Managing Environmental Issues

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Managing Environmental Issues
Chapter
12

• Role of Government
• Costs and Benefits of Environmental Regulation
• The Greening of Management
• Environmental Management as a Competitive
  Advantage

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Major areas of environmental regulation

• Air pollution
• Occurs when more pollutants are emitted into the
  atmosphere than can safely be absorbed and
  diluted by natural processes.
• Water pollution
• Occurs when more wastes are dumped into
  waterways than can be naturally diluted and
  carried away.
• Land pollution
• The contamination of land by both solid and
  hazardous waste.

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Leading U.S. environmental protection laws
Figure 12.1a

• National Environmental Policy Act (1969)
• Created Council on Environmental Quality to
  oversee quality of the nations environment.
• Clean Air Act (1970)
• Established national air quality standards and
  timetables.
• Water Pollution Control Act (1972)
• Established national goals and timetables on
  pesticide use.
• Pesticide Control Act (1972)
• Required registration of and restrictions on
  pesticide use.

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Figure 12.1b
Leading U.S. environmental protection laws
Endangered Species Act (1973) Conserved species
of animals and plants whose survival was
threatened or endangered. Safe Drinking Water Act
(1974 1996) Authorized national standards for
drinking water. Hazardous Materials Transport Act
(1974) Regulated shipment of hazardous
materials. Resource Conservation and Recovery Act
(1976) Regulated hazardous materials from
production to disposal.
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Figure 12.1c
Leading U.S. environmental protection laws
Toxic Substances Control Act (1976) Established
national policy to regulate, restrict, and, if
necessary, ban toxic chemicals. Clean Air Act
amendments (1977) Revised air standards. Comprehe
nsive Environmental Response Compensation and
Liability Act (1980 1986) Established
Superfund and procedures to clean up hazardous
waste sites. Clean Water Act amendments
(1987) Authorized funds for sewage treatment
plants and waterways cleanup.
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Leading U.S. environmental protection laws
Figure 12.1d

• Clean Air Act amendments (1990)
• Required cuts in urban smog, acid rain,
  greenhouse gas emissions promoted alternative
  fuels.
• Pollution Prevention Act (1990)
• Provided guidelines, training, and incentives to
  prevent or reduce pollution at the source.
• Oil Pollution Act (1990)
• Strengthened EPAs ability to prevent and
  respond to catastrophic oil spills.
• Chemical Safety Information, Site Security, and
  Fuels Regulatory Relief Act (1999)
• Set standards for the storage of flammable
  chemicals and fuels.

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Superfund
Comprehensive Environmental Response,
Compensation, and Liability Act

• Passed in 1980, this law established a fund,
  supported primarily by a tax on petroleum and
  chemical companies that were presumed to have
  created a disproportionate share of toxic wastes.
• EPA established a National Priority List of the
  most dangerous toxic sitesabout 1,200 so far.
• As many as 10,000 other sites may need to be
  cleaned up.
• Although cleanup was well under way at almost
  all sites by 2003, only about a fifth of the
  total had been removed from the list.
• Entire cleanup could cost as much as 1 trillion.

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Alternative policy approaches

• Environmental standards
• Standard allowable levels of various pollutants
  are established by legislation or regulatory
  action.
• Environmental-quality standard
• Emission standard
• Market-based mechanisms
• Based on the idea that the market is a better
  control than extensive standards that specify
  precisely what companies must do.
• Allow businesses to buy and sell the right to
  pollute.
• Emissions charges or fees
• Government incentives

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Alternative policy approaches (continued)

• Information disclosure
• Regulation by publicity
• The government encourages companies to pollute
  less by publishing information about the amount
  of pollutants individual companies emit each
  year.
• Civil and criminal enforcement
• The threat of prison can be an effective
  deterrent to corporate outlaws who would
  otherwise degrade the environment.
• U.S. Sentencing Commission has established
  guidelines for sentencing environmental
  wrongdoers.

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Advantages and disadvantages of alternative
policy approaches to reducing pollution
Figure 12.2a
Policy Approach Advantages Disadvantages
Environmental standards Enforceable in the courts Compliance mandatory Across-the-board standards not equally relevant to all businesses Requires large regulatory apparatus Older, less efficient plants may be forced to close
Tradable allowances Gives businesses more flexibility Achieves goals at a lower overall cost Saves jobs by allowing some less efficient plants to stay open Permits the government and private organizations to buy allowances to take them off the market Gives business a license to pollute Allowance are hard to set May cause regional imbalances in pollution levels Enforcement is difficult
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Figure 12.2b
Advantages and disadvantages of alternative
policy approaches to reducing pollution
Policy Approach Advantages Disadvantages
Emissions fees and taxes Taxes bad behavior (pollution) rather than good behavior (profits) Fees hard to set Taxes may be too low to curb pollution
Government incentives Rewards environmentally responsible behavior Encourages companies to exceed minimum standards Incentives may not be strong enough to curb pollution
Information disclosure Government spends little on enforcement Companies able to reduce pollution in the most cost-effective way Does not motivate all companies
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Figure 12.3
The cost of pollution control in the United States
Source Environmental Investments The Cost of a
Clean Environment (Washington, DC EPA, 1990)
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Figure 12.4
Costs and benefits of environmental regulation

• Benefits
• Emissions of nearly all pollutants have dropped
  since 1970.
• Air and water quality improved, some toxic waste
  sites cleaned improved health natural beauty
  preserved or enhanced.
• Growth of other industries, such as environmental
  products and services, tourism, and fishing.

• Costs
• 160 billion a year spent by business and
  individuals in the United States by 2000.
• Job loss in some particularly polluting
  industries.
• Competitiveness of some capital-intensive,
  dirty industries impaired.

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Stages of corporate environmental responsibility

• Clean technology
• Businesses develop innovative, new
  technologies that support sustainability.
• Product stewardship
• Managers focus on all environmental impacts
  associated with the full life-cycle of a product.
• Pollution prevention
• Focuses on minimizing or eliminating waste
• before it is created.

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Environmental management in practice

• Proactive green companies share the following
  elements
• Top management involvement to sustainability
• Line manager involvement
• Codes of environmental conduct
• Cross-functional teams
• Rewards and incentives

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Environmental management as a competitive
advantage

• Cost savings
• Companies that reduce pollution and hazardous
  waste, reuse or recycle materials, and operate
  with greater energy efficiency can reap
  significant cost savings.
• Product differentiation
• Companies that develop a reputation for
  environmental excellence and that produce and
  deliver products and services with concern for
  their sustainability can attract environmentally
  aware customers.
• Technological innovation
• Technological innovation can lead to imaginative
  new methods for reducing pollution and increasing
  efficiency.
• Strategic planning
• Companies that cultivate a vision of
  sustainability must adopt sophisticated strategic
  planning techniques.