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50 Long Range Planning, Printed in Great Britain

Vol.

25,

No.

3,

pp.

50

to

59,

1992

0024-6301/92

Pergamon

$5.00 + .OO

Press

Ltd

Environmental

Issues : The

Challenge

for

The

Chief

Executive

Issues : The Challenge for The Chief Executive Colin Hutchinson Businesses are under pressure to adopt
Issues : The Challenge for The Chief Executive Colin Hutchinson Businesses are under pressure to adopt

Colin

Hutchinson

Businesses are under pressure to adopt environmental policies and incorporate them into their strategic business planning as a matter of routine. These pressures are coming from at least five sources-stricter legislation, consumer demand, competi- tive advantage, staff concerns and community pressure. The challenge is enormous but there is growing evidence that sound environamental management provides pay-off in bot- tom line results. Business organizations have a vitalrole to play and its good for them. There are opportunities for new business as well as threats to those organizations which continue to ignore the trends.

have

divided

up

the

task

and

many

top

executives

have

been

drawn

in

to

work

with

the

Department

of

the

Environment.

 

Similar

initiatives

are being taken by other countries

around

the

world

and

there

is

no

doubt

that

all

commercial

 

and industrial

organizations

are now

or

soon

will

be

taking

their

environmental

responsi-

bilities

seriously.

Sir

Denys

Henderson

of Imperial

Chemical

Industries

plc

has said

‘As individuals,

we

care

about

our

environment

on

and

as a company

our

we

are

increasingly

environmental

record

as much

judged as on any

other

aspect

of our

overall

performance.’

 

What

are the Environmental

Issues?

In

more

contained

this

a very

comprehensive

article

in

Business

brief

outline

coverage

is provided

but

of

the

issues

and

the

Environmental

Chal-

a

is

lenge:

A

Guide

fir

A4anagers.3

This

guide

contains

references

to

some

60

books

as

well

as

a

brief

description

of

20

threats

to

the

Earth’s

life

support

systems.

Population

 

In

1900

the

world

population

was

estimated

at

1.5

billion,

by

the

year

2000

it is expected

to

exceed

6

billion

and

is unlikely

to stabilize

until

it exceeds

10

billion

in

the

latter

half

of

the

next

century.

The

average

annual

increase

in

each

of

the

last

five

decades

is shown

in Table

1.

As

world

population

grows

the

impact

on

the

environment

grows

with

it.

Every

extra

mouth

to

feed,

every

extra

person

to

consume

energy,

every

addition

to resource

consumption

and

the

resulting

pollution

creates

further

demands

on the capacity

of

the Earth

to cope

and

to provide

healthy

habitation

for

all living

things.

For

the

first

time

ever,

a World

Summit

has

been

called

and

is due

to

take

place

in

Brazil

from

5

to

19 June

1992

under

the

title

of

the

United

Nations

Conference

on

Environment

and

Development

 

(UNCED).

Th ere

is

sufficient

concern

about

the

health

of planet

Earth

to attempt

the formidable

task

of getting

all national

leaders

together

in one place

at

the

same

time

to

agree

some

crucial

principles.

Maurice

Strong

is

Secretary-General

 

of

UNCED

and

he

has

appointed

 

Dr

Stephan

Schmidheiny,

a

prominent

Swiss

businessman,

to

head

up

the

Business

Council

 

for

Sustainable

Development

 

(BCSD).’

 

The

Ch airmen/Chief.

Executives

of

50

major

organizations

from

around

the

world

are

members

 

of

BCSD-including

Norsk

Hydro,

Volkswagen,

3M,

Ciba-Geigy,

Nissan

Motors,

John

Laing,

Dow

Chemicals

and

Royal

Dutch

Shell.

Their

mission

is

to

stimulate

active

partici-

pation

of

the

business

community

in

the

prep-

arations

for

Brazil

with

particular

emphasis

on

environmentally

sustainable

development.

 

In

the

U.K.,

Michael

Heseltine,

Secretary

of

State

for

the

Environment

has

appointed

a

committee

under

the

chairmanship

 

of

John

Collins,

Chief

Executive

of

Shell

UK

Ltd,

to

address

similar

questions

in

this

country.*

Three

subcommittees

 
in this country.* Three subcommittees   Cohn Hutchinson is a Management Affairs and chairman of the

Cohn Hutchinson is a Management

Affairs and chairman of the Conservation Trust.

Consultant

in

Environmental

Consumption

The

pattern

of

consumption

varies

widely,

so

the

 

The

Challenge

for

The

Chief

Executive

 

51

Table

1. World

population

growth

by

decade

or buy enough food to maintain

their

health;

they

1950-2000

Year

Population

(bn)

1950 2515

1960 3019

1970 3698

1980 4450

1990 5292

2000 6251

Source:

Lester

Brown

et

a/

State

are predominantly illiterate and therefore lack the

Increase

Average

ideas and information which would enable them to escape from their predicament.

bY

annual

decade

increase

 

One

comparative

measure

which

highlights

the

disparity

of

wealth

and

poverty

in

rich

and

poor

504

50

countries

is GNP

per

capita

as is shown

in Figure

2.

