ISL452U-BUSINESS ETHICS
Chapter 3: Environmental Responsibilities
Introduction
Worldwide environmental difficulties have several effects on business activities. The importance of the environment has increased and has become a stakeholder in industrial processes. The “costs” of production facilities (e.g., greenhouse gas emissions, air pollution, groundwater pollution and depletion, soil erosion, disposal of nuclear wastes) are often covered by “external” parties (e.g. winds, neighbors, future generations). Some environmental problems experienced today have the possibility to negatively affect the world and human life for the foreseeable future. The environmental responsibilities of organizations arise from their concerns as today’s people and forthcoming generations rely upon the natural environment to survive.
Natural Environment and Environmental Sustainability
For humans, the environment can include external living, working, and playing spaces, natural resources as well as internal physical, mental and emotional states” (Carroll et al., 2018).
Natural environment consists of all living and nonliving things occurring naturally such as land, water, air, plants, and animals. Any place, any city, any country in the region will have its own natural environment and resources. The companies are highly dependent on these natural resources in their natural environment. So, the natural environment can be considered one of the key factors where the company decides how, when and where to produce and market their products/services. In other words, these resources have an impact on the functioning of the companies and their economic activities are dependent on energy and resource consumption, many of which are limited and scarce.
Consumption generates demand, and demand is the cause of production. Undoubtedly, the enormous growth in consumption, in the last period of the last century and early twenty-first century, has created immense tensions on the natural environment.
Environmental policy has become prominent in the work of economists studying sustainable development and the ecological economy. For instance, Herman Daly (1996) advocates biological, physical and ethical limits of growth. Organizations will not be able to fulfill some very basic ethical and environmental requirements unless they alter their way of doing business.
Buchholz (1998) implies that a change in the direction of further environmental consumption should consider the ethical changes that regulate our societies. Buchholz also argues that humanity needs a fresh environmental ethic for sustainability, again supplying ethical boundaries to consumption.
High (and constantly increasing) amounts of consumption pose major problems in the sustainable development of businesses (Kilbourne et al., 1997; Schaefer & Crane, 2005), and increasing consumer demands for products and services can inevitably be held responsible for most of the social and environmental degradation (Heiskanen & Pantzar 1997).
Organizations and their top executives need to master environmental terminology when conducting sustainability efforts. A brief dictionary of essential and useful environmental terms is provided in Table 3.2, which covers the following terms: Bio-Based Product, Environment, Carbon Footprint, Carbon Neutral, Carrying Capacity, Circular Economy, Entropy, Ecosystem, Internal Carbon Tax, Irreversibility, Threshold, Voluntary carbon markets.
Environmental sustainability of businesses requires the long-term protection and care of the natural environment, as well as the entire biological assets, together with preserving the interaction between environment, people, organizations and company strategies. Ethical decision- making values that indicate the ethical culture also affect strategies such as policies related to sustainability programs and their strategic plans. Businesses should act in response to environmental sustainability issues in their strategies, procedures and processes, as generally stakeholders have worries about several aspects of the natural environment. Decisions include ensuring legal compliance, examining risks and preventing harm to the environment.
Whereas for the most part choices or indecisions can have ethical consequences, organizations should note that they create many natural environmental issues due to their activities. Stakeholders should be provided with accurate and clear information by the organization. Also, sustainability issues should be properly evaluated by the relevant stakeholders, and organizations should be provided with transparent and accurate explanations. Sustainability also emphasizes that many of today’s crucial environmental, economic, and ethical issues are interrelated in complex ways, and that any encompassing solution requires a thorough understanding of these interrelations and underlying causes.
The Effects of Businesses on the Natural Environment
Some of the most common factors leading to environmental damage and resource depletion are consumers’ income growth, establishment of materialistic cultural values, urbanization, population explosion, new and uncontrolled technologies, industrial activities.
Although there are different factors that lead to environmental damage, the effects of business operations constitute a big share in this condition. Ten basic environmental problems are discussed that businesses should consider according to their importance (see Fig.
3.1). These are climate change, energy, water, biodiversity, chemicals, toxics, and heavy metals, air pollution, waste management, ozone depletion, oceans and fisheries, deforestation. Enterprises are under pressure to address these factors.
Climate change implies a major change in any long-term (decades or longer) climate measure, as well as temperature, wind and precipitation. Another definition for climate change is loss of biological reserves, extinction of species and ecological damages triggered by emissions and wastes caused by unsustainable expenditure and fabrication patterns. Such a change in climate can result from natural events for example fluctuations in ocean movement or changes in the intensity of the sun. It may likewise be the consequence of human activities, for instance fossil fuel burning or deforestation. Businesses can evaluate themselves with ecological risk assessment, the possibility of changes in the natural environment associated with adverse factors such as exposure to pollution or climate change.
Water is one of the most essential substances for life. Nothing is as crucial for individual existence as water, but fresh water is contaminated, and is used at an extraordinary rate. Water pollution caused by the activities carried out by businesses leads to health problems and material soiling. Because of the activities of people and businesses, once rivers, irrigated plants and glaciers that supply drinking water are now disappearing. Worldwide, groundwater is pumped for industrial agriculture at a much faster rate than precipitation can be renewed. The practice of water privatization in emerging nations forces individuals and businesses to manage to pay for water, thereby decreasing water to a commodity to be sold and bought only to meet the desire for income (Jacoby & Ji, 2010).
Biodiversity is the variability among living organisms from all sources. The extinction of many creatures and the risk of extinction of the species in the near future are followed with anxiety by scientists, environmentalists and other stakeholders. Species extinction is one of the extremely significant environmental challenges we face today. There is increasing evidence that the loss of biodiversity affects basic ecosystem functioning and reduces environmental services that benefit people (Cardinale et al., 2012; Timmons, 2015).
