A series of Q&A questions. (case study) The knowledge of Business and Sustainable Development is required

September 27, 2025 Claire B 0 Comments

You need to answer the questions based on the instructional materials I have provided. You have 24 hours to do it. Each question needs 600-700 words.

Welcome to MGMT 2004 Business and Sustainable Development

Dr. Hossein Mohammadi

Unit Coordinator

Building 402| Level 6 | Room # 616

School of Management and Marketing

Curtin University

Tel: +61 9266 7673

[email protected]

Contact hours : Monday and Wednesday 11am-12pm.

(Or please email to arrange a suitable day and time)

My Contact Details

Introduction

Unit Objectives/Administration

Premise/Assumption of this Unit

Main Themes in the Unit

State of the World: An Overview

Concluding Remarks

Plan for this lecture

What is my role?

Lead the team of local/overseas lecturers/tutors

To share my passion for learning and knowledge of the subject

To be your guide and not to be preacher on the stage

Deep Learning:

Aim high (in this unit and beyond) – I am here to help

Gain discipline knowledge: why sustainable development matters for business?

Relate theoretical ideas to your own life/everyday practice

Organise & understand weekly themes into a coherent whole

Develop critical thinking and reflection skills

What do I expect from you?

Critical thinking is the attempt to ask and answer questions systematically in order to analyse the assumptions behind a certain position of others

Critical reflection is a method of examining the assumptions behind our own values and beliefs that we possess and then questioning them

What does deep learning take?

Workload:

You should spend at least a few hours per week studying this unit:

reading, research, working on exercises when attending classes

Attendance:

You cannot learn:

if you don't attend

if you don’t ask questions

if you don’t participate

if you don’t prepare

Being informed:

Take note of all announcements made in lectures, tutes, and on blackboard

Unit Delivery and Assessments

Class format

1 hour lecture, 2 hours tute

Reading and learning materials

Textbook (NOT mandatory)

Resources on Blackboard/Unit Outline

Team Facilitation	20%
Essay	40%
Exam	40%

Unit Administration

This part will be reviewed in our first week tutorial.

Examples of contemporary issues that will be covered in this unit

Premise/Assumption of the Unit

Anthropocene era has arrived i.e. we have entered a new geological period where human activities are influencing the environmental outcomes as much as natural forces

Economy-first mindset may be preventing us from creating a sustainable (better) future for all in the long-run

Businesses have capacity to address environmental changes and their social impacts i.e. if we have the will and the right mindset, we can find ways to recalibrate and restructure our priorities

4 Main Themes

State of the World (Changing Business Environment)

Theories of Sustainable Development

Practices of Sustainable Development

Agents of Change: e.g. Consumers & Government

What on earth this unit has to do with business???

State of the World: Why Does it Matter for Businesses?

Environment

Change or Decline?

Society

Attitudes, Values & Expectations

Policies

Government Regulation

Business

Threat or opportunity?

Economic View of the People and Planet

Source: Diesendorf & Hamilton (1997, p.43)

So is there a problem here?

Ecological View of People and Planet

Source: Norton (1984, p.114)

All individuals, organisations, and the environment in which they function are interconnected in a complex and elegant web of mutually influential relationships.

10 Billion people by 2050 …

Population Growth in Perth

Lucky Country?

The Value of Nature

Source: The Guardian 2019

Source: The Gaurdian 2019

Economic Progress and Environmental Decline

60% of world ecosystem services have been degraded.

Species extinction rates are now 100-1000 times above the background rate.

More than 16,000 species are now listed as threatened with extinction

Over a quarter of all fish stocks are overharvested and global fish catch is declining

Since 1980, about 35% of mangroves and 20% of corals have been lost.

Per capita freshwater availability is declining globally

By 2025 1.8 billion people will live with absolute water scarcity

75% of wetlands and bushland in and around Perth have been lost in the past 150 years

State of the Environment

And what about that dirty ‘C’ word?

Is there even a debate on climate change?

http://youtu.be/cjuGCJJUGsg

Is there even a debate on climate change?

Please double click on the photo (hyperlink) to watch the video.

Tipping Point

More erratic weather patterns and increases in “natural” disasters

Increased food shortages due to frequent flooding and drought

Rising sea levels of almost one meter predicted for this century alone

Habitat and species loss

A 2C rise means

At the end of this lecture you will:

Have gained an understanding of the meaning of sustainability and the basic principles of sustainable development
Be able to differentiate between weak and strong aspects of sustainability, and also
Critically think about how business management should approach sustainable development

Lecture 1

Environmental Issues in Business 201

Lecture 1

Environmental Issues in Business 201

Lecture 1

Environmental Issues in Business 201

The 15 Global Challenges provide a framework to assess the global and local prospects for humanity. The Challenges are interdependent:

an improvement in one makes it easier to address others; deterioration in one makes it harder to address others. Arguing whether one is

more important than another is like arguing that the human nervous system is more important than the respiratory system.

Can you see why there is a growing desire to shift away from the economic paradigm of development?

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Environmental Issues in Business 201

Silent Spring – warned of toxicity of chemicals

Carson, R 1962, Silent Spring, Penguin Books, New York.

Tragedy of the Commons – warned of demise of open access resources

Hardin, G 1968, 'The tragedy of the commons', Science, vol. 162, pp. 1243-8.

Population Bomb – warned of overpopulation

Ehrlich, P 1970, The Population Bomb, Ballantine Books, New York.

Limits to Growth – warned about the cost of unlimited economic growth

Meadows, D, Meadows, D, Randers, J & Behrens, W 1972, The Limits to Growth: A Report to the Club of Rome's Project on the Predicament of Mankind, Pan, London.

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Environmental Issues in Business 201

Hardin (1968) suggested that excessive population growth and exploitation of natural resources leads to the:

‘tragedy of the commons’

When nobody owns a particular resource, it gets exploited to the extent that the resource becomes unusable for everybody

e.g. The Tragedy of the Commons

So, is sustainable development a new concept? (Required Reading # 1)

Lecture 1

Environmental Issues in Business 201

June 1962:

Rachel Carson’s Silent Spring is published. Acclaimed as the catalyst of the sustainability movement

Greater focus on increasing environmental awareness and the need to shift away from just the economic mindset

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Environmental Issues in Business 201

Sustainable Development (WCED, 1987 p. 43)

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Environmental Issues in Business 201

Greater Focus on Participation and Local Solutions to existing and emerging problems

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Environmental Issues in Business 201

The 1992 Earth Summit: Rio, Brazil

http://www.youtube.com/watch?v=TQmz6Rbpnu0&feature=share&list=PLD940256D2E56A15F

Miss Suzuki – The girl who silenced the world for 5 minutes …

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Environmental Issues in Business 201

Social and economic problems of developing countries as viewed by developed countries

– 8 MDGs

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Environmental Issues in Business 201

2015 +: Sustainable Development Goals [SDGs] – the 4th Era?

Paradigm shift towards Sustainable Development for all not just selected few

189 countries adopted the UN Millennium Declaration and committed to the Millennium Development Goals (MDGs) in 2000
MDGs reflect on a shared vision for reducing poverty around the world
The central goal is to reduce by half the proportion of people living on less than US$1.25 a day by 2015 relative to 1990

1. UNIVERSALITY: We’re in this together and the goals are applicable to all countries rich & poor

2. SUSTAINABILITY: The goals are holistic and target social, economic, and environmental issues

3. LEAVE NO-ONE BEHIND: We cannot claim to have met a goal unless it is met for everyone

4. PARTICIPATION: All countries and multiple stakeholders involved in putting together SDGs

SDGs and the Drivers

A new type of thinking is essential if mankind is to survive and move toward higher levels …

– Albert Einstein (1946)

Paradigm – a framework for observation and understanding the patterns that influences what we think and how we want to solve problems e.g. theory, norm, common sense.

