Corporate Environmentalism

8803 Business and the Environment

Beril ToktayCollege of Management

Georgia Institute of Technology

Overview

The economic contextThe historical contextMaking 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, 1996.

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 1946. 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”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 14001 Brownfield redevelopment

Sustainable Value Framework

EngagingExternalConstituencies

NurturingInternalCapabilities

Managing Today’s Business

Building tomorrow’s opportunity

Cost andriskreduction

Legitimacy &reputation

Innovation &repositioning

Growth path

Source: Hart, Capitalism at the Crossroads

Historical Evolution1963 Silent Spring published

1984 Bhopal tragedy

Regulation:Rapid proliferationEnd-of-pipe regulation, “pay to reduce -ve impact”Mandates specific technologiesFocus on hazardous waste, emissions, pollution

Industry:Compliance focusedFocused on internal manufacturing processes“Resistant adaptation”

Historical Evolution1984 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 sustainabilityStakeholder involvementAlliances with NGOsCorporate Social ResponsibilityInternational collaboration

Sustainable Value Framework

ExternalInternal

Today

Tomorrow

Strategy: Eco-efficiencyMinimize waste & emissions

Corporate Payoff:Cost & risk reduction

Strategy: Product StewardshipIntegrate stakeholder viewsInto business processes

Corporate Payoff:Reputation and legitimacy

Strategy: Sustainable TechnologyDevelop sustainable competencies of the future

Corporate Payoff:Innovation & repositioning

Strategy: Sustainable DevelopmentCreate a shared roadmap for meetingunmet needs

Corporate Payoff:Growth path

Source: Hart, Capitalism at the Crossroads

Sustainability Framework

Pollution prevention Waste reduction Environmental Mgt ISO 14001 Risk management End of pipe

Life-cycle management Design for environment Closed-loop supply chain Dematerialization Cradle to cradle

ExternalInternal

Today

Tomorrow

Biomimicry Renewable energy Clean technology

Triple-bottom line Sustainable development Urban reinvestment Brownfield development

Fundamentals

EnvironmentalImpact

The Role ofCompanies

Core Dilemma:Tragedy of the Commons

The Role ofLegislation

Pollution Prevention

Waste Reduction

ISO 14000

Life-cycleAnalysis

Risk Mitigation

Design forRecovery

SellingServices

ExtendedProductResponsibility

CommercialReturns

Eco-efficiency Product Stewardship

SustainabilityStrategy

Alliances andCommunication

ProductDifferentiation

CorporateSocialResponsibility

SustainableDevelopment

Flow of Course

Concepts

A historical perspectiveFramework to classify sustainability

initiativesThe limits of the win-win argumentThe limits of the shareholder value

argument

Suggested Readings

Carson, Silent Spring Hart, Capitalism at the CrossroadsElkington, Cannibals with ForksFrankel, In Earth’s Company