Chemicals, Toxics, and Heavy Metals constitute another problem. Toxic substances are chemicals that will cause harm to human health when they enter the body. The use of toxic substances leads to two problems: The first is to be unaware of the effects on humans and the bio- environment, particularly the long-term and interactive effects of exposure to the large number of chemicals that are usually produced each year. Second, toxic substances can be associated with industrial accidents and can cause unpredictable biological damage.
Air pollution has existed as long as there has been life in the world. But the history of air pollution goes back to the industrial revolution. The combination of production procedures, inhabitant’s expansion and motor-powered transportation which is specific to the nineteenth century additionally indicates the era when air quality caused real worry. Some pollutants in the air are natural pollutants such as pollen, dust fragments from volcanic disturbances, smokes from rotting organisms and plants, and at the same time salt spray from the seas and oceans. These pollutants naturally appear and happen regardless of human activity. On the other hand, Anthropogenic pollutants refer to contaminants related to completely human activity. Air pollution gives rise to global warming, acid rain, reduction of the ozone layer, smoke, and other critical conditions. When it comes to air pollution, only air pollution of the external environment should not be considered. The short and long-standing effects of indoor air pollution are also broad and serious.
Waste management is defined as control strategies to decrease the amount and poisonousness of hazardous waste at every phase of the waste flow (Callan & Thomas, 2012). Waste flow refers to a chain of actions that begin with waste production and carry on with the transport, storage, processing, and disposal of these substances. Hazardous solid waste refers to undesirable materials that can pose a serious risk to human wellbeing or the ecosystem. As a wide variety of substances falls into this wide-ranging classification, it is helpful to contemplate the hazardous components of the wastes as fitting to subcategories, for example; pesticides, synthetic chemicals, acids and bases, heavy metals, reactive, synthetic organic chemicals, and solvents.
Oceans and fishery is another topic of concern. While all humanity lives in a watershed, human activities affect the oceans and other waterways seriously. Many of the same factors affecting the freshwater ecosystem have an impact on the marine environment.
Deforestation is another problem as forests help develop and survive, such as, by cleaning water and air and providing jobs to people. Forests likewise play a serious role in moderating climate change because they act like a carbon pool – they will absorb carbon dioxide, which will otherwise be free in the air and contribute to continuing changes in climate models.
Environmental Legislation
With the increasing environmental awareness and concern, institutional initiatives related to environmental protection began in the 1970s. With the First World Day in America, the increase in environmental concerns and the awareness of stakeholders about the establishment of the Environmental Protection Agency (EPA) brought sustainability to the fore. As world resources become more and more depleted, costs increase simultaneously for businesses and consumers. Therefore, it is no longer
acceptable for businesses to continue their daily business activities without worrying about how their activities affect the environment. Laws such as the Clean Air Act and the Environmental Protection Act are to protect the environment by limiting activities that harm the planet. Organizations violating these regulations may receive severe punishments.
Many countries have approved a large number of laws and regulatory organizations to address ecological issues. Many of these efforts have concentrated on the actions of industries, government agencies, and additional groups that use natural resources to provide goods and services (Ferrell, Fraedrich & Ferrell, 2017).
In the USA, the regulatory agency coping with environmental issues and implementing environmental legislature is the Environmental Protection Agency. The EPA was established in 1970 to conduct environmental investigation, deliver support in combating pollution, and coordinate environmental institutions interested in implementing the country’s environmental laws.
The European Environment Agency (EEA) is an agency of the European Union (EU). Their task is to supply sound, self-governing data on the environment. They tend to be a significant info supplier for those concerned in developing, adopting, implementing and evaluating environmental policy, and conjointly the general public.
The General Directorate of Environmental Management as a directorate attached to the Ministry of Environment and Urbanization is an institution that takes measures to prevent human health and environmental pollution within the framework of sustainable development principles, ensures effective use of administrative, legal, financial, human and environmental resources, and guarantees the right to live in a healthy environment.
Finally, many countries and unions have introduced some regulations to protect the environment. Some examples are shown in Table 3.6.
Business Responses to Environmental Issues
Many businesses have begun to make sustainability a part of their strategy from the ground up through the pressure of their stakeholders. This approach can provide economic benefits as well as environmental and social benefits. Increasing a firm’s reputation for environmental management can help companies capture a growing market niche. Green strategy can help companies distinguish their products from competitors. Better environmental management efforts can decrease charges by improving risk management and stakeholder interactions, decreasing the quantity of things and energy used, and reducing capital and employment charges.
Sustainable green marketing is one aspect of an approach that radically changes the way many companies do business. The four characteristics of marketing - product, price, promotion and placement - are a helpful way to
structure a sustainable, green marketing approach. Marketing departments must find ways to create sustainability in the design, packaging (over-packaging and use of petroleum based plastics) and disposal of used products for each product.
Sustainability requires us to pay attention to the environmental charges of resources that are “natural capital” that most companies depend on, and that environmental costs are rarely included in the price of the products. Marketing specialists should play a crucial role in determining prices that imitate the accurate environmental cost of a product. Sustainable marketing can help create social meanings and consumer expectations that support sustainable goals. One aspect of product promotion may include “green labeling”. While nutrition, content and warning labels become usual and normal, environmental pressure can create a new niche and a public request for environmental and sustainable labeling.
Sustainability has become a progressively more popular term in rhetoric surrounding business ethics and is broadly applied by companies, authorities, professionals, pressure groups and academics. For this reason, global and local organizations share their annual and updated reports on sustainability on their websites (Crane & Matten, 2016). Figure 3.7 contains the environmental sustainability related statements of several major global businesses.