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Business and Sustainability

Business and Sustainability. Professor Craig Diamond BA 385 November 18, 2009. Presentation Overview. Global environmental problems The sustainability business opportunity Business approaches to sustainability Discussion of some current trends. 4.5 billion . present. Earth formed.

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Business and Sustainability

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  1. Business and Sustainability Professor Craig Diamond BA 385 November 18, 2009

  2. Presentation Overview • Global environmental problems • The sustainability business opportunity • Business approaches to sustainability • Discussion of some current trends

  3. 4.5 billion present Earth formed present 7 million First humans present 10,000 BC First agriculture History of the Earth

  4. History of the Earth – cont. 1750 AD Industrial Rev begins 1804 World pop reaches 1 B 1999 World pop reaches 6 B 1776 Wealth of Nations (Adam Smith) 1908 Ford Model T 2200 World pop Reaches 10 B

  5. Resources Fossil fuels Water Metals Minerals Wood Other Products 5% Consumed 95% Wastes Gases Liquids Solids Annual waste in U.S. ~15 B tons Inputs, Outputs, and Waste Production Mostly a Linear Process Note: numbers are approximate, U.S. data

  6. Labor and Resource Productivity • 1750: “unlimited” natural resources made labor much more expensive relative to resources • Since Industrial Revolution: huge gains in labor productivity (e.g., farming, manufacturing) • In future: huge gains in resource productivity will be required

  7. Global Environmental Challenges • Global Climate Change • Pollution and accumulation of toxics • Destruction of forests • Diminishing supplies of clean drinking water • Declining fisheries • Deterioration of soil quality in agriculture • Accelerating growth of mega-cities

  8. Build-up in Environment combustion Carbon Dioxide combustion Global Climate Change Global Environmental Problems - Extraction and Accumulation

  9. Global Climate Change Carbon dioxide is the primary “greenhouse gas” Rapid rise in greenhouse gas concentration in atmosphere causing temperature to rise Carbon Cycle

  10. Environmental Economics • “Tragedy of The Commons” • Externalities • Ecosystem Services

  11. Environmental Ethics • What are the rights of nonhumans (plants, animals, ecosystems, etc.)? • What are the rights of future generations? • What is the right balance between economic growth and the resulting environmental consequences of growth?

  12. Global Social Problems • Poverty: approximately 50% of the world’s population lives in poverty or near-poverty conditions • Reliance on dirty fuels (e.g., manure) and unsafe drinking water • Environmental conditions (air and water pollution in particular) worse in underdeveloped areas

  13. Population (in billions) *Est. Growth of Wealth (Environmental Impact)GDP per capita (real$, in 1,000s)

  14. Definition of Sustainability Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Brundtland Commission Report, 1987 Economy “3-Legged Stool” or “Triple Bottom Line” Equity Environment

  15. The Sustainability Dilemma • Need to slow or stop growth in environmental burden, but… • Need to increase wealth to address global poverty EB = P x A x T EB = environmental burden P = world population A = affluence (consumption per capita) T = technology (means of production)

  16. Sustainability: a Huge Business Opportunity EB = P x A x T EB = environmental burden P = world population A = affluence (consumption per capita) T = technology (means of production) From Stuart Hart, “Beyond Greening: Strategies for a Sustainable World,” 1997 To slow or stop the growth environmental burden (EB), huge advances in technology (T) will be needed. This is the role of business.

  17. History of Environment and Business in the U.S. • Early 1900s: laws to protect forests, natural areas • 1950-1970: growing pollution concerns • 1970: U.S. Environmental Protection Agency established • 1970-1990: several environmental laws passed and implemented (compliance only mindset) • 1990s-present: growing recognition in business and government of need to go “beyond compliance” (voluntary actions and partnerships)

  18. Potential for Threat High Low Stakeholder Type Mixed Blessing Strategy:Collaborate Stakeholder Type Supportive Strategy:Involve ? High Potential forCooperation Stakeholder Type  Nonsupportive Strategy:Defend Stakeholder Type Marginal Strategy:Monitor Low 0 Types of Environmental Stakeholders Figure 3-9

  19. Progression of EnvironmentalManagement Approaches

  20. Progression of Environmental Management ApproachesExample: Agriculture Compliance Comply with regulations in regard to pesticide use and clean water Eco-Efficiency Eliminate unnecessary use of pesticides and other chemicals, or use less toxic ones New Products Grow crops for use in energy production (biofuels) Product Design Organic farming, Integrated Pest Management

  21. Progression of Environmental Management ApproachesExample: Auto Manufacturing Compliance (plant focus) Comply with regulations for air, water, solid waste, hazardous waste; “CAFÉ” standards Eco-Efficiency (plant focus) Reduce use of energy and materials, reduce solid and hazardous waste New Products (auto focus) Cars for disassembly; FlexCar (car sharing) Product Design (auto focus) Hybrid electric vehicles

  22. Progression of Environmental Management ApproachesExample: Electric Utility (fossil fuel) Eco-Efficiency Maintain efficient power plant to avoid wasting fuel inputs (coal, natural gas, oil); min. releases to air, water, land Compliance Comply with regulations for air, water, solid waste, hazardous waste New Products Innovative ways to deliver electricity (“Smart Grid”) Product Design Advanced coal plant with near-zero emissions; renewable sources

  23. Natural Capitalism • Foundational book on sustainability • by Paul Hawken and Amory Lovins • Argues for a fundamental shift in our economic system • Place same value on natural resources (“natural capital”) that we currently place on commodities, human capital, and other kinds of capital • Huge shift toward resource productivity • Modeling our production on natural processes (“biomimicry” and “industrial ecology”)

  24. Industrial Ecology Nothing is wasted, as in natural ecological cycles Products Resources Fossil fuels Water Metals Minerals Wood Other Consumed Minimized use over time “Wastes”

  25. The Natural Step • A business framework, based on scientific principles, for understanding what sustainability means for an organization • 4 System Conditions for sustainability: A society cannot systematically.... • Build up concentrations of materials taken from the earth’s crust • Build up concentrations of materials produced by society • Degrade natural resources and ecosystems • Fail to meet human social/economic needs

  26. Environmental Management Systems (EMS) • A systematic approach to managing environmental issues (based on quality mgmt) • If include social issues, can be a “sustainability management system” • Businesses can get certified to the ISO 14001 international EMS standard • Can integrate with Natural Step and industrial ecology concepts

  27. Wal-Mart and Sustainability • Sustainability programs • News • Videos

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