Corporate Environmentalism 8803 Business and the Environment Beril Toktay College of Management Georgia Institute of Technology

Overview  The economic context  The historical context  Making sense of how it all fits together

The Three Economies Source: Hart, Capitalism at the Crossroads

Environmental “Footprint” In the United States, it takes 12.2 acres to supply the average person's basic needs; in the Netherlands, 8 acres; in India, 1 acre. The Dutch ecological footprint covers 15 times the area of the Netherlands, whereas India's footprint exceeds its area by only about 35%. Most strikingly, if the entire world lived like North Americans, it would take three planet Earths to support the present world population. Source: Donella Meadows "Our 'Footprints' Are Treading Too Much Earth, "Charleston (S.C.) Gazette, April 1, Source: Hart, Capitalism at the Crossroads

The Wake-up Call  Publication of Silent Spring in 1962 First recorded photo of smog in Los Angeles, 1943 Vast clouds of smoke boil into the sky from the Glendale city dump in October Burning garbage in dumps was a common practice then. -- From “The Southland's War on Smog: Fifty Years of Progress Toward Clean Air, ” May 1997 “the smell of money”

Sustainability Buzzwords  Environmental management  Corporate social responsibility  Green design  Industrial ecology  Triple bottom line  Shareholder value  Eco-efficiency  Pollution prevention  End-of-pipe  Clean fuel  Cradle to cradle  Renewable energy  Design for environment  Dematerialization  Sustainable development  Closed-loop supply chain  Biomimicry  Industrial ecology  Life-cycle management  Urban reinvestment  ISO  Brownfield redevelopment

Sustainable Value Framework Engaging External Constituencies Nurturing Internal Capabilities Managing Today’s Business Building tomorrow’s opportunity Cost and risk reduction Legitimacy & reputation Innovation & repositioning Growth path Source: Hart, Capitalism at the Crossroads

Historical Evolution 1963 Silent Spring published 1984 Bhopal tragedy Regulation: Rapid proliferation End-of-pipe regulation, “pay to reduce -ve impact” Mandates specific technologies Focus on hazardous waste, emissions, pollution Industry: Compliance focused Focused on internal manufacturing processes “Resistant adaptation”

Historical Evolution 1984 Bhopal tragedy 1992 Rio World Economic Summit 1987 Brundtland report “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” 1989 Exxon Valdez Oil Spill Industry initiatives “Beyond compliance” Regulatory change - outcome based - information based - market based

Historical Evolution 1995 Brent Spar incident 1992 Rio World Economic Summit Strategic view of sustainability Stakeholder involvement Alliances with NGOs Corporate Social Responsibility International collaboration

Sustainable Value Framework External Internal Today Tomorrow Strategy: Eco-efficiency Minimize waste & emissions Corporate Payoff: Cost & risk reduction Strategy: Product Stewardship Integrate stakeholder views Into business processes Corporate Payoff: Reputation and legitimacy Strategy: Sustainable Technology Develop sustainable competencies of the future Corporate Payoff: Innovation & repositioning Strategy: Sustainable Development Create a shared roadmap for meeting unmet needs Corporate Payoff: Growth path Source: Hart, Capitalism at the Crossroads

Sustainability Framework  Pollution prevention  Waste reduction  Environmental Mgt  ISO  Risk management  End of pipe  Life-cycle management  Design for environment  Closed-loop supply chain  Dematerialization  Cradle to cradle External Internal Today Tomorrow  Biomimicry  Renewable energy  Clean technology  Triple-bottom line  Sustainable development  Urban reinvestment  Brownfield development

Fundamentals Environmental Impact The Role of Companies Core Dilemma: Tragedy of the Commons The Role of Legislation Pollution Prevention Waste Reduction ISO Life-cycle Analysis Risk Mitigation Design for Recovery Selling Services Extended Product Responsibility Commercial Returns Eco-efficiencyProduct Stewardship Sustainability Strategy Alliances and Communication Product Differentiation Corporate Social Responsibility Sustainable Development Flow of Course

Concepts  A historical perspective  Framework to classify sustainability initiatives  The limits of the win-win argument  The limits of the shareholder value argument

Suggested Readings  Carson, Silent Spring  Hart, Capitalism at the Crossroads  Elkington, Cannibals with Forks  Frankel, In Earth’s Company