Ecology and Sustainable Development in Global Business

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Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Ecological Challenges
Ecology
The study of how living things plants and animals

interact with one another in an ecosystem By some measures the demands of human society have already exceeded the carrying capacity of the earths ecosystem

Global Commons
A commons is a shared resource that a group of

people uses collectively Paradox that if all individuals maximize their own advantage in short term, commons will be destroyed
Dr. Elycheikh / Business Ethics, KIC - Spring 11/12 10-2

Ecological Challenges
Preserving our common ecosystem and assuring its

continued use is a new imperative for business, government, and society

Sustainable development Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Protecting the environment will require economic development Economic development must be accomplished sustainably

Sustainable development is an appealing idea but also

a controversial one
Dr. Elycheikh / Business Ethics, KIC - Spring 11/12 10-3

Threats to the Earths Ecosystem

Sustainable development requires that human society

use natural resources at a rate that can be continued over an indefinite period
Renewable resources (water, forests) can be naturally

replenished Nonrenewable resources (fossils fuels like oil, coal) once used are gone forever

Examples of natural resources that are now being

Water resources Fossil fuels Arable land
Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

depleted or polluted at well above sustainable rates

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Forces of Change Accelerating Ecological Crisis

Pressure on the earths resource base is becoming increasingly severe

Three critical factors have combined to accelerate the ecological crisis facing the world community and to make sustainable development more difficult

Population explosion World income inequality Rapid industrialization of many developing nations
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Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

World Population Growth

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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World Income Distribution by Deciles (Tenths) of the Population, 2000

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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The Earths Carrying Capacity

The world resource base is essentially finite, or bounded

Limits to growth hypothesis suggests human society is overshooting earths carrying capacity, with drastic consequences if changes are not made

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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The Earths Carrying Capacity

One method of measuring the Earths carrying

capacity, is called the ecological footprint

The amount of land and water a human population

needs to produce the resources it consumes and to absorb its wastes, given prevailing technology

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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How Can Human Society Bring the Earth's Carrying Capacity Back into Balance?
This is without a doubt one of the great challenges facing the

worlds people. Any solution will require change on many fronts:

Technological innovation Develop new technologies to

produce energy, food, and other necessities of human life more efficiently and with less waste
organizations concerned about environmental impact could decide to consume less or choose less harmful products and services public policies that impose taxes on environmentally harmful products or activities

Changing patters of consumption Individuals and

Getting the prices right Some economists have called for

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Global Environmental Issues

Ozone depletion A bluish gas, composed of three bonded oxygen atoms, that floats in a thin layer in the stratosphere between 9 and 28 miles above the planet 1974 Scientists chlorofluorocarbons (CFCs) could react with and destroy ozone 1985 - Scientists discovered a thin spot, or hole, in the ozone layer over Antarctica 1987 - A group of nations negotiated the Montreal Protocol, agreeing to cut CFC production, agreement later amended to ban CFCs (This is an example of world governments coming together to address an environmental threat)

As of 2009, 195 countries had signed the protocol

The protective layer will gradually recover if regulatory trends

continue

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Global Environmental Issues

Global warming
Greenhouse effect occurs when carbon dioxide and other

gases in the atmosphere prevent heat from escaping into space

Since the Industrial Revolution, the amount of greenhouse

gases in the atmosphere has increased by as much as 25%

Caused mainly by the burning of fossil fuels such as oil and

natural gas
If societal emissions of these gases continue to grow

unchecked, the earth could warm by as much as 6.4 degrees Celsius by 2100
Dr. Elycheikh / Business Ethics, KIC - Spring 11/12 10-12

Global Warming

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Causes of Global Warming and Carbon Dioxide

Black carbon the sooty smoke that is created by the incomplete combustion of diesel engines and wildfires is the second largest contributor to climate change, responsible for as much as 18 percent of global warming Deforestation Trees and other plants absorb carbon dioxide and remove it from the atmosphere; therefore cutting down trees contributes to global warming Beef production Methane, a potent greenhouse gas, is produced as a by-product of the digestion of some animals, including cows CFCs Destroy the ozone and are also considered greenhouse gases

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Global Climate Change Initiatives

Kyoto Protocol
Multination agreement in 1997, went in to effect in 2005 Requires industrial nations to reduce greenhouse gas emissions 5% below 1990 levels

European Union has taken lead on reducing emissions

As of 2006, 161 nations, representing 62% of worlds carbon emissions, had ratified U.S. has not ratified, citing harm to U.S. economy

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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More Global Environmental Issues

Decline of biodiversity
Refers to the number and variety of species and the range

of their genetic makeup

Scientists estimate that species extinction is occurring at

100 to 1,000 times the normal, background rate due to pollution and habitat destruction
A major reason for the decline in the earths biodiversity is

the destruction of rain forests

Only half of the original tropical rain forests still stand Rain forests destruction is ironic because they may have more economic value standing than cut

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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More Global Environmental Issues

Threats to marine ecosystems
Refers to oceans, salt marshes, lagoons, and tidal

zones that border them, as well as diverse communities of life they support
Salt water covers 70 percent of the earths surface and

supports many species

Key categories of threats to these ecosystems

Fish populations Coral reefs Coastal development

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Response of the International Business Community

World Business Council for Sustainable Development
One of leaders in effort to promote sustainable business

practices Made up of 200 companies representing more than 35 countries and 20 industries Goal to encourage high standards of environmental management and to promote closer cooperation among businesses, governments, and other organizations concerned with sustainable development Promotes eco-efficiency and has documented competitive advantages for companies

Those that added the most value with the least use of resources and pollution were more competitive and environmentally sound

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12

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Voluntary Business Initiatives

Life cycle analysis
Involves collecting information on the lifelong environmental impact of a

product, from extraction of raw material to manufacturing to its distribution, use, and ultimate disposal

Industrial ecology
Refers to designing factories and distribution systems as if they were self-

contained ecosystems

Extended product responsibility

Companies have a continuing responsibility for the environmental impact of

the products and services, even after they are sold

Carbon neutrality
An organization or individual produces net zero emission of greenhouse

gases; this is usually accomplished by a combination of energy efficiencies and carbon offsets
Dr. Elycheikh / Business Ethics, KIC - Spring 11/12 10-19

Codes of Environmental Conduct

Some of the leading universal codes include the following: Business Charter for Sustainable Development developed by the International Chamber of Commerce
CERES Principles developed by the Coalition for

Environmentally Responsible Economies

ISO 14000 a series of voluntary standards developed by the

ISO, an international group based in Switzerland

Many executives are championing the idea that

corporations have moral obligations to future generations

Dr. Elycheikh / Business Ethics, KIC - Spring 11/12 10-20