological cycles Minimized use over time

34. Chapter 14  THE NATURAL ENVIRONMENT as STAKEHOLDER

35. Threshold Pollution Irreversibility Cycle Sustainability Important Environmental Terms Terms Carrying Capacity Entropy Ecosystem Environment Niche

36. Carrying Capacity Entropy Ecosystem Environment Niche Broadly, anything that is external or internal to an entity. For humans, it can include external living, working, and playing spaces and natural resources, as well as internal physical, mental and emotional states. The volume of and intensity of use by organisms that can be sustained in a particular place and at a particular time without degrading the environment’s future suitability for that use. It has limits that need to be respected for continued use. A measure of disorder of energy, indicating its unavailability for recycling for the same use. Energy tends to break down into lower quality with each use. All living and nonliving substances present in a particular place, often interacting with others. The role an organism plays in its natural community, including what it eats and the conditions it requires for survival. Habitat is a related concept. CAN YOU MATCH THE DEFINITION TO THE TERM?

37. Threshold Pollution Irreversibility Cycle Sustainability CAN YOU MATCH THE DEFINITION TO THE TERM? The characteristic of an entity, such as an economic or environmental system, that is related to its ability to exist and flourish over an acceptably long period of time. The point at which a particular phenomenon, previously suppressed, suddenly begins to be activated. For instance, when a population’s carrying capacity threshold is exceeded, the population tends to decrease or even crash as a result of increased morbidity and mortality. The continuous looplike movement of water, air, and various nutrients, such as nitrogen, phosphorous, and sulfur, through the environment. Such cycles can be impaired in performing their roles, such as purification and sustenance, by excessive human-caused pollution and depletion. The existence of material or energy that has gone through a transformation process and is perceived as unwanted or devalued in a particular place and a particular time. The inability of humans and nature to restore environmental conditions to a previous state within relevant time frames. Human environment-related actions that appear this way are the destruction of a rainforest or extinction of a species.

38. Business Impact on the Environment Pollution versus Productivity

39. Responsibility for Environmental Issues “Not in my Back Yard” NIMBY NIMBY is the human denial of responsibility for misuse of the environment Entities causing environmental pollution are not identified as the sources of the problem NIMBY avoids or denies the root cause of the damage

40. Beliefs of Environmentalists Life on earth should continue Human life on earth should continue Natural justice should be done Nonmaterial qualities of life are worth pursuing

41. The Role of Governments in Environmental Issues U.S. Government Response National Environmental Policy Act (NEPA) - 1970NEPA Policy goals Environmental Impact Statements An EIS should include discussions of the purpose of and need for the action, alternatives, the affected environment, the environmental consequences of the proposed action, lists of preparers, agencies, organizations and persons to whom the statement is sent, an index and appendix. Environmental Protection Agency (EPA)EPA

42. U.S. Government Response Air Quality Legislation Clean Air Act Clean Air Act Emissions trading and the bubble concept Clear Skies Initiative The Role of Governments in Environmental Issues

43. U.S. Government Response Water Quality Legislation Clean Water Act Marine Protection, Research and Sanctuaries Act Safe Drinking Water Act The Role of Governments in Environmental Issues

44. U.S. Government Response Land-related legislation Solid Waste Disposal Act Resource Conservation and Recovery Act Toxic Substances Control Act Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)(CERCLA) Emergency Planning and Community Right-to-Know Act The Role of Governments in Environmental Issues

45. U.S. Government Response Endangered Species Act (ESA)ESA Role of the President in environmental regulation The Role of Governments in Environmental Issues

46. International Government Response United Nations Environmental Programme (UNEP) Montreal Protocol Global Waters Assessment Rotterdam Convention The Role of Governments in Environmental Issues

47. Protection of the biosphere Sustainable use of natural resources Reduction and disposal of waste Energy conservation Risk reduction Safe products and services Environmental restoration Informing the public Management commitment Audits and reports CERES Principles

48. Business Environmentalism Systematic business responses to environmental challenges: Generic management decision-making tools Sustainability Strategic environmental management

49. Future of Business: Greening or Growing? TWO PRESSING QUESTIONS Can the earth support a high- consumption Western lifestyle? If not, what are the implications for business and how should business respond?