1. Unlocking the Business Environment Chapter 14 The Macro Environment – Environmental Influences By the end of this chapter you should have a better understanding of: the causes of key environmental issues; the consequences of environmental issues; the nature of environmental influences and their impact on organisations; key world initiatives combating climate change; some of the current and emerging ethical and international issues with regard to environmental influences. Chapter 14

2. What do we mean by the term ‘environmental’? The term ‘environment’, for the purpose of this chapter, refers to the physical environment of the planet. This includes land, sea, air and fresh water. The consequences of human activity are considered in this chapter, rather than any natural events that may alter the environmental status quo. The term must not be confused with the more general term of ‘business environment’ or ‘environment of business’. Chapter 14 Unlocking the Business Environment

3. Chapter 14 Unlocking the Business Environment What do we mean by the term ‘environmental’? The industrial or technological revolutions brought in new methods of production and ways of working. This brought about social and economic changes, and transformed the way people lived and worked. The move from rural areas to towns and cities, and increasing concentrations of people in these towns and cities, is referred to as urbanisation. This trend of urbanisation and industrialisation is found across the world.

4. Chapter 14 Unlocking the Business Environment What do we mean by the term ‘environmental’? The consequences of economic growth, underpinned by these industrial and technological processes, soon became apparent. There was a realisation that: there were consequences to waste generation of industrial processes and disposal of some products; some chemicals used produced harmful side effects to people and animal populations; economic growth, with the increased consumption that this entailed, could not be sustained by the planet; human activity is a contributing factor to climate change.

5. Chapter 14 Unlocking the Business Environment Key environmental influences – the ozone layer Ozone is a gas that occurs naturally at two levels: 1.Ground level. 2.In the upper atmosphere. In the upper atmosphere, ozone gas forms what is termed the ‘ozone layer’, which plays a key role in absorbing some of the sun’s harmful ultraviolet (UV) rays. The ozone layer was found to have been depleted in the 1980s, with notable holes over the Arctic and Antarctic. This was found to be due to the use of a specific group of chemicals, the most well known of which are the chlorofluorocarbons (CFCs), which used to be found in aerosols and old refrigerators.

6. Chapter 14 Unlocking the Business Environment Key environmental influences – the ozone layer For recovery of the ozone layer the use of CFCs was phased out by industrialised countries (the UK stopped production in 2000). It has been suggested that if global protocols are followed, full recovery of the ozone layer over the Antarctic may be achieved by 2100.

7. Chapter 14 Unlocking the Business Environment Key environmental influences – deforestation There are also concerns over the depletion of forests. There are two key reasons why forests have been cleared: 1.The trees are used for wood or wood products. 2.The land is used for urban development, grazing cattle or crop growing (e.g. for the production of bio-fuels). There are concerns over the possible impact of large-scale deforestation on climate change, such as: 1.The release of CO 2 into the atmosphere, contributing to global warming. 2.The loss of plant and animal species, including as yet undiscovered medicinal plants.

8. Chapter 14 Unlocking the Business Environment Key environmental influences – global warming The greenhouse effect is the term given to the trapping of the sun’s energy by greenhouse gasses such as carbon dioxide (CO 2 ). There is concern over the increasing amount of CO 2 in the atmosphere. Many scientists now suggest that these increasing CO 2 levels have resulted in global warming. Organisations have responded to calls to lower CO 2 emissions – in product design and processes, organisational processes including their supply chains, and in their own organisational operating systems.

9. Chapter 14 Unlocking the Business Environment Key environmental influences – pollution Over the past 200 years the planet has been subjected to an unprecedented increase in pollution, and this continues to increase (Markham, 1994). The key problems include: 1.The exhaustion of raw materials needed to produce energy and make products. 2.Increasing use of energy, which is required to facilitate our lifestyles in the developed and, increasingly, the developing economies. 3.Chemical processes and potential toxic waste. 4.The problem of industrial and domestic waste disposal.

10. Chapter 14 Unlocking the Business Environment Key environmental influences Attempts to address the environmental issues include: UN Conference on the Human Environment, Stockholm, 1972 – the first major international conference to address the world’s environmental concerns. World Commission on Environment and Development, 1987 – The Brundtland Report; sustainable development defined. United Nations Framework Convention on Climate Change (UNFCC),1997. UNFCC led to the Kyoto Protocol – an international (and legally binding) agreement; a key aim is the reduction in global greenhouse-gas emissions.

11. Chapter 14 Unlocking the Business Environment Key environmental influences The Stern Review on the Economics of Climate Change, 2006 – forecast that if action was immediately taken to reduce global greenhouse gases, then the costs of action could be just 1 per cent of global GDP per annum. United Nations Climate Change Conference, Copenhagen, 2009 – considered by many as a crucial conference, where strong global commitments to take action to tackle global warming were needed. However, the conference ended with a bare-minimum agreement that fell far short of the summit’s original goals.

12. Chapter 14 Unlocking the Business Environment Key environmental influences Organisations that have products or processes that produce high carbon emissions may find their response to the environmental issues are pressing. Other industry sectors that produce items or by- products that are non-biodegradable on disposal, polluting, energy intensive, land consuming or water intensive, may need to act sooner rather than later. Changing weather patterns could contribute to changing consumption habits. Some organisations view environmental concerns as threats, others as opportunities to be taken.

13. Chapter 14 Unlocking the Business Environment Current and emerging ethical and international issues An organisation’s ethical approach to environmental issues could be seen as the extent to which it views corporate social responsibility (CSR) as a responsibility and translates good environmental practice into its organisational strategy. The CSR approach to climate change relies on voluntary action, taking action above and beyond what is required by law. A key question: is this voluntary approach by individuals, organisations and government bodies enough to tackle the problem?

14. Chapter 14 Unlocking the Business Environment Current and emerging ethical and international issues Many environmental issues, such as global warming, are a global phenomenon. This requires not only individuals, organisations and governments to work together, but also individuals, organisations and governments across the world to work together tackle these issues.

15. Chapter 14 Summary Naturally occurring environmental changes can occur; however, there is concern that human activity is increasing the rate and pace of some environmental changes such as global warming. As towns and cities have developed over the decades, so have problems in terms of water and air pollution, waste management and population growth. From the industrial revolution in the UK onwards, pollution and urbanisation have increased. Unlocking the Business Environment

16. Chapter 14 Summary There are concerns that pollution, over-use of resources and waste issues are affecting the planet’s environment and ultimately affecting the climate. Ozone depletion, deforestation, the greenhouse effect and pollution – air, water and land – have all caused concern, with calls from some scientists that action needs to be taken. Major international conferences have attempted to address the world’s environmental concerns. Unlocking the Business Environment

17. Chapter 14 Summary These environmental issues could be an organisational opportunity or a threat. Organisations’ ethical approaches to environmental issues can be seen by the extent to which they view CSR as a responsibility and translate it into organisational strategy and their operations throughout. Environmental issues are a global phenomenon. This requires individuals, organisations and governments across the world to work together. Unlocking the Business Environment