So paradigm shift is a change from one of way of thinking/examining to another

http://janefriedman.com/2012/05/11/distinguishing-between-straight-up-advice-and-paradigm-shift/

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Environmental Issues in Business 201

“to sustain”:

Support

Keep in being

Keep in certain state

Keep at proper level or standard

So, “sustainability” has something to do with:

continuance

maintenance, and

the ability to continue an activity or maintain a certain condition indefinitely

Source: Eckersley (1998)

Shift towards Sustainable development

“to develop”:

Improve

Get better

Progressive transformation of economy and society

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Environmental Issues in Business 201

Inter-species equity : Making sure that other species and their habitat can co-exist

Intra-species equity: Making sure that all of us have the same rights and opportunities now and in the future (includes inter-generational)

Precautionary principle: Making sure that the lack of scientific certainty doesn't compromise common sense to minimize risks

If an activity is said to be sustainable: it should be able to continue forever. SD = development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987, p.43)

Sustainability or Sustainable Development?

Sustainability = Aim| Sustainable Development = Objective

Ethics

Approaching sustainability as an ‘essentially contested concept’ … three constituent, management-relevant dimensions – scope, substitutability, and goal orientation – demonstrates how different conceptions within these dimensions result in hugely different, often incompatible, yet legitimate interpretations of sustainability

Sustainability: A Contested Concept

(Required Reading # 2: Lankoski (2016, p.847)

Sustainability was first conceived as an environmental issue only
Sustainability meant nature conservation

Today, sustainability stands for the balancing of many issues and dimensions
Sustainability now encapsulates political, social and cultural as well as environmental and economic concerns

What are the implications of this changed understanding???

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Environmental Issues in Business 201

… Sustainable Everything?

• Sustainable advertising

• Sustainable architecture

• Sustainable art

• Sustainable business

• Sustainable city

• Sustainable communities Plan

• Sustainable community

• Sustainable design

• Sustainable fashion

• Sustainable fisheries management

• Sustainable forest management

• Sustainable industries

• Sustainable landscape architecture

• Sustainable living

• Sustainable packaging

• Sustainable procurement

• Sustainable reporting

• Sustainable tourism

• Sustainable transport

• Sustainable urban drainage systems

• Sustainable urban infrastructure

• Sustainable yield

The sustainability notion has become a buzzword

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Environmental Issues in Business 201

Multiple Meanings + the 2 Camps: Weak vs. Strong

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Environmental Issues in Business 201

Maintenance of high standard of living through the maintenance of various forms of capital

Substitutability of natural capital e.g. economic rationality

Anthropocentric

Emphasis on human needs and values e.g. triple bottom line

Mechanistic worldview

Everything can be measured and explained

If you cannot measure it, it does not exist

Nature is ascribed utilitarian values only

Nature only matters when useful to humans (resources)

Optimist and Strong faith in:

technology and science will save the day

Anthropocentric (planet is for people to exploit)

Optimistic (science & technology can fix problems)

Economic rationality (substitutability of capitals)

Can we really manufacture natural resources in reality?

This view suggests that man-made capitals cannot serve as a substitute for (critical) natural capital

Pessimistic assumptions

Focuses on precaution and carrying capacity

Ecocentric worldview

Nature matters in its own right

Challenges entrenched structures and beliefs

Rejects economic rationality and technocracy

Calls for radical social, political, and economic reform

Trans-scientific / multi-disciplinary

New approach to science based on integration and holism as opposed to sole reliance on single disciplines

Diesendorf & Hamilton (1997, p.79)

Ecocentric (planet has its ecological limits)
Pessimistic (no prospect of finding solutions)
Holistic rationality (natural capital can’t be substituted)

Can we substitute natural capital in reality?

1.27 ha structure originally built as a dome or an artificial enclosed ecological system in Arizona (USA)
The dome aimed to mimic nature and contained: rainforest, ocean with a coral reef, a mangrove wetlands, grassland, agricultural system & human habitat

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Environmental Issues in Business 201

Due to falling oxygen and rising CO2 levels, 8 scientists needed to be evacuated only after a few months… If we have hard time figuring out the dome for 8 people, how would we manage to keep 7 billion (and counting) people alive and at what cost?
The cost of the built capital i.e. Dome that (marginally) regulated life-support systems for 8 People over two years was about $150 million, or $9,000,000 per person per year.
These ecosystem services i.e. Natural capital are provided to you and me more-or-less cost-free by natural processes, if we were to be charged for such services, the total invoice (sans GST ) will run into many quintillion dollars for one generation alone!

Lesson Learned from Biosphere 2

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Environmental Issues in Business 201

Sustainability Spectrum Revisited

(Required Reading # 3: Hopwood et al. (2005, p.41)

Strong Camp: Pessimists

Weak Camp: Optimists

The Paradox

Achieving that ideal balance: to increase profits, strengthen society, and in the process not damage the environment remains paradoxical

Society

Environment

Economy

Planet

Profit

People

Sustainable development requires:

Inter-species, Intra-species and Inter-generational equity considerations; and the adoption of the precautionary principle in the context of weak or strong sustainability paradigm

Businesses as an integral component to achieve SDGs (the 4th era)

However, many unanswered questions remain:

How should business address the trade-offs?

E.g. jobs vs. few trees; lobby for subsidy for fossil fuel vs. action on climate change

How could businesses deal with the vagueness and paradox?

Business driven socially and environmentally just development? – where is the successful model?

Difficult institutional/behavioural changes? Are societies and consumers ready?

How might businesses be able to shift paradigms?

Little guidance on how businesses can holistically address sustainable development + no laws and no agreement on what this should look like.

We will explore these issues in more detail in weeks to come…

Concluding Remarks

Lecture 1

Environmental Issues in Business 201

MGMT 2004

Week 1:

Introduction Thinking Critically About Sustainable Tourism

Lecturer: Hossein Mohammadi

School of Management, Curtin University

ELECTRONIC WARNING NOTICE FOR COPYRIGHT STATUTORY LICENCES

Cleaner Production

Eco-Efficiency & Eco-Effectiveness

At the end of this lecture you will be able to:

Explain the workings of Cleaner Production; Eco-effectiveness and Eco-efficiency in the business context
Differentiate between cradle-to-grave and cradle-to- cradle principles

How can cleaner production, eco-efficiency, and eco-effectiveness assist businesses to improve environmental performance as desired by CSR?

Foundational concepts:

Carrying capacity
Circular Economy
Cradle to cradle
Cradle to grave
Decoupling
Dematerialization
Linear Economy
Resources intensity
Reuse Economy

When does Mother Nature become natural capital or resources?

Global resource extraction 1980-2013

Global material extraction more than doubled in the past 30 years, from around 36 billion tonnes in 1980 to almost 85 billion tonnes in 2013, an overall growth of 132%. Two distinct phases of material extraction can be identified. A period of modest growth between 1980 and around 2002, with only a short period of stagnation caused by the collapse of the former Soviet Union. From 2003 onwards, growth of global material extraction increased significantly, mainly driven by the rise of emerging economies such as China and India. Growth rates were unevenly distributed among the main material categories. Particularly the extraction of industrial and construction minerals increased significantly (by more than 240%), indicating the continued importance of this resource category for industrial development, in particular for building up housing, energy and transport infrastructure in emerging economies. Global extraction of metal ores increased by 183% and fossil fuels by 82% in the period of 33 years. Increases in biomass extraction amounted to 61%. The share of renewable resources in total resource extraction thus is constantly decreasing (from around 39% in 1980 to less than 27% in 2013).

Global resource intensity 1980-2013

NOTE:

Resource intensity is a measure of materials or natural resources (e.g. fossil fuel, water) used per GDP + GHG (GDP = the value of goods and services produced over a year, GHG=carbon emissions)

This analysis addresses the question, whether on the global level, a de-coupling between economic growth and material extraction could be observed over the past 30 years. It can be seen that between 1980 and 2013, world GDP (in constant prices) grew by almost 150%. At the same time, global material extraction increased by around 130%. Across the whole time period, a slight relative de-coupling could be observed.

