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Business and society ethics sustainability and stakeholder management 9e chapter 15

© 2015 Cengage Learning


Chapter 15
The Natural

© 2015 Cengage Learning


Learning Outcomes
1. Discuss the concept of sustainability, and compare
and contrast it with environmentalism.
2. Describe ten major natural environment issues.
3. Describe the NIMBY and its impact on

environmental problems.
4. Discuss the roles that business and government play
in environmental issues.
5. Explain the concept of environmental ethics.
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Chapter Outline

The Sustainability Imperative
The Natural Environment
A Brief Introduction to the Natural Environment
The Impact of Business upon the Natural Environment
Responsibility for Environmental Issues
The Role of Governments in Environmental Issues
Other Environmental Stakeholders
Business Environmentalism
The Future of Business: Greening and/or Growing?
Key Terms
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and the Natural Environment
Sustainability •Business that meets the needs of the present without
compromising the ability of future generations to meet
their own needs.
•Akin to walking lightly on the earth, taking only what’s
needed, and leaving behind enough for future
generations to have access to the same resources.
•Sustainability means running the global environment –
Earth, Inc. – like a corporation: with depreciation,
amortization and maintenance accounts.
•Keeping the asset whole, rather than undermining your
natural capital.
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The Sustainability Imperative (1 of 2)

Businesses used to label the environment an
externality and paid no attention to the damage
they caused. Now, it requires action, both a
necessity, and an opportunity. CERES identifies
several key drivers:
Competition for resources - demand is growing more
quickly than they can be replaced.
Climate change - business must be prepared to respond
to new policies regarding emissions, and to take
advantage of new technology.
Economic globalization - wide disparities in social and
environment standards bring risks and
Connectivity and communications - stakeholders can
monitor and react to sustainability efforts more
quickly. Reputations are quickly built and destroyed.
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The Sustainability Imperative (2 of 2)

A leading advocate of business sustainability is
Unilever. The CEO sought out long-term
investors as shareholders, rather than shortterm hedge-fund managers, banned quarterly
earnings reports, and embarked on a 10-year
plan. As of 2012, Unilever had:
Health & Hygiene – reached 224 million people
Improving nutrition – a majority of products
met national standards, with 18% meeting
highest nutritional standards
Greenhouse gases – impact was reduced by 6%
Waste – impact per consumer was reduced by
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The Natural Environment

For years, businesses conducted their operations
with little concern for environmental consequences.
They consumed significant amounts of materials and
energy, causing waste accumulation and resource
They caused major air, water and land pollution
problems. They looked the other way, labeling the
negative consequences of their actions as
externalities – side-effects or by-products not
intended, and often disregarded.
Any environmental effort usually came from
compliance or efficiency. Businesses would stop
damaging the environment only when it became
illegal or unprofitable to do so.
Now, environmentalism is becoming profitable.
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A Brief Introduction
to the Natural Environment

This chapter focuses on the natural environment –
what it is, why it is important, how it has become a
major concern, and what businesses and other
organizations have done to it or for it.
The environment has become one of the most
significant societal issues of our time.
To help you make environmental business decisions
in the future, we’ll describe the variety of responses
humans and businesses have developed to address
these issues, and present facts and figures.
The emphasis is on two themes:
• Humans are part of their natural environment
• The environment is complex, defying simple
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Glossary of Environmental Terms

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The Impact of Business
on the Natural Environment
The Top Ten fundamental environmental issues:
1.Climate Change
4.Biodiversity and Land Use
5.Chemicals, Toxics, and Heavy Metals
6.Air Pollution
7.Waste Management
8.Ozone Layer Depletion
9.Oceans and Fisheries
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Climate Change
Climate change global warming creates the:
Greenhouse effect - the prevention of solar heat
absorbed by our atmosphere from returning to space,
causing an unprecedented rate of warming.
•Hurricane Katrina, a European heat wave, and
starving polar bears are all signs of warming.
•The probability that humans are changing the climate
is greater than 90%.
•The U.S. Chamber of Commerce opposes controlling
emissions which contribute to climate change. Some
CEOs felt so strongly about this that they quit the U.S.
•Nearly all legitimate scientists fear the possibility of
swift and radical climactic changes.
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Global Carbon Dioxide Emissions

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A major environmental issue is energy inefficiency,
wasting nonrenewable sources of energy.

