Transcript Ecology and Sustainable Development in Global Business

Chapter 10
Ecology and Sustainable
Development in Global
Business
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Ch. 10: Key Learning Objectives
 Defining sustainable development
 Understanding the obstacles to developing the world’s
economy to meet the needs of the present without hurting
future generations
 Assessing the major threats to the Earth’s ecosystem
 Recognizing the ways in which population growth,
inequality, and industrialization have accelerated the
world’s ecological crisis
 Examining common environmental issues that are shared
by all nations
 Analyzing the steps the global business community can
take to reduce ecological damage and promote
sustainable development
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Ecological Challenges
 Ecology
 The study of how living things – plants and animals – interact
with one another in an ecosystem
 By some measures the demands of human society have
already exceeded the carrying capacity of the earth’s
ecosystem
 Global Commons
 A commons is a shared resource that a group of people uses
collectively
 Paradox that if all individuals maximize their own advantage
in short term, commons will be destroyed
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Ecological Challenges
 Preserving our common ecosystem and assuring its
continued use is a new imperative for business,
government, and society
 Sustainable development
 Development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs
• Protecting the environment will require economic
development
• Economic development must be accomplished sustainably
 Sustainable development is an appealing idea but also a
controversial one
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Threats to the Earth’s Ecosystem
 Sustainable development requires that human society use
natural resources at a rate that can be continued over an
indefinite period
 Renewable resources (water, forests) can be naturally
replenished
 Nonrenewable resources (fossils fuels like oil, coal) once used are
gone forever
 Examples of natural resources that are now being
depleted or polluted at well above sustainable rates
 Water resources
 Fossil fuels
 Arable land
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Forces of Change
Accelerating Ecological Crisis
 Pressure on the earth’s resource base is
becoming increasingly severe

Three critical factors have combined to accelerate
the ecological crisis facing the world community and
to make sustainable development more difficult



Population explosion
World income inequality
Rapid industrialization of many developing nations
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Figure 10.1
World Population Growth
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Figure 10.2
World Income Distribution by Deciles
(Tenths) of the Population, 2000
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The Earth’s Carrying Capacity
 The world resource base is essentially finite,
or bounded
 Limits to growth hypothesis suggests human
society is overshooting earth’s carrying
capacity, with drastic consequences if
changes are not made
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The Earth’s Carrying Capacity
 One method of measuring the Earth’s carrying
capacity, is called the ecological footprint
 The amount of land and water a human population
needs to produce the resources it consumes and to
absorb its wastes, given prevailing technology
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How Can Human Society Bring the Earth's
Carrying Capacity Back into Balance?
 This is without a doubt one of the great challenges facing
the world’s people. Any solution will require change on
many fronts:
 Technological innovation – Develop new technologies to
produce energy, food, and other necessities of human life more
efficiently and with less waste
 Changing patters of consumption – Individuals and
organizations concerned about environmental impact could decide
to consume less or choose less harmful products and services
 “Getting the prices right” – Some economists have called for
public policies that impose taxes on environmentally harmful
products or activities
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Global Environmental Issues
 Ozone depletion
 A bluish gas, composed of three bonded oxygen atoms, that floats in
a thin layer in the stratosphere between 9 and 28 miles above the
planet
 1974 – Scientists chlorofluorocarbons (CFCs) could react with and
destroy ozone
 1985 - Scientists discovered a thin spot, or hole, in the ozone layer
over Antarctica
 1987 - A group of nations negotiated the Montreal Protocol, agreeing
to cut CFC production, agreement later amended to ban CFCs (This
is an example of world governments coming together to address an
environmental threat)
• As of 2009, 195 countries had signed the protocol
 The protective layer will gradually recover if regulatory trends
continue
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Global Environmental Issues
 Global warming
 Greenhouse effect occurs when carbon dioxide and other gases
in the atmosphere prevent heat from escaping into space
 Since the Industrial Revolution, the amount of greenhouse gases
in the atmosphere has increased by as much as 25%
 Caused mainly by the burning of fossil fuels such as oil and
natural gas
 If societal emissions of these gases continue to grow unchecked,
the earth could warm by as much as 6.4 degrees Celsius by
2100
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Figure 10.3
Global Warming
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Causes of Global Warming and Carbon Dioxide
 Black carbon
 the sooty smoke that is created by the incomplete combustion of
diesel engines and wildfires is the second largest contributor to climate
change, responsible for as much as 18 percent of global warming
 Deforestation
 Trees and other plants absorb carbon dioxide and remove it from the
atmosphere; therefore cutting down trees contributes to global
warming
 Beef production
 Methane, a potent greenhouse gas, is produced as a by-product of
the digestion of some animals, including cows
 CFCs
 Destroy the ozone and are also considered greenhouse gases
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Global Climate Change Initiatives
 Kyoto Protocol
 Multination agreement in 1997, went in to effect in 2005
 Requires industrial nations to reduce greenhouse gas
emissions 5% below 1990 levels
 European Union has taken lead on reducing emissions
 As of 2006, 161 nations, representing 62% of world’s carbon
emissions, had ratified
 U.S. has not ratified, citing harm to U.S. economy
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More Global Environmental Issues
 Decline of biodiversity
 Refers to the number and variety of species and the range of
their genetic makeup
 Scientists estimate that species extinction is occurring at 100
to 1,000 times the normal, background rate due to pollution
and habitat destruction
 A major reason for the decline in the earth’s biodiversity is
the destruction of rain forests
 Only half of the original tropical rain forests still stand
 Rain forests destruction is ironic because they may have more
economic value standing than cut
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More Global Environmental Issues
 Threats to marine ecosystems
 Refers to oceans, salt marshes, lagoons, and tidal zones that
border them, as well as diverse communities of life they
support
 Salt water covers 70 percent of the earth’s surface and
supports many species
 Key categories of threats to these ecosystems
• Fish populations
• Coral reefs
• Coastal development
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Response of the International Business
Community
 World Business Council for Sustainable Development
 One of leaders in effort to promote sustainable business practices
 Made up of 200 companies representing more than 35 countries
and 20 industries
 Goal to encourage high standards of environmental management
and to promote closer cooperation among businesses,
governments, and other organizations concerned with sustainable
development
 Promotes eco-efficiency and has documented competitive
advantages for companies
• Those that added the most value with the least use of
resources and pollution were more competitive and
environmentally sound
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Voluntary Business Initiatives
 Life cycle analysis
 Involves collecting information on the lifelong environmental impact of a
product, from extraction of raw material to manufacturing to its
distribution, use, and ultimate disposal
 Industrial ecology
 Refers to designing factories and distribution systems as if they were selfcontained ecosystems
 Extended product responsibility
 Companies have a continuing responsibility for the environmental impact
of the products and services, even after they are sold
 Carbon neutrality
 An organization or individual produces net zero emission of greenhouse
gases; this is usually accomplished by a combination of energy
efficiencies and carbon offsets
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Codes of Environmental Conduct
 Some of the leading universal codes include the
following:
 Business Charter for Sustainable Development – developed by
the International Chamber of Commerce
 CERES Principles – developed by the Coalition for
Environmentally Responsible Economies
 ISO 14000 – a series of voluntary standards developed by the
ISO, an international group based in Switzerland
 Many executives are championing the idea that
corporations have moral obligations to future generations
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