However, the dynamic changed completely around the year 2000. Before the millennium, material intensity of the world economy decreased constantly, indicated that a relative de-coupling occurred. In the year 2000, 20% less materials were required to produce a US$ of global economic output compared to 1980. However, since 2000, the material intensity curve bounds upward, indicating that in the past 15 years, not even a relative de-coupling can observed. Due to the rapid expansion of material extraction activities in many world regions, growth rates in extraction are even above the global growth rates for GDP. Currently, the world economy is therefore on a path of re-materialisation and far away from any – even relative – de-coupling.

E.g. Running out of water

http://voices.nationalgeographic.com/2012/03/14/are-we-running-out-of-water/

E.g. Running out of fossil fuels

In Linear Economy, raw materials are used to make a product, and after its use any waste (e.g. packaging) is thrown away. It works according to the ‘take-make-dispose’ step plan:

Resources are extracted
Products are produced and used
Discarded and disposed as waste

So system cares about maximizing the amount of products produced and sold but does not care about the waste.

Linear Economy

Decoupling = using less resources per GDP (i.e. dematerialize) + minimizing environmental impacts
Dematerialization = the reduction in the quantity of materials required to fulfil economic functions in our society i.e. wise use of resources or do more with less (see Wernwick et al., 1990)

Decoupling/Dematerialization:

A way forward for sustainability paradigm shift?

Environmental Impacts …

Pollution is the introduction of wasteful substances (visible or invisible) into an environment causing harm, instability or disorder to the natural functioning of ecosystems (and their inhabitants).

Pollution (1)

Air Pollution

Pollution (2)

Land Pollution

Pollution (3)

Most city skies are virtually empty of stars

Light Pollution

Pollution (4)

Noise Pollution

Thermal Pollution is the degradation of water quality due to processes that change ambient water temperature e.g. caused by discharging clean but hot water used as a coolant in a power plant

Pollution (5)

Thermal Pollution

Pollution (6)

Visual Pollution

Pollution (7)

Water Pollution

PASSIVE

Ignore pollution

PROACTIVE

Cleaner Production

Eco-Effectiveness Eco-Efficiency

How Businesses Deal with Pollution(s)?

REACTIVE

Dilution and dispersion

CONSTRUCTIVE

End-of-pipe treatment

The “Cost of Pollution” Iceberg

Source: Bierma et al. (1998)

THE HIDDEN COST

OF WASTE

Company Image

Liability

Regulatory

Compliance

Treatment &

Disposal

Lost Raw

Materials, Energy,

Labor

Three Well-Known Pollution Reduction Principles

Polluter pays principle:

It identifies that people or organisations responsible for pollution are accountable for any social or environmental damage and should be responsible for paying the costs of damages

Cradle to Grave principle:

Using techniques e.g. Life Cycle Assessment to find ways to minimise pollution associated with business activity

Cradle to Cradle principle:

Using techniques e.g. Life Cycle Assessment to find ways to prevent pollution associated with business activity i.e. it pursues economic, ecological, and social values through the practice of intelligent design and zero waste

E.g. Preferred Options for Dealing with Pollution

Waste Management and Recycling

“The continuous application of an integrated preventive environmental strategy applied to processes, products, and services to increase overall efficiency and reduce risks to humans and the environment.” (UNEP, 1992)

Guiding Principles

Precaution

Reducing externalities through redesign of industrial systems of production and consumption which currently might be material-intensive.

Prevention

Making changes upstream in the system of production and consumption

Integration

Integration across economic, social, and environmental boundaries to achieve efficiency

Cleaner Production

Lecture 4

Lecturer: Dr Hossein Mohammadi

School of Management, Curtin University

MGMT 2004 | Business and Sustainable Development

Lecture 5

Environmental Issues in Business 201

ELECTRONIC WARNING NOTICE FOR COPYRIGHT STATUTORY LICENCES

Environmental Management Systems (EMS) and ISO Certification

At the end of this lecture you will be able to:

describe the nature and implementation of EMS;
identify the obstacles for businesses concerning the uptake of ISO certification;
assess the benefits and drawbacks of recognised certification schemes.

Lecture 5

Environmental Issues in Business 201

Solutions Environmental Management Systems

Plan for the hour

Credentials and Standards
International Organization for Standardization (ISO)
ISO Process
Environmental Management Systems (EMS)
EMS in practice (Video clip)
Potential and Pitfalls of ISO 14001
Recap

Can ISO certified EMS contribute towards CSR and Sustainable Development?

Lecture 5

Environmental Issues in Business 201

Per Capita Egg Consumption: > 200/year

Number of Egg Producers (commercial): ~ 500

Gross Value of the Egg Sector: > 1 billion

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Environmental Issues in Business 201

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Environmental Issues in Business 201

Australian Model Code of Practice for Poultry (2002) defines “free range” as 1,500 birds/hectare
QLD recently adopted “free range” as 10,000 birds/hectare [not based on evidence or science]
Business and consumers can benefit from the consistency of labels for different types of eggs

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Environmental Issues in Business 201

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Environmental Issues in Business 201

Credentials have always been important as a way to set and sell standards in the business world
Claims of product safety, lab tested performance or celebrity endorsements have helped businesses to grow for decades

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Environmental Issues in Business 201

Improved transparency & communication
Commonly agreed parameters
Fill regulatory vacuum

Market-based substitute to government regulation

Facilitate world trade based on trust
Foster benchmarking of products

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Environmental Issues in Business 201

The world’s leading institution that prepares and publishes International Standards for all electrical, electronic and related technologies.

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Environmental Issues in Business 201

ISO is a group of voluntary standards adopted universally (160+ countries around the world)/ EMAS is a quasi regulation issued by the European Union
EMAS covers only industrial productions whereas ISO is much wider in scope, production, distribution, services i.e. only production sites are eligible for certification under the EMAS
EMAS is more holistic in nature and in comparison ISO certified companies need to go through stringent hoops in order to be EMAS certified

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Environmental Issues in Business 201

ISO also means ‘equal’ (as in isobar, isometric, isotope)
Develops international standards in all technical areas except electrical and electronics (responsibility of IEC)
Promotes development of standardization in the world with the aim of easing international trade of goods and services
Has a portfolio of over 22,500+ standards for all three sectors (business, state, & civil society) that provide practical tools related to triple bottom-line (economy, environment & society).

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Environmental Issues in Business 201

Quality refers to all those features of a product (or service) which are required by the customer

Quality management means what the organization does to ensure that its products or services satisfy the customer's quality requirements and comply with any regulations applicable to those products or services.

ISO 9001 certification deals with how organizations:

enhance customer satisfaction, and

achieve continual improvement of its performance

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Environmental Issues in Business 201

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Environmental Management is relatively a ‘new turf’ for business

There is much confusion as to what is expected of firms as many environmental aspects are not subject to regulation or standards

There is a wide range of company practices, which are difficult to compare

There is a recognised need for a standardised approach for environmental management in business

ISO 14001: certification for Environmental Management Systems

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Environmental Issues in Business 201

https://isotc.iso.org/livelink/livelink?func=ll&objId=18808772&objAction=browse&viewType=1

There are more than 300,000 ISO 14001 certifications in 171 countries around the world.

