Chapter 10 Ecology and Sustainable Development in Global Business


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


Chapter 10

Ecology and Sustainable
Development in Global


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


Ecological Challenges


The study of how living things

plants and animals

with one another in an ecosystem

By some measures the demands of human society have
already exceeded the carrying capacity of the earth’s

Global Commons

A commons is a shared resource that a group of people uses

Paradox that if all individuals maximize their own advantage
in short term, commons will be destroyed


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

Economic development must be accomplished sustainably

Sustainable development is an appealing idea but also a
controversial one


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

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


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


World Population Growth

Figure 10.1


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

Figure 10.2


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


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


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


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


Scientists chlorofluorocarbons (CFCs) could react with and
destroy ozone


Scientists discovered a thin spot, or hole, in the ozone layer
over Antarctica


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


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


Figure 10.3

Global Warming


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


Trees and other plants absorb carbon dioxide and remove it from the
atmosphere; therefore cutting down trees contributes to global

Beef production

Methane, a potent greenhouse gas, is produced as a by
product of
the digestion of some animals, including cows


Destroy the ozone and are also considered greenhouse gases


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


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


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

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


Response of the International Business

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

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


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


Codes of Environmental Conduct

Some of the leading universal codes include the

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