Fossil fuels such as coal, oil and natural gas were
formed millions of years ago under unique
conditions; once they are depleted, they will be
gone forever.

Because such fuels are not equally distributed
around the world, disastrous armed conflicts result.

Businesses should use as little non-renewal energy
as possible, and shift to renewable sources such as
solar, wind, hydroelectric, biomass

Energy represents a challenge and an opportunity;
firms that succeed in this area will reap big profits.
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• Both quality and quantity of water
Quality – Degradation of oceans & waterways
• Municipal sewage, Industrial wastes
• Urban runoff, Agricultural runoff
• Atmospheric fallout, Overharvesting
• Dam sedimentation, Deforestation
• Overgrazing, Over-irrigation
• More than a billion people lack clean water.
• Quantity –
• Earth is a closed system with a fixed water
supply; growing populations use more water.
• The world is facing water bankruptcy.
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Biodiversity and Land Use
Biodiversity - The variation of life forms inside an
ecosystem, serves as a key indicator of its health. It
is being lost at an unprecedented rate.

•Ecosystem and habitat destruction, pollution, other
excesses in individual and organizational activities
are responsible.
•The current rate of extinction is 1,000 times
higher than the natural rate.
•Land degradation threatens the livelihood of more
than one billion people, especially in Africa, the
continent most affected by drought.
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Chemicals, Toxics and Heavy Metals
Toxic substances •Chemicals or compounds that may cause
damage to the nervous system, reproductive
and developmental problems, cancer and
genetic disorders - & the environment.
•Can be intentionally or unintentionally created.
•Two main problems 1. We are not always aware of the effects of
exposure to chemicals.
2. Toxic substances can be associated with
industrial accidents, causing unforeseen
widespread biological damage.
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Air Pollution
Outdoor Air pollution •Acid Rain
•Global Warming
•Depletion of the ozone layer
•Serious respiratory illnesses

Indoor Air Pollution –
•Comes from oil, gas, kerosene, coal, wood and tobacco
products, building materials & furnishings, damp
carpets, household cleaning products and lead-based
•Long term effects , respiratory diseases, heart disease
and cancer, can be fatal.
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Waste Management

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Waste Trends in the U.S.

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Ozone Depletion
Ozone depletion •Ozone is harmful near the surface of the earth,
but vital in the atmosphere.
•It blocks dangerous ultraviolet radiation from
the sun.
•Decrease in stratospheric ozone comes from
human use of chlorofluorocarbons (CFCs) and
other chemicals.
•The ozone hole in our atmosphere has been
greatly reduced since 1993.
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Oceans and Fisheries
Watershed - an area that drains to a common
waterway. We all live in a watershed.

•Trillions of gallons of sewage & industrial waste are
dumped into marine waters each year.
•These & other pollutants do significant damage coastal
ecosystems, resulting in shellfish bed closures, seafoodrelated illnesses, and reduced shoreline protection from
floods and storms.
•Once inconceivable, now 85% of the world’s fisheries
are at capacity, over capacity or have collapsed. The
oceans are running out of fish to meet human needs.
•Conservation efforts have helped some species
recover, and such efforts continue.
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Humans depend on forests for building materials,
fuel, medicines, chemicals, food, employment
and recreation.

Deforestation •

Adds to soil erosion problems.

Plays a key role in global warming; Felled trees
can no longer absorb carbon dioxide. Dead trees
release it into the atmosphere.

Accounts for 20% of global carbon emissions –
more than the world’s trains, boats and planes
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for Environmental Issues

Wicked problems - (smog, toxic waste and acid

Tragedy of the commons – is likely to occur

A “commons” (our environment) is a plot of land
available to all.

Constraints must be placed on the use of the
commons because self-interest is likely to lead
individuals and organizations to behave in ways that
will not sustain our shared resources.

rain) are problems with complexity, uncertainty,
interconnectedness, ambiguity, conflict, and societal
constraints. When no one takes responsibility -

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Environmental Ethics

Humans must consume at least some plants and
water to survive. What level is ethical? Which
school of environmental thought should we

Kohlberg – levels of moral development

Utilitarianism – greatest good for greatest number

Integrating sustainability into a firm’s philosophy
is a natural extension of stakeholder theory,
including as a stakeholder the ecological system
from which the firm obtains resources and to
which it bears responsibility for its impacts, both
positive and negative.
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