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Environmental Issues in Business 201

Chart1

1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

Australia

ISO 14001 Certifications: Australian Trend

708

1049

1370

1485

1250

1898

1778

1964

749

1125

1432

1472

1882

2000

3339

4191

4400

4247

3938

Sheet1

Year	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Australia	708	1049	1370	1485	1250	1898	1778	1964	749	1125	1432	1472	1882	2000	3339	4191	4400	4247	3938

Sheet1

Australia

ISO 14001 Certifications: Australia

https://youtu.be/ZZrYfO3Q6q8

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Environmental Issues in Business 201

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Environmental Issues in Business 201

EMS is an integrated tool, designed to help companies not only realise legal compliance but environmental, economic and social benefits through waste minimisation and efficiency gains

It includes the organisational structure, planning and resources for developing, implementing and maintaining policy for environmental protection
The main purpose of an EMS is to systematically control adverse environmental impacts and ensure that established objectives are met. It helps in scrutinizing environmental performance … (Massoud et al., 2010)

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Environmental Issues in Business 201

To develop, implement, manage, coordinate and monitor corporate environmental activities for compliance and efficiency:

Compliance = reaching/maintaining the legal standards

Efficiency = improved economic bottom-line

To provide an independent means of external verification that can vouch for – reliable and comprehensive system to implement, monitor and evaluate their environmental initiatives

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Environmental Issues in Business 201

Plan what is needed
Do it
Check that it works
Act to correct any problems

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Environmental Issues in Business 201

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Environmental Issues in Business 201

Management must commit

Senior management needs to be committed and involved in EMS

Evaluate legal requirements

Specific legal requirements against company’s operations must be cross-referenced

Provide adequate resources

Requisite human, financial and physical resources required, including allocations for training and EMS coordination

Set relevant SMART targets

Objectives and targets should be specific, measurable, action oriented, realistic and relevant and time bound

Continuously improve your EMS/Recognise the marketing benefits

Use of external audits in order to improve the process/feature EMS as a core part of your CSR to your customers (with the help of ISO)

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Environmental Issues in Business 201

Financial Drivers

Ethical investment

Quality ratings

Liability protection

Financial damages

Regulatory Drivers

Environmental regulation

National/Local green agenda

Public disclosure requirements

Resource efficiency regulation

Market Drivers

Green consumerism

First mover advantage

Cost reduction advantage

Market access!!!

Social Drivers

Public opinion

Media attention

Community pressure

Employee expectations

Lecture 5

Drivers of Certification

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Environmental Issues in Business 201

http://youtu.be/HK6AeQSCLt4

Tute Question of the Week:

Demonstrate the strengths and weaknesses of ISO 14001

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Environmental Issues in Business 201

Minimise environmental liabilities (risk management)
Maximize the efficient use of resources (reduce cost)
Demonstrate a good corporate image (market advantage)
Build awareness of environmental concern among employees (organisational culture)
Improve recognition outside the market sector (community groups, state agencies)
Gain a better understanding of the environmental impacts of business activities (improved eco-efficiency/do less harm)

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Environmental Issues in Business 201

Is not a product standard
Is not a performance standard
Is not a tool of change for doing better
Does not require or establish limits of pollution
Does not mandate best practice technology
Dependent on the credibility and work-ethic of a certifying agency
Resource intensive (time/cost/interruption)
Does not consider ethics i.e. weapon manufactures can be certified (Krut and Glecckman 2013)

It is not the environment that is being managed but, business activities that have adverse impacts on the environment

ISO 14001 does not state specific environmental performance criteria (ISO, 2018 para 3).

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Environmental Issues in Business 201

Bansal and Bogner (2002) reported that firms were certified for estimated costs ranging from $10,000 (for small firms) to $200,000 (for large firms).

Cost associated with developing and implementing the ISO 14001 includes:

Acquiring information necessary for completing the certification requirements;
Record keeping and documentation, and changes in practices necessary for meeting the requirements of the ISO 14001;
Employee training (the opportunity costs)
Time associated with auditing (both internal and third party) to verify that the policies and practices meet the standards;
Registration (paid to the national agency that oversees ISO standardization).
Renewal of certification (need to do it every three years)

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Environmental Issues in Business 201

The Federal Court upheld the Australian Competition and Consumer Commission (ACCC) case against Steggles that the company deliberately misled consumers by claiming its chickens were “free to roam”. Reality is that each bird had a space of less than 8 x 10 inches [ABC, 2013]

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Environmental Issues in Business 201

Comparison between 42 ASX listed/ISO 14001 certified companies and 60 ASX listed/non-certified and found that certified companies were no better than non-certified companies in terms of environmental engagement.

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Environmental Issues in Business 201

ISO 14001 certification reflects on the practice of an Environmental Management System (EMS) – a tool designed to help companies realise legal compliance as well as TBL performance

EMS is an internal process to manage environmental risks and opportunities. Whereas ISO 14001 is an external certification of that process but not the outcome.

ISO certified EMS is certainly a positive way forward in terms of CSR, but it is not the ideal blueprint to achieve sustainable development.

Can ISO certified EMS contribute towards CSR and Sustainable Development?

Lecture 5

Environmental Issues in Business 201

MGMT 2004: Business and Sustainable Development

Lecturer: Dr. Hossein Mohammadi

School of Management

Curtin University

Lecture 7

Environmental Issues in Business 201

ELECTRONIC WARNING NOTICE FOR COPYRIGHT STATUTORY LICENCES

Lecture 8

Green and Sustainability Marketing

At the end of this lecture you will be able to:

Describe the difference between conventional and green marketing

Understand the strengths and weaknesses of green marketing

Identify the potential of sustainability marketing as a way forward

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A story of my neighbour!

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Do you know anyone like my neighbour? [But you and I are definitely not like that right? ]

To what extent “marketing” is responsible for this lifestyle? [It’s not our fault]

Can “green marketing” come to the rescue? [If so, what are the potential and pitfalls?]

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How well does the marketing practice align with the aspiration of sustainability?

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Marketing is about developing products and services that meet consumer needs at the right price and communicating their benefits effectively in the market place

Marketing

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Conventional Marketing Equation

Marketing techniques have evolved over time i.e. intensified advertising in social media. However, profiting from consumer satisfaction remains the primary motive behind marketing theory and practice

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E.g. Theories of Marketing

Perceived-value

Either offer similar products and services at higher price/rate than the competition so that consumers will believe what’s being advertised is superior

Or offer cheaper prices than the competition so that consumers will believe its more value for the money

Positioning

In order to maximize sales (and profits), products or services offered must be positioned in such a way that consumers should believe that they need to buy what's being advertised

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E.g. Practices of Marketing

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E.g. Types of Marketing

Social marketing: the main focus is on the application of well-known marketing tools and techniques to foster social change

Sustainability marketing: the main focus is on building and maintaining viable relationships with customers, the society, and the environment

Green marketing: the main focus is on promoting products and services with minimum detrimental impact on the natural environment

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Environmental Issues in Business 201

The paradox of marketing:

Marketing is the driving force behind unsustainable economic growth and individual lifestyles

Contributes to over-consumption

Complicit in the promotion of unsustainable/unethical values and behaviours (suppliers & buyers)

How Responsible is Marketing?

The ‘more is better maxim’ of marketing seems to violate sustainability principles and arguably undermines efforts to mainstream ethical and ecologically sensitive consumer behaviour

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Marketing has the potential to be used as a tool to do less harm or do better:

Altering consumption patterns for society’s long-term best interests

Educate and raise awareness about the impact of our consumption

Change values, life-styles and consumer choice

Help challenge the status quo or existing norms

Marketing with a Conscience

There is an increasing recognition and desire within the business sector to change the way marketing is done in line with the triple bottom line

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Wellbeing of the Planet and People should be a part of the marketing mix

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The Growth of Green Market

How to identify Green Products and Services?

