Copyright © 2008 McGraw-Hill Ryerson Ltd.1 Chapter Fourteen The Environment and Business Responsibilities Canadian Business and Society: Ethics & Responsibilities

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.2 Chapter Outline Defining Environmental Ethic and Sustainable Development Environmental Concerns in Business and Society Government’s Influence Environmental NGO Influence Market-Driven Environmentalism Managing Responses to Environmental Concerns The “Greening” of Business Functions Measuring and Reporting on Environmental Sustainability Dissenting Views on the Environment The Environment: Corporate Opportunities and Threats

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.3 Defining Environmental Ethic Environmental ethic: the set of values or principles that govern a corporation’s practices relating to the environment.

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.4 Defining Sustainable Development 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 14Copyright © 2008 McGraw-Hill Ryerson Ltd.5 Environmental Concerns in Business and Society Acid rain Air pollution Ecosystems Energy production and consumption Nature and wildlife Ozone Pollution Waste management Water quality Climate change/ global warming

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.6 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

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.7 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.

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.8 Difference between Standard and Market Environmentalism (Table 14.2) FactorsStandardMarket Economic Growth Destructive1. Higher enviro. quality 2. Innovation Free Trade Part of the problem Increases competition for good enviro. practices Property Rights vs. Regulation Govn’t will protectOwnership creates stewardship

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.9 Market-Driven Environmentalism 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. Offsets: Credits purchased from other corporations or organizations to mitigate greenhouse gases released into the environment.

Chapter 14Copyright © 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

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.11 The “Greening” of Business Functions Financial management Marketing (e.g., green marketing) Human resources Production

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.12 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: GRI, 2006

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.13 Measuring and Reporting on Environmental Sustainability Coalition for Environmentally Responsible Economies (CERES) International Organization for Standardization ISO International Institute for Sustainable Development (IISD) Canadian Sustainability Indicators Network (CSIN) Environmental and Sustainable Development Indicators Initiative (ESDI)

Chapter 14Copyright © 2008 McGraw-Hill Ryerson Ltd.14 Dissenting Views on the Environment According to some business journalists:  Concept difficult to define and understand  Means stopping or constraining economic development  Implies capitalism is unsustainable  Lacks understanding of markets  Executives are being misled

Chapter 14Copyright © 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 14Copyright © 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