679

68

752

75

842

84

At

least

80

per

cent

of

the

world

population,

not

959

96

only

in

poor

countries,

wish

to

improve

their

of

the

World

1990.

standard

of

living-the

poor

in

developing

coun-

tries

for

very

good

reasons.

If this

improvement

in

living

standards

is achieved

by

conventional

forms

 

of

development

then

the

problems

of

the

environ-

impact

on

the

Earth

from

relatively

small

numbers

ment

which

are

now

widely

discussed-global

of high

consumers

is much

more

significant

than

the

warming,

ozone

depletion,

loss oftop

soil,

pollution

low

levels

of

consumption

of

the

vast

majority

of

in

all

its

forms,

destruction

of

rain

forests,

water

the

people

who

live

on Earth.

About

one

quarter

of

quality,

acid

rain

etc.-will

reach

even

more

the

world’s

population

live

in

the

developed

horrific

proportions.

 

countries

and

they

account

for

two

thirds

of

the

Earth’s

energy

consumption.

 

The

remaining

three

Pollution

and

Use

of

Resources

 

quarters

of

the

world’s

population

live

in develop-

The

scale

and

nature

of

the

threats

to

the

environ-

ing

countries

and

account

for

only

one

third

 

of the

ment

have

been

widely

reported

in many

books,

on

energy

consumed.

This

is shown

in

Figure

1.

television

and

in

the

press.

An

interesting

report

 

published

in

1991

entitled

Industry

and the Environ-

It is estimated

that

of the

world’s

 

population

 

of

5.3

ment:

A Strategic

Overview4

lists 12 key

environmen-

 

billion

in

1990,

one

billion

live

in

countries

whose

tal

problems

as shown

 

in

Table

2.

The

interesting

standard

of

living

(health,

housing,

 

diet,

education

aspects

of

this

report

are

that

the

environmental

 

and

material

possessions)

have

improved

over

the

significance

of

each

problem

is tabulated

together

last

century.

The

remaining

4.3

billion

have

not

with

the

main

causes

and

an

estimate

of

the

improved

 

their

standard

of

living

significantly

quantities

of

pollutant

released.

 

The

industries

during

this

period

and

one

billion

 

of

these

people

which

contribute

 

to

each

problem

are

identified,

live in absolute

poverty-they

are too

poor

to grow

developments

in legislation

are

discussed,

the

tech-

in legislation are discussed, the tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0
in legislation are discussed, the tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0
in legislation are discussed, the tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0
in legislation are discussed, the tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0
in legislation are discussed, the tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0

DEVELOPING

COUNTRIES

DEVELOPED

COUNTRIES

tech- DEVELOPING COUNTRIES DEVELOPED COUNTRIES 0.0 7.5 15.0 22.5 30.0 3 7 . 5 4 5

0.0

7.5

15.0

22.5

30.0

37.5

45.0

52.5

60.0

67.5

75.0

 

Percentage

 

figures

 

I

Consumption

%

I7

Population

%

Source: Gala Peace Atlas Approximate figures

L

Figure

1. World

energy

consumption

and

population

52

Long

Range

Planning

Vol.

25

June

1992

52 Long Range Planning Vol. 25 J u n e 1 9 9 2 GNP Per

GNP Per Capita

Range Planning Vol. 25 J u n e 1 9 9 2 GNP Per Capita OECD
Range Planning Vol. 25 J u n e 1 9 9 2 GNP Per Capita OECD

OECD

Members

Vol. 25 J u n e 1 9 9 2 GNP Per Capita OECD Members Europe,

Europe,

M East, N Africa

9 9 2 GNP Per Capita OECD Members Europe, M East, N Africa South Asia  

South Asia

 

D

East Asia

 

D

Sub-Saharan

Africa

h

P

0.0

I

1.5

I

3.0

I

4.5

I

6.0

I

7.5

I

9.0

I

10.5

I

12.0

I

13.5

I

15.0

 

Source:

World Development

Report

1989

In Thousands GNP Per Capita $

 

World

Bank weighted

average

figures

1987

Figure

2.

The

gap

between

rich

and

poor

countries

Table

2.

Key

environmental

problems

 

cent),

Nitrous

Oxide

(6 per

cent)

and

others

(13

per

 

cent).

Virtually

every

industry

is

involved

in

 

Issues

Estimated expenditure

U.K.

1991-2000)

E.C.