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Eco Labels

The potential of eco labels was globally recognized in 1992 Rio Earth Summit

An informative means for consumers to make choices to reduce their negative impacts + influencing the green market in terms of better products and services

Type I, II, and III labels

(URL: http://www.ecospecifier.com.au/knowledge-green/technical-guides/technical-guide-9-introduction-to-ecolabels-and-environmental-product-declarations/

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For businesses: provides a way to measure performance and also communicate and market the environmental credentials of product & services

For consumers: guides their purchasing decisions by providing behind the scene info on products & services

For governments: encourages the behavioral change of producers and consumers towards long-term sustainability without regulatory measures (C&C or MBE)

Purpose of Eco Labels:

It empowers people to discriminate between products that are harmful to the environment and those more compatible with environmental objectives…so ecolabels are the tools of green marketing

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Promotes products or services by employing environmental claims either about their attributes or about the systems, policies and processes of the firms that manufacture or sell them (Prakash 2002: 285)

Channels consumer demand towards environmentally less problematic areas of consumption (Hockerts 2003)

Green Marketing

Green Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment [Polonsky 1994, p. 2]

Profiting from not only satisfying customers but also caring for the socio-environment

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Green Marketing Target Group

Types of Consumers [Sources: Ginsberg & Bloom (2004) & Brooks et al. (2009)]
Share	Type	Explanation
11%	True Blue Greens	Likely to buy green products and services
5%	Greenback Greens	Will buy green but won’t make lifestyle changes
33%	Sprouts	Care but don’t put in extra effort
18%	Grousers	Environmental issues are somebody else’s problem
31%	Basic Browns	Unaware or don’t care

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Types of Consumers [Source: Ogilvy and Mather (1992)]
Share	Type	Explanation
16%	Activist	Likely to buy green products and services
34%	Realist	Are worried about the state of the environment
28%	Complacent	Environmental issues are somebody else’s problem
22%	Alienated	Unaware or don’t care

Green Marketing Target Group

Only a Small Percentage of Consumers Respond to Greenness

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Numbness

People are too busy and simply do not have (make) time or don’t want to know

Reluctance to change lifestyles

Green issues are too big to handle

What can I do about melting ice caps??

Apathy

Green labels have a bad name because of perceptions of poor performance and ideological slant

Dislike of ‘green’ labels

Scepticism about industry's green claims

Understanding the Consumers

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Akrasia

Inconsistency in their demand – mostly opportunistic – consumption choices often do not reflect personal values.

Self-righteousness – self-deception

I recycle and therefore I am green

Financially struggling

We may like to buy organic but simply cannot afford to do so because of large price premiums

Reluctance to pay more – fear of price gauging

Understanding the Consumers

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Adequate pricing

Consumers must be willing and able to afford premiums

Adequate greenness

Price, image & performance may be more important

Product performance

Product must be/do more than being green

Credibility of claims

Consumers need to believe your claim

Instilling an sense of wanting to make a difference

Demonstrate that using your product will make a difference

Encourage behavioural change

Ingredients of Effective (Green) Marketing

Source: Prakash (2002), Ottman (2008)

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https:// youtu.be / PVPyHrPZbVM

E.g. Green Marketing

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Green marketing can help communicate the need to:

Improve environmental quality

Look for alternative product choices

Promote ‘better’ practices in industry

Raise awareness

Educate consumers

Potential of Green Marketing

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Social, Economic, and Environmental:

Not really about reducing the levels of consumption in the society

Primarily about sales or profits at the end of the day

Superficial and unethical environmental improvements or misleading claims

… which is called ?

Pitfalls of Green Marketing

Rebound effect

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Greenwashing

http://www.greenwashingindex.com/

It’s greenwashing when a company or organization spends more time and money claiming to be “green” through advertising and marketing than actually implementing business practices that minimize environmental impact. It’s whitewashing, but with a green brush (http://greenwashingindex.com/about-greenwashing/)

Greenwashing Index

Public rating system for greenwashed advertising

CHOICE Australia

Reporting system which registers consumer complaints

NGO registers

E.g. Greenpeace, Sierra Club

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Sin of the hidden trade-off

e.g. made from 100% paper

Sin of no proof

e.g. This product is ‘green’

Sin of vagueness

e.g. environmentally friendly

Sin of irrelevance

e.g. CFC free hairspray

Sin of lesser of two evils

e.g. fair trade tobacco

Sin of worshipping false labels

e.g. free to roam chooks

Sin of fibbing

E.g. Outright lying and deceit

7 Sins of Greenwashing

Source: Terrachoice (2009)

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How prevalent is greenwashing?

In 2007, over 95% of environmental product claims committed at least one of the seven sins of greenwashing; by 2010, this percentage had fallen by half and the number of genuinely green products on offer rose significantly

Source: Terrachoice (2009, 2010)

http://youtu.be/zR3pslIPnOQ

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Weekly Topic

Compare and contrast green marketing vs sustainability marketing using advertisements (TV or print media) of your choice.

Does it:

Improve environmental quality or promote ‘ethical/better’ practices in industry?

Sound like green-washing (which type?)?

Cause rebound effect?

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Environmental Issues in Business 201

Embryo stage (pre-1974)

Ecological marketing (1975-1989)

Green marketing (1990-2000)

Sustainable marketing (post-2000).

Sustainability paradigm shift requires:

Promotion of ‘less being more’

Reductions in aggregate levels of consumption

Acceptance of having to take a step back

Social transformation based on values (not the value of the stuff you keep in the storage)

Transition from consumers to customers

¾ of the world population have not even started to consume the way we do though India, China and Brazil have slowly begun to do so…

Is Marketing for Sustainability a way forward?

Source: Peattie & Crane (2005)

Can we really market what will be perceived as:

deprivation

anti-development

moralistic

a step back?

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Key Elements of Sustainability Marketing

Treating socio-ecological problems as a starting point of the marketing process, not as a set of externalities or constraints (i.e. businesses don’t operate in isolation)

Understanding costumer behaviours holistically (i.e. numb or akrasia)

Reconfiguring the marketing mix (i.e. 4P)

Appreciating and utilizing the transformational potential of marketing activities and relationships (i.e. optimistic view of the future)

Green Marketing

Conventional Marketing

Retention & Engagement

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Back to the Marketing Equation

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Australians spend $750 million annually on dud Christmas presents (SMH 29.12.2011)

We are spending more and more each year on professional de-cluttering services (Nelson et al. 2007)

Americans spend about $35 billion a year on weight-loss products ( http://www.cbsnews.com)

Critical reflection (of us):

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Growing demand for green and ethical consumer products will continue to fuel green market and green marketing

Marketing will continue to reward unethical behaviour (due to price advantages) in the absence of complete information and safeguards

Green marketing, although is a right step forward, it does have limitations on social, economic, and environmental fronts

Critical thinking/reflection is desperately needed to transform marketing for sustainability that promotes changing our behaviour and reducing the levels of our consumption

Concluding remarks

A story of my neighbour!

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Environmental Issues in Business 201

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MGMT 2004: Business and Sustainable Development

Lecture 9

Sustainability Reporting

The Hype and Reality of Reporting Initiatives

By the end of this lecture you will be able to:

explain the rise of corporate reporting initiatives;

describe the nature of sustainability reporting;

describe existing reporting standards and frameworks; and

evaluate the value and effectiveness of sustainability reporting.

Sustainability Reporting

Why do businesses bother to report on sustainability, and, what is the value of such reporting for companies as well as stakeholders?

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Environmental Issues in Business 201

CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders.

Drivers of Sustainability in Business and the Corporate Social Responsibility (CSR)

Discretionary

Mandatory

Lecture 9

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Environmental Issues in Business 201

A window through which light can be shed on key elements of corporate performance to help investors
A tool used by companies to undertake the process of socio-environmental audit
A transparent practice of measuring, disclosing and being accountable to stakeholders for organisational performance towards non-financial goals
Hence, non-financial reporting is also often referred to as:

sustainability reporting, responsibility reporting, accountability reporting, CSR reporting, Triple Bottom Line reporting, community reporting, social reporting and most recently shared value reporting

Various attempts towards improving financial performance as well as environmental and social improvements need to be documented and accounted for

Accountability

Companies are increasingly made to face the effects of their actions

polluter pays principle

Accounting

Companies have started to collect information on aspects (beyond financial) for which accountability is required

e.g. environmental and social accounting

Reporting

Companies making information publicly available via corporate reports for their stakeholders

Increasingly asked for by investment community and law makers

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A sustainability report is published by a company or an organization about the economic, environmental and social impacts or improvements caused by its activities (Source: GRI 2014). It not only presents the organization's values and governance model but also communicates the link between their actions and commitment to triple bottom line

Financial reporting

Well established
Clear audience
Clear set of rules
For what it captures (an incomplete picture) it captures well

Non-financial reporting

Newly arrived and evolving
Multiple audiences
Vaguely expressed and debatable rules
It captures something important, but not well enough

https://assets.kpmg/content/dam/kpmg/xx/pdf/2020/11/the-time-has-come.pdf

http://youtu.be/8Xt_Ddltzn4

The State of Bhopal Today

Clean-up of the site is still pending until today, those who survived the disaster still don’t have alternate livelihood opportunities and victims are still suffering.
The company abandoned the factory site without cleaning and restoring it to its original state and families too poor to move continue to live in the vicinity – exposed to toxic chemicals through groundwater and soil contamination.

