Chapter Ten Business’s Environmental Responsibilities Jerry Estenson

Classic View of Ethics in Business Environment Maximize profit within the law Utilitarian – Greater overall good of optimally satisfying consumer preference

William Baxter Search for optimal level of pollution that would best serve society’s interests. – Caveat Emptor (protect consumer safety and allow for individual bargaining – No perfect “state of health” – Allow market to balance risk and benefits Air safe enough to breath water safe to drink without costing to much

Julian Simon Allow for human ingenuity and incentives to work Allow the market to work to balance supply and demand for resources Natural objects have no value but that placed on them by humans. The term “nature” has no normative connotation Preserving biological diversity is appropriate if it satisfies more consumer preference than the alternative

Market serves four environmental goals Reducing pollution Conserve resources Preserve natural areas Support biological diversity

Market Failures Cost of such things as pollution are borne by third parties No market exists to create a price for important social goods (protection of animals versus using threatened animals – Rhinoceros, tigers, elephants Buying is an individual decision consequences are borne by group Market does not respond until there is a major screw up

Mark Sagoff – The Economy of the Earth Environmental issues not economic issues – Confusion between wants/preferences: What one is willing to pay handled through a cost- benefit analysis – Beliefs and Values Purely personal and subject Conflict resolved non-rational means – Dialog and democratic processes Ignores the individual role of being both a consumer and a citizen

What is business to do? Business needs to meet “Moral minimum” Bowie – cause no harm to humans, obey the law and refrain from unduly influencing environmental legislation – Citizen are free to create laws and exercise consumer preference

Issue with this Rx Underestimate business ability to influence law making Underestimates business ability to influence consumers Law is a crude tool Models used to deal with corporate social responsibility underestimates managerial discretion

Critical flow model ignores the cost of resources and waste generation Daly’s model – Recognizes business is part of a subsystem with Earth’s biosphere – Recommends long-term consumption of resouces – Manage waste – Manage energy and recognize the losses we are now generating – Limit grow using a biophysical perspective

Pillars of Sustainable Development Economically, environmentally and socially satisfactory Meet the needs of those future generations Meet the needs of those who lack food, water, and other necessities Hawken, Lovins – Natural Capitalism – Productivity of natural resources – Redesign to utilize a model biological process (cradle to grave – Model business as a provider of services (light, floor covering) – Invest in natural captial