Chapter 10 Ecology and Sustainable Development in Global Business

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Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

McGraw
-
Hill/Irwin

Chapter 10

Ecology and Sustainable
Development in Global
Business

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2

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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World Population Growth

Figure 10.1

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World Income Distribution by Deciles
(Tenths) of the Population, 2000

Figure 10.2

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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 self
-
contained 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