Corporate Register (2009)

~ 90% of institutional investors rely on sustainability reporting to make investment decisions

Companies choose to report for a variety of reasons, including:

to inform non-shareholder stakeholders of impacts of the company's performance and strategies to improve impacts,

to inform shareholders and the market how well the company is dealing with non-financial and financial risks, and

to identify areas of key risks and mitigate or minimise the potential impacts

(Source: Parliament of Australia, 2010)

The main target audiences for sustainability reports are employees (87%), customers (79%), shareholders (74%), local community (67%), institutional investors (54%), suppliers (59%), analysts (51%), and governments and NGOs (28%).

Lecture 9

Corporate distress occurs when promises to creditors of a company are broken or honoured with difficulty.

If such distress cannot be relieved, it can lead to bankruptcy

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Environmental Issues in Business 201

https://www.globalreporting.org/information/sustainability-reporting/Pages/reporting-benefits.aspx

p.13

The International Standard on Assurance Engagements – it is developed by the international federation of accountants and outlines guiding principles for external auditing.

Standards for sustainability reporting

ISAE 3000

The Assurance Standard developed by Institute of Social and Ethical Accountability- focuses on the quality of sustainability reporting-specifically in relation to accuracy and materiality of subject matter

AA1000

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The Global Reporting Initiative [GRI] Reporting Framework contains general and sector-specific content that has been agreed by a wide range of stakeholders around the world to be generally applicable for reporting an organization’s sustainability performance.

Source: GRI (2006, p. 3)

The Global Reporting Initiative Reporting: Framework

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The GRI was initiated as a project group for the Coalition for Environmentally Responsible Economies, CERES (Boston) in 1997.

The objective of CERES was to develop a reporting framework to provide social and environmental information on top of financial information in order to increase organisational accountability.

GRI is the de facto standard for voluntary sustainability reporting.

Such wide acceptance is due to the support from other international initiatives e.g. the United Nations Global Compact.

The Global Reporting Initiative Reporting: History

The Global Reporting Initiative Reporting: Scope

~70% of Sustainability Reports use GRI Framework

http://database.globalreporting.org/

Moneva, J. M., Archel, P., & Correa, C. (2006, June). GRI and the camouflaging of corporate unsustainability. Accounting forum (Vol. 30, No. 2, pp. 121-137).

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Economic – 7 core and 2 voluntary indicators

e.g. Economic performance

Environmental – 17 core and 13 voluntary indicators

e.g. materials and energy

Labour practices – 9 core and 5 voluntary indicators

e.g. Occupational Health and Safety

Human rights – 6 core and 3 voluntary indicators

e.g. number of discrimination incidents

Society – 6 core and 2 voluntary indicators

e.g. corruption & anti-competitive behaviour

Product responsibility – 4 core and 5 voluntary indicators

e.g. customer health and safety

Critically examine the internal and external value of sustainability reporting using a recent report of a company of your choice.

https://youtu.be/Sjbn6RFxZWk

http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2015/04/group-sustainability-report-2014.bin.html/binarystorageitem/file/Volkswagen_Sustainability_Report_2014.pdf

Difficulty for shareholders to link non-financial performance data to companies’ financial position

The business implications of social and environmental issues are not discussed. It is relatively unusual for companies to explicitly discuss the implications (if any) of environmental and social issues for the company’s strategy or key value drivers.

Most are not externally audited, presented vaguely with positive spin

e.g. “Our injury rate continues to be one-third of the total Australian metalliferous mining industry average." + so lacks credibility

Voluntarism and lack of uniform standards limit comparability

Companies have a “pick and mix” approach to the indicators on which they report, and these indicators frequently change every 2 or 3 years.

Uncertainties i.e. interpolation or extrapolation in the data provided in corporate responsibility reports are rarely acknowledged or quantified.
It is difficult to assess how companies are performing against their own corporate responsibility policies and commitments.
It is not clear what resources (human, financial, etc) have been allocated for the achievement of the company’s corporate responsibility objectives.

Global 100 (2008)

Political Economy Research Institute (2008)

Toxic 100 Index

Issue 4: Trustworthiness

Absence of reporting requirements and binding guidelines allow less meaningful ‘sustainability’ reporting and communication practices (difficult to separate fact from fiction)

p.10

It runs the risk of losing sight of the bigger picture for sustainability (e.g. equity, trade, globalisation)
It prevents an integrated view of business and sustainable development by insisting on separate, non-integrated core and voluntary indicators.
It treats three dimensions of sustainability as being equal and on the same level of priority

Global rise in sustainability reporting is because of changing supply, changing demand, and changing rules
Sustainability reporting, however, is largely voluntary and their publication is largely up to corporate policy and goodwill
Questions remain surrounding the veracity of company reports as verification is still in its infancy e.g. difficulty remains to discern ‘fact’ from ‘fiction’ e.g. BP, VW
Future reporting formats and company rating systems will need continuous improvement in line with the aspirations of sustainability (perhaps with the help of regulation!)

Businesses bother to report on sustainability because it demonstrates accountability (sometimes superficially) and has a positive impact on their profitability

Lecture 9

Environmental Issues in Business 201

MGMT 2004: Business and Sustainable Development

Stakeholders: Government and NGOs

Lecture 8

Environmental Issues in Business 201

Lecture 10

The Roles of Government and Non-Government Organisations in Pursuit of Sustainability

This lecture will cover the:

• challenges of policy-making for sustainability

• complexities of engaging with stakeholders

• significance of business-stakeholders nexus for sustainability

Stakeholders: Government and NGOs

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Why do business relations with Government and NGOs matter for sustainable development?

Why is stakeholder’s interest important for businesses?

How is the policy making process for sustainability challenging?

What are the sustainability policy tools?

Stakeholder influence: threat or an opportunity for businesses?

What do you think is the most important problem facing the world today?

What do you think is the most important problem facing Australia today?

Remember this from the 2nd lecture?

Nature of Problems

Simple: e.g. How to Bake a Cake?	Complex: e.g. How to Land on the Moon?	Wicked: e.g. How to Raise a Child?
Recipes are tested to assure easy replication	Sending one rocket increases assurance that the next will be okay	Raising one child provides experience but no assurance of success with the next
No particular expertise is required but cooking experience increases success rate	High levels of expertise in a variety of fields are necessary for success	Expertise can contribute but is neither necessary nor sufficient to assure success
The best recipes give good results every time – usually one or two stakeholders	There is a degree of certainty of outcome – multiple stakeholders with complementary interests collaborate with each other	High degree of uncertainty of outcome – a wide variety of stakeholders with conflicting and competing vested interests

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Ten attributes of wickedness (Rittel & Webber 1973):

1. There is no absolute definition

2. The search for solutions is never ending

3. Solutions are based on good-or-bad premise instead of true-or-false

4. Effectiveness of solutions is hard to measure effectively

5. There is no opportunity to come up with a solution by trial-and-error

6. There is not an exhaustively describable set of potential solutions

7. Every problem is essentially unique

8. Every problem can be considered to be a symptom of another problem

9. Possible solutions involve multiple stakeholders wanting different outcomes

10. Policy-makers are liable for the consequences of the solutions they prescribe.

Sustainability Challenge

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Business Stakeholders

Stakeholders represent groups or individuals who can be affected or are affected by the functioning of an organisation (Freeman 2010).