(fbn

U.S.A.

making

issue.

their

Remedies

contribution

include

to

landfill

this

gas

environmental

collection

and

 

flaring,

afforestation,

m-use

 

of

waste

heat,

district

Greenhouse

effect

48

237

443

heating,

recovery

of methane

at coal

mines,

landfill

Water quality

25

75-l

00

71

sites,

farms

and

abattoirs,

use

of

efficient

boilers,

Waste manage-

 

motors

and

domestic

appliances,

better

insulation,

ment

19

180-200

120-I

70

 

Acid

rain

11

51

25

energy

management

systems,

traffic

management

Heavy

metals

9

80

52

systems,

and

use

of

more

renewable

energy

(solar,

Ozone depletion

7

70

76

tidal,

wind,

wave

geothermal

and

hydro).

 

Air quality

 

7

34

17

Noise

6

32

33

The

countries

which

contribute

 

the

most

to

the

VOCs

and

Persistent

smells

orga-

3

26

27

greenhouse

effect

are

the

U.S.A.,

C.I.S.

(former

nits

2

23

15

U.S.S.R.),

Brazil,

China,

India,

Japan

and

the

U.K.

Contaminated

 

which

between

them

account

for

60

per

cent

of the

land

2

25

150

global

problem,

as shown

in

Figure

3.

Major

spills

1

7

7

TOTAL

 

140

860

1060

One question that inevitably

 

arises

concerns

the

Source: Industry and the Environment: A Strategic Overview, The Centre for Exploitation of Science & Technology

ability to find the capital expenditure required to

tackle the problems that undoubtedly that will make a significant difference.

exist,

at a level

nologies

most

likely

to

abate

or

remedy

the

problems

are

explained

and

the

probable

expendi-

Military

Expenditure

 

ture

in

the

U.K.,

Europe

and

the

U.S.A.

are

estimated.

 

World

military

expenditure

is

now

approaching

 

$lOOObn

each

year

and 70

per cent

of this is incurred

The

greenhouse

effect

tops

the

list

of

problems

by

the

super

powers

and

their

allies.

The

pattern

of

assessed

by

CEST.

Carbon

dioxide

accounts

for

military

expenditure

relative

to the

expenditure

on

nearly

half

the

greenhouse

gases

with

methane

health

and

education

varies

enormously

from

(18

per

cent),

Chlorofluorocarbons

(CFCs-14

per

country

to

country.

For

example

Iraq’s

military

The

Challenge

for

The

Chief

Executive

53

1

The Challenge for The Chief Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - -

17.60

U.S.A.

10.50

The Challenge for The Chief Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - -

Brazil

for The Chief Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - - I Source:

6.60

China --I

Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - - I Source: U.S.A. have Highest
Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - - I Source: U.S.A. have Highest
Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - - I Source: U.S.A. have Highest
Executive 53 1 17.60 U.S.A. 10.50 Brazil 6.60 China - - I Source: U.S.A. have Highest

Source:

U.S.A. have Highest Emissions Per Capita (Mn Tonnes p.c.1

The Guardian June

15th 1990

U.K.

G-gas

40.00

Other

Figure

3.

Estimates

of

greenhouse

gas

emissions

from

specific

countries

expenditure

is

90

per

cent

compared

with

only

around

$500bn

a year

for

10 years.

Even

at this level,

10 per

cent

on

health

and

education.

Iran,

Uganda,

it

is

still

only

half

the

annual

global

military

Oman,

and

Pakistan

are

all

over

75

per

cent

on

expenditure.

 

military

spending

and

under

25

per

cent

on

health

 

and

education.

This

contrasts

with

Costa

Rica

with

only

2 per

cent

military

spending

and

98

per

cent

health

and

education.

Mauritius,

Trinidad

&

Tobago,

Jamaica,

Panama,

Botswana

and

Brazil

keep

their

military

expenditure

under

30

per

cent

with

over

70

per

cent

on

health

and

education.

These

figures

suggest

that

it is possible

for national

governments

parative

policy

than

to

exercise

choice

and

that

the

com-

of

levels

of

necessity.

expenditure

are

more

a matter

Some

interesting

figures

are

quoted

ofFuture

Worlds5

by

Norman

Myers

in

the

Guia

Atlus

drawing

on

calculations

made

by

Lester

Brown

of

the

Worldwatch

Institute.

The

estimated

expenditure

required

to restore

environmental

security amounts

to

no

more

than

8 weeks

global

military

expendi-

ture

at

the

levels

being

incurred

in

the

late

1980s.

Table

3 gives

the

details.

 

Barry Commoner

in

Making

Peace

with

the

Planet6

It

is

considerations

like

these

that

have

led

to

the

50

per cent

initiative

by

Saferworld.’

They

also give

some

interesting

figures

of

the

trade-off

between

spending

environmental

priate alternative.

