7 INDUSTRIAL POLLUTION ENVIRONMENTAL REGULATION TBUS 102 AB

7. INDUSTRIAL POLLUTION & ENVIRONMENTAL REGULATION TBUS 102 AB: BUSINESS AND SOCIETY SHALINI SARIN JAIN M IL A G U A T R U D M S N C 2 H 0 O 1 5 O L O F B U S IN E S S

AGENDA §Case Discussion: The Majestic Hudson River (p. 436) § Chapter 13 § Break § Case Discussion: The American