NGOs

Local

communities

Creditors

Government

Suppliers

Consumers

Employees

Corporation

Shareholders

Internal

External

Trade unions

Business with Government and NGOs

Actors	Reactive interest	Proactive interest	Influence areas	Issue examples
Business	Profit	TBL	Celebrity leaders, political influence, R&D capacity	UN Compact, 4th Gen CSR, SDGs
External Stakeholders
Government (e.g. local, state, federal)	Tax, economic growth, balance the budget, pollution clean-up	Invest in and support TBL strategies and solutions, pollution prevention	Compliance & enforcement, Eco-efficiency & effectiveness	Carbon pricing, renewable energy subsidy, social enterprise grants
NGOs (e.g. International Council on Clean Transportation (ICCT), Sea Shepherd, Bill and Melinda Gates Found.	Anti-corporation, Environmental awareness, Activism	Partner with business/government to foster TBL solutions that reflect ART	Agenda setting, informing public (inc research) mobilizing media, lobbying (inc boycotting)	Watchdog (i.e. Volkswagen), Wildlife conservation, SDGs

Regulatory pressure is important for businesses because:

Regulation can help

increase awareness of CEOs and managers

change behaviours of industries and households

reduce the footprint of both production/consumption

People and companies respond to price signals

Environmental/social costs are internalised – making environmentally harmful products/services more costly for both producers/consumers

Price may act as deterrent or incentive for consumers

Cost associated with regulatory compliance affect companies’ competitiveness

Regulation = policy attempts by governments to influence behaviors of various actors e.g. consumers, companies, civil society, public sector

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Cost internalisation is the incorporation of negative externalities [notably environmental depletion and social impact] in the price of a product/service

Private costs (P) – e.g. the cost of acquiring and running a vehicle i.e. fuel, oil, maintenance, depreciation, insurance, drive time
External costs (E)– e.g. the disposal of used oil or flat batteries, if unregulated will end up costing government agencies more to clean-up
Social costs (S) – e.g. private cost + the cost of externalities to the resulting from the vehicle usage that the vehicle owners don’t pay

S = P + E

So, if E > 0, then S > P

Meaning, if we don’t internalise the cost of externalities – the value of product will be less than what it should be

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Difficulties in:

demonstrating that failure to regulate would lead to undesired side effects

extrapolating undesired side effects/explaining the causes of such effects

Policy scepticism

‘Less than 3% ‘Climate sceptics’ (vs more than 97% scientists) have been able to stall policy changes by muddying the waters:

the earth's climate has not become unpredictable

human activity is not the main cause behind the changing climate

global warming will bring weather related benefits

government actions are useless unless all nations act

Much of the scepticism is manufactured by corporate interests e.g. Exxon funds sceptical climate change research
Arguments about the public good are often a mere façade e.g. Monsanto argues GM food protects consumer interests

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Environmental Issues in Business 201

Pressure on governments from all across the spectrum

There are growing calls for better protection of social and environmental interests

NGOs ask for better social welfare provisions e.g. increases in minimum wages

NGOs want political action on climate change and tighten corporate regulations

At the same time, the government is required to provide favourable conditions for business and commerce

Business pressure to fast-track environmental impact assessments for approval of mining operations

Business lobbying efforts against environmental protection

Importantly, policy-makers always wish to be re-elected

Sustainability (long-term solutions beyond an election cycle) policy-making is therefore considered risky

Policy for whom?

Who or what are the policy priorities?

Political resistance
Tough regulation may be seen as a threat to industry
Higher taxes (prices) do not win elections

Measurement / enforcement / punishment
Incentives to cheat
Compliance can be difficult to monitor

Need to reconcile seemingly conflicting aims: but where is the blueprint?
Industry competitiveness
Environmental effectiveness
Social acceptability

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Right Pricing

Uncertainty about environmental sensitivity and thus about right level of taxes, charges and fines

What are the risks of getting the prices wrong?

Are environmental cost fully internalized?

Uniformity
One size does not fit all
Different industries face different problems with compliance

Regressivity

– Fairness of cost sharing

– Is everybody equally affected by policies?

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1. Paramedics

2. Firefighters

3. Pilots

4. Rescue volunteers

5. Nurses

6. Pharmacists

7. Farmers

8. Medical specialists

MGMT 2004: Business and Sustainable Development

Lecture 8

Environmental Issues in Business 201

Lecture 11

The Role of Consumers:

Socially Responsible Investment

Sustainable Consumption

At the end of this lecture you will be able to:

Describe socially responsible investment (SRI) or the ethical investment;
Critically assess the ethicality of SRI;
Explore links between sustainable consumption and sustainable development;
Understand local and global impacts of over-consumption and the need for change.

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Environmental Issues in Business 201

Ethical Investment

Sustainable Consumption

Paraguay
Panama
Guatemala
Nicaragua
Ecuador
Costa Rica
Colombia
Denmark
Honduras
Venezuela
El Salvador
Indonesia
Philippines
Thailand
UAE
Canada
New Zealand
Australia
Chile
Argentina

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Environmental Issues in Business 201

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Most of the working Australians are investors (through our superannuation),

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Environmental Issues in Business 201

Business Stakeholders

Stakeholders represent groups or individuals who can be affected or are affected by the functioning of an organisation (Freeman 2010).

NGOs

Local

communities

SMEs

Government

Universities

Consumers

Employees

Corporation

Shareholders

Internal

External

Trade unions

Business and Consumers

Actors	Reactive interest	Proactive interest	Influence areas	Issue (Examples)
Business	Profit	TBL	Celebrity leaders, political influence, R&D capacity	UN Compact, 4th Gen CSR, SDGs
External Stakeholders
Government (e.g. local, state, federal)	Tax, economic growth, balance the budget, pollution clean-up	Invest in and support TBL strategies and solutions, pollution prevention	Compliance & enforcement, Eco-efficiency & effectiveness	Carbon pricing, renewable energy subsidy, social enterprise grants
NGOs (e.g. International Council on Clean Transportation (ICCT), Sea Shepherd, Bill and Melinda Gates Found.	Anti-corporation, Environmental awareness, Activism	Partner with business/government to foster TBL solutions that reflect ART	Agenda setting, informing public (inc research) mobilizing media, lobbying (inc boycotting)	Watchdog (i.e. Volkswagen), Wildlife conservation, SDGs
Consumers e.g. you and me	Accept what is being offered, Interested in maximum returns on investments, Seek best price	Question what is being offered, Conscious investors, Seek best products and services	Lobbying (inc. boycotting), Social media	Activism against GMOs

Choosing to invest in companies that operate ethically, provide social benefits, and are sensitive to the environment
A risk management tool to minimise negative impacts of the investment
A facility for investors to match their ethical values with their investment decisions based on integrated information (social, economic and environment)
A.K.A. Ethical Investment

Lecture 8

Environmental Issues in Business 201

In the early 1900s, the Methodist Church began investing in the stock market, consciously avoiding companies involved in alcohol and gambling
During the twentieth century more charities and individuals began to take account of ethical criteria when making investment decisions
Interest in SRI grew during the Vietnam war and anti-apartheid protests in 1960’s
Early 1980s saw the establishment of independent research services for ethical investors and the first ethical investment businesses

Avoid sin stocks/ Seek moral stocks

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Environmental Issues in Business 201

SRI has been the fastest growing investment portfolio over the past ten years in the financial centres of the USA and Europe

Examples:

SRI assets under management in Europe grew from 2.7 trillion in 2007 to € 5 trillion in 2009, representing a growth of 87% (Eurosif 2010)

As of 2010, US$3.07 trillion in assets tied to SRI, representing 12.2% of assets under management (Chava 2011)

The Responsible Investment Association Australia (2017) reported that SRI in Australia and New Zealand have reached over $600B

Global SRI market has grown since 2002 at a rate of 22% per annum (Booz&Co 2009)

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Environmental Issues in Business 201

Screening

Positive: seeking to invest in companies with a commitment to responsible business practices, or that produce positive products and/or services.