Economic Community

For

specific

on

priority

military

which

example,

military

priorities

might

be

an

and

an

appro-

10 days of European

spending

is kl.5bn

which

could,

as an alternative,

be spent

each

year

on

cleaning

up

hazardous

waste

sites

in

10

European

Economic

also draw

Development

military

Community

attention

R

&

countries

to the proportion

that

U.S.A.

expenditure

D.

In

Israel,

by

2000.

They

of Research

81

is

directed

U.K.

and

into

over

50

per cent

of public

R

& D is for military

purposes.

A Key Role

for Business

 

It will

already

be apparent

that

industrial

organiza-

tions

of

every

kind

are

directly

involved

in

the

also provides some comparable estimates. He con-

environmental

able future

challenge.

for

The

target

for

the foresee-

siders that the expenditure required to effect a global

is to strive

sustainable

development.

transition to an ecologically sound system would be

This

is defined

by

Gro

Harlem

Brundtland

in

Our

54

Long

Range

Planning

Vol.

25

June

1992

 

Table

3.

Estimated

 

expenditure

to

Table

4.

The

challenge

to

business

 

‘Repair

the

Environment’

 
 

Sbn

To make the present business effective environmental impact acceptable

and

the

 

To

identify

and

realize

its potential,

including

the

 

Protect

World’s

top

soil

9

potential

for:

 

Restore

World’s

forests

 

3

6

reducing

pollution

 

Halt

the

march

of

deserts

4

$r

using

resources

economically

and

efficiently

Raise

energy

efficiency

renewable

 

10

5

 

* new

developing

business

opportunities

 

Develop

 

energy

A fulfilling

providing

work

for

staff

at

all

levels

 

Slow

down

population

growth

18

Supply

World

with

clean

water

30

To

make

your

business

into

a different,

sustainable

 

Write-off

Third

World

debt

 

30

business

for

a future

that

will

inevitably

be different.

 

All

three

challenges

have

to

be faced

in

the

present.

 

Total

109

Total

by year

2000

170

 

N.B.

The

equivalent

of

8

weeks

global

military

the money

might

come

from

to tackle

the issues.

It is

spending.

 

now necessary

to

look

at

the

issues

from

the

Source:

Myers,

Gaia

Atlas

of

Future

Worlds

perspective

of

     

(p.

162).

the

individual

business.

 

John

Davis,

who

was

at

one

time

Chairman

and

Common

Future8

as

‘development

that

meets

the

Managing

Director

of

Shell

Composites

Ltd

and

needs

of

the

present

without

compromising

the

IBE

Ltd,

recently

wrote

Greening

Businesx.9

In

ability

of

the

future

generations

 

to meet

their own

undertaking

to

write

this

book

he

decided

that

the

needs’.

Since

that

report

was

published

many

best

approach

would

be to think

in terms

of a Chief

national

governments

have

produced

their

own

Executive

facing

the

challenge

of

changing

his

documents

and

white

papers,

set up

committees

to

business

into

one

that

would

be

sustainable.

work

out

what

should

be done

and how

it might

be

Throughout

the

book

 

he

retains

a highly

practical

implemented

etc.

Britain

is no

exception.

approach

and

quotes

examples

which

demonstrate

 

that

very

significant

progress

can

be

made.

 

The

challenge

facing

any

business

inevitably

focuses

 

on

current

performance.

For

many

companies

the

From

that

and

other

sources

it is possible

to identify

struggle

to

manage

short

term

cash

flow

takes

some

of the

consequences

for

businesses

that

decide

precedence

over

other

matters.

During

periods

 

of

that

the

environmental

challenge

is not

for

them.

rapid

external

change

there

is also a pressing

need

to

They

are

likely

to

find

that

there

are

adverse

assess

the

organizations

potential

and

find

ways

 

to

consequences

of

many

kinds

for

their

business.

include

time

to

attend

to

this

perspective.

If

it

is

These

will

not

all emerge

at one

time

and

they

will

ignored

then

the

business

may

emerge

from

the

not

affect

businesses

in different

sectors

to

the

same

recession

having

been

overtaken

by

events.

There

is

degree.

possible

that

many

directors

and

also

a third,

equally

important,

perspective

which

senior

It is quite executives

already

experience

a

general

concerns

changing

the

business

because

the

future

malaise

but

find

it

hard

to

be

specific.

In

these

will

inevitably

 

be

different.

All

three

elements

can

circumstances

it is worth

considering

the

degree

to

be

applied

to

environmental

issues

as

well

 

as

which

the

checklist

in

Table

5 is relevant

to

your

conventional

business

performance.

When

this

is

business

now

or could

become

relevant

in the future

incorporated

the

third

dimension

becomes

chang-

if nothing

is done.

 

ing

the

business

into

one

that