BA 310 Mod 10 Ch 8 Ethics and the Environment Objectives Identify areas where firms can be environmentally proactive 1 Explain the concept of the tragedy of the commons 2 Comment on the natural environment as a stakeholder and as a competitive advantage 3 4 Describe the various environmental stakeholders 5 6 Describe some of the benefits of establishing a voluntary partnership with the US Environmental Protection Agency 7 Explain environmental justice 8 Describe the importance of a firm s carbon footprint List some of the major environmental regulations in the United States 1 The Tragedy of the Commons Although Garret Hardin usually receives credit for the concept of the tragedy of the commons the roots of the concept go back to Aristotle Underlying belief is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation Recommended management solutions to the tragedy of the commons is to Privatize resources Have polluters pay for their damage Have government regulations to control the use of natural resources 2 Natural Environment as a Stakeholder Can be considered a stakeholder without a voice The following resources used link the natural environment with firms Manufacturing of a product Energy used to run a plant The disposal of waste products Natural Environment as a Competitive Advantage environment into a competitive advantage The competitive business strategies a firm uses to convert the natural Eco Efficiency Productivity is the key element environmentally competitive advantage for companies to gain an Waste products are considered to be an inefficient use of resources Beyond Compliance Leadership of its stakeholders The firm makes a conscious effort to acknowledge the demands Firm are able to provide proof j to their stakeholders pertaining to their commitment to the natural environment Firms use their proactive environmental commitments in an to differentiate their products and services for their Eco Branding attempt customers Allows potential customers to consider the natural environment when they are purchasing products and services Must be difficult for competitors to copy Environmental Cost Leadership Firms that compete on low price can offset their environmental investments Firm would concentrate on radical product innovation such as material substitution and or using fewer materials to yield cost savings 1 BA 310 Mod 10 Ch 8 Ethics and the Environment 3 Voluntary Environmental Compliance Catherine A Ramus recommends 13 areas in which environmentally proactive firms should address Release an environmental policy that is available for all stakeholders to review Establish specific targets to be measured for annual environmental performance environmental issues benchmarks Implement an environmental management system Publish an annual environmental report Use environmental criteria when making purchasing decisions Provide employees with environmental training Make the employees accountable and responsible for performance of the company Use life cycle analysis that evaluates the environmental creation until it is no longer in use the overall environmental impact of a product from its Have top level managers who understand and attempt to address the issues of sustainable development Implement a system to try to reduce the level of fossil fuel use Implement a system to reduce toxic chemical use Implement a system to reduce the use of unsustainable products Ensure that the same environmental standards are consistent globally The Cost of Noncompliance The US Environmental Protection Agency EPA Has the power to impose sanctions and fines against firms who violate environmental laws Example Charged DuPont in 2005 with hiding information about the dangers caused by one of the chemicals perfluorooctanoic acid used to make Teflon DuPont paid 16 5 million in fines and research and education funds Johnson Johnson s Worldwide Environmental Policy Committed to the following Operating beyond compliance Maintaining an environmental accountability structure Integrating environmental goals Striving for zero waste Utilizing innovative technologies Fostering an environmental ethic Building relationships with appropriate stakeholders Enhancing corporate social responsibility 4 Various Environmental Stakeholders Employees as Environmental Stakeholders Three types of environmental initiatives that can be generated from an employee Initiatives that decrease the environmental impact of the company through the policies of reuse and recycling Initiatives that solve an environmental problem such as hazardous substance use reduction Initiatives that develop a more eco efficient product or service that uses fewer resources and or less energy NGOs as Environmental Stakeholders Greenpeace focuses on climate change and has offices in 40 countries Sierra Club oldest and largest environmental group in the US Environmental Defense Fund made up primarily of scientists and economists Friends of the Earth international advocacy group for a variety of environmental concern Communicating the Firm s Environmental Commitment to its Stakeholders Stanwick Stanwick Research Found there was a relationship between a firm s environmental disclosures and its financial performance Also found that firms that had a medium level of financial performance had the highest incidences of environmental policies firms in the middle of the pack financially were usually most Concluded that environmentally committed 5 Government Regulations 2 BA 310 Mod 10 Ch 8 Ethics and the Environment Domestic Regulations Federal Food Drug and Cosmetic Act 1938 Federal Water Pollution Control Act aka Clean Water Act 1948 Air Pollution Control Act of 1955 Clean Air Act 1963 Solid Waste Disposal Act 1965 National Environmental Policy Act 1970 Ocean Dumping Act 1972 Endangered Species Act 1973 Safe Drinking Water Act 1974 Resource Conservation and Recovery Act 1976 Comprehensive Environmental Response Compensation and Liability Act 1980 Nuclear Waste Policy Act 1982 Emergency Planning and Community Right to Know Act 1986 Ocean Dumping Ban Act 1988 Chemical Safety Information Site Security and Fuels Regulatory Relief Act 1999 Toxic Substance Control Act 1976 Food Quality Protection Act 1996 International Agreements Montreal Protocol 1987 signed by President Ronald Reagan international agreement to phase out chlorofluorocarbons that erode the ozone Kyoto Protocol 1997 established a