Negative: avoidance of investment in targeted companies, industries and countries

Shareholder activism

Active voting and engagement in companies in which one has invested or has vested interest

Integration

Environment, society and governance (ESG) are incorporated into investment analyses and decision making

Community investment

Providing capital to underserviced communities

Divestment

Withdrawing investor support from companies whose conduct has be drawn into question

e.g. exclude companies that draw more than 20% of revenues from coal, gambling, tobacco or pornography.

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Environmental Issues in Business 201

http://www.australianethical.com.au/managed-funds

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Environmental Issues in Business 201

News about company’s ethical practices can affect their share price for good or ill.

Sustainability performance can be seen as an indicator for management competence

Proactive, responsible management can enhance profitability

More proactive companies may therefore stand to outperform their more reactive competition

Various aspects of sustainability seen as proxy for risk minimization and future profitability

Ethical investments do not yield less returns than mainstream investments

Lecture 8

Lecture 10

Environmental Issues in Business 201

The Responsible Investment Certification Program

RIAA helps investors find out and learn more about responsible investment products and services available in Australasia. The program provides assurance, independent verification and information

United Nations’ 6 Principles for Responsible Investment

Principles are based on a environmental, social and corporate governance (ESG) framework, which is meant to align investors with broader objectives of society

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Environmental Issues in Business 201

SRI can be deceptive not addressing the root cause of the problem
Lack of accountability and transparency in portfolio screening
Despite the rhetoric SRI funds rarely engage in shareholder activism
Social and environmental screens are loose and vaguely defined, often failing to protect the society or the environment

Source: Hawken (2004)

Norway’s State Fund (NSF) (similar to Aus Future Fund) withdraw its investment from the US retailer Wal-Mart because of systematic human rights abuses by the company
NSF is not an ethical investment portfolio but it is run by ethical managers (Kirby, 2006)

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Environmental Issues in Business 201

http://youtu.be/JVsecrTj3oI

SRI matters because if more and more of us are willing to invest only in sustainable profit making practices, companies will have no choice but to change for better

Lecture 8

Environmental Issues in Business 201

Lecture 8

Environmental Issues in Business 201

As income rises, so does the demand from us consumers i.e. we consume our way towards prosperity
Pervasive sense of material deprivation of people like us i.e. “keeping up with the jones” is an integral part of our identity and culture
Since World War II living standards in the West have risen to a high level for most of the population
Access to housing, education, health care and consumer goods are far higher than they were fifty years ago
BUT ARE WE HAPPY?

The primary purpose of consumption is to satisfy our basic needs, food, shelter, education, etc.

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Environmental Issues in Business 201

Maslow, 1954

Happiness

Lecture 8

Environmental Issues in Business 201

Law of diminishing returns

Lecture 8

Environmental Issues in Business 201

Jebb, A. T., Tay, L., Diener, E., & Oishi, S. (2018). Happiness, income satiation and turning points around the world. Nature Human Behaviour, 2(1), 33.

$159,000,

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Environmental Issues in Business 201

Purpose: liking what you do each day, being motivated to achieve your goals
Social: having supportive relationships and love in your life
Financial: managing your economic life to reduce stress, increase security
Community: liking where you live, feeling safe, having pride in your community
Physical: having good health and enough energy to get things done daily

Lecture 8

Environmental Issues in Business 201

Bangladesh

Ecological footprint = the amount of resources that we consume per certain area of land to sustain our lifestyle

http://www.footprintnetwork.org/en/index.php/gfn/page/earth_overshoot_day/

Lecture 8

Environmental Issues in Business 201

Lecture 8

Environmental Issues in Business 201

Economic Impacts

Debt has become the Australian way of life. In recent years, the average Australian household has tripled to more than one-third of debt of GDP (Creighton, 2014)

Total household debt in Australia in 2016 amounted to $2 trillion (Soos, 2016)

Credit card debt in Australia is over $31 billion, with $5 billion+ as interest charges, with an average HH debt of $4155 (Canstar 2016)

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Environmental Issues in Business 201

Social Impacts:

Overwork and family time: High income aspirations require either high paying jobs or long working days (or both).

In 2010 Australians worked over 2 billion hours of overtime. 46% of all full-time employees worked overtime on a regular basis (Australia Institute 2010)

63% of employed Australians consider themselves highly stressed. Workers compensation claims for stress-related conditions amount to of over $200 million every year (Monash University 2010)

The proportion of children attending formal care increased from 17% in 1999 to 22% in 2008 in part due to the increase in the labour force participation rate of women with young children (ABS, 2010)

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Environmental Issues in Business 201

Environmental Impacts

The environmental crisis is a crisis of desire

Consumption impacts on:

Resources

Waste

Australian average of 1.62tonne and 200kg of food per capita

99% of materials bought in the US end up as waste within 6 months after purchase (Leonard 2009)

Pollution

E.g. Australian per capita CO2 emissions

Changes in Consumption

Larger houses

average 206 m2 & 2.6 occupancy rate

More cars (2+)

SUVs, 4WD, sport cars

Larger TV sets

Plasma TV

Electrification

Phones, picture frames, bread cutters, can openers

Lecture 8

Environmental Issues in Business 201

“The use of services and related products which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of future generations”’

According to the OECD, sustainable consumption is about consuming differently, not necessary less, while maintaining, or possibly even enhancing the well-being and fulfillmenty

Lecture 8

Environmental Issues in Business 201

Consumers say they pay attention to two things: companies that are going above and beyond with CSR efforts and companies that are being called out for poor CSR performance.
Consumers are willing to make personal sacrifices for the greater good. They are even willing to pay more or reduce how much they buy if it will have a positive impact on social or environmental issues.
Consumers consistently see social media as an important way to learn, voice their opinions and speak directly to companies around CSR issues

Changes are only likely if those concerned have

An understanding of the impacts of consumption

One kWh of electricity produced by coal-fired power stations results in 0.43kg of CO2 …is my fridge killing polar bears?

Knowledge about existing and potential alternatives

Where do I buy organic food or avoid GMO?

The motivation and incentives to change e.g. reduce waste

Is it attractive to change? (cost, image, functionality)

The capacity to choose right options

Can I afford to buy differently?

Do I know enough to make the right choices?

Are the right choices facilitated by my surroundings?

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Environmental Issues in Business 201

http://youtu.be/w7ENwvpRDsQ

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Environmental Issues in Business 201

Insistence on consumer rights for transparent environmental information

e.g. Eco-labeling/ Ethical textiles / Debate on controversial issues (e.g. GM crops)

Reflection on wasteful/polluting practices

Junk mail / Excessive packaging

Material/energy intensive goods

Reflection on needs vs. wants

Do I need a … ? Is newer better? What is the true cost of my consumption?

Political engagement

Change is not a given … it needs to be driven/demanded socially, commercially and politically

Active citizenship

Lecture 8

Lecture 11

Environmental Issues in Business 201

Consumers in affluent countries like us need to take an extended sense of responsibility for our consumption patterns, not just for the local impacts but also for the aspirations that they generate elsewhere
There cant be unlimited growth:

In developed countries, people have been told that ‘more = better’ for the last 60 years

It is now understood that western lifestyles cannot be sustained and replicated in global terms

Sustainable consumption can be a powerful driver for that ABC

Yet, the task of confronting our culture of over-consumption is difficult for individuals when governments try to sell the delusion that everyone in this planet can and wants to consume like us

We are affluent but not so happy because we are always told what we have is not enough and what we need is more stuff … social and moral emptiness can’t be compensated by more consumption

Lecture 8

Lecture 11

Environmental Issues in Business 201

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