Environmental Responsibilities

1
Environmental Responsibilities

• Mgmt 621
• Contemporary Ethical Issues in Management
• Jeffery Smith

2
Accounting for the Environment

• Why is the natural environment (air, water,
  non-human animals, species, ecosystems) valuable?
• Valuable as a means to human interest
• satisfaction?
• Valuable as a means to economic prosperity?
• Valuable as an end in itself?

3
Valuable as means to human interest satisfaction

• I reject the proposition that we ought to
  respect the balance of nature or to preserve
  the environment unless the reason for doing so,
  express or implied, is the benefit of man. I
  reject the idea that there is a right or
  morally correct state of nature to which we
  should return. The word nature has no
  normative connotation.
• William Baxter, People or Penguins The Case for
  Optimal Pollution (New York Columbia University
  Press, 1974), p. 8.

4
Valuable as a means to economic prosperity

• Environmental harm and resource use should be
  optimized so that human preference satisfaction
  is maximized.
• Too little resource use can thwart preference
  satisfaction too much environmental harm can
  lead to preference dissatisfaction.

Preference Satisfaction
Environmental Harm/Resource Use
5
Valuable as an end in itself

• Animals are sentient creatures
• Species and Ecosystems have interests
• Aesthetic

6
Corporate Responsibilities to the Environment

• Narrow View
• Corporations only have an ethical responsibility
  to comply with environmental laws. They do not
  have a responsibility to avoid harm or conserve
  resources beyond was is required by the law.
• Broad View
• Corporations have an ethical responsibility to
  comply with environmental laws and take steps to
  protect the natural environment and conserve
  resources when it is technologically and
  financially feasible to do so.

7
Narrow view defended

• Corporations have an entitlement to sell products
  and services in response to market demand.
• Sometimes there is market demand for
  environmentally harmful products and services.
• Environmental protection that goes above and
  beyond the law reduces the competitive position
  of corporations.
• 4. Governments have a responsibility to protect
  individuals and society from market activity that
  results in environmental harm by instituting laws
  and regulations.
• 5. Therefore, it is not the responsibility of
  corporations to protect the environment from harm
  when it is part of legal market activity.

8
CIRCULAR FLOW MODEL
consumer goods and services
wages, rents, interests, profits
BUSINESS
HOUSEHOLDS
labor, land, capital, natural resources
payments
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BIOSPHERE
consumer goods and services
Energy
Energy
wages, rents, interests, profits
Natural Resources Energy
Natural Resources Energy
BUSINESS
HOUSEHOLDS
labor, land, capital
Waste
Waste
payments
SOLAR ENERGY
10
3 Pillars of Sustainable Development

• Economic
• meeting the material needs of current and future
  generations
• Environmental
• meeting the material needs of current and future
  generations without harming the ability of the
  biosphere to sustain ecosystems and life
• Social
• meeting the material needs of neglected,
  disadvantaged or poor individuals and groups

11
Natural Capitalism

• Amory Lovins and Paul Hawken, A Road
• Map for Natural Capitalism, Harvard Business
  Review, May-June 1999, pp. 145-58.
• Increase Productivity of Natural Resources
• Biological Models of Production
• Service-leasing Business Model
• Reinvest in Natural Capital

12
Ritter Sport

• 1996 Involvement with Eco-Audit Regulation
• Efficient, on-site power generation technology
• Funding of recycling initiatives across Germany
• Principle We introduce energy-saving measures
  whenever they do not increase our costs by more
  than 10
• Cocoa growing initiative in Central America

13
Ethics of International Business

• Inevitable trend
• Fewer institutions for enforcement
• National and cultural differences

14
Multinational Corporations (MNCs)
technology, information, and organization
financial and political strength
multidomestic multinational
global multinational
15
Thomas DonaldsonBusiness Values Away From Home

• Balancing Ethical Relativism and Absolutism
• respect for core human values
• respect for local traditions
• context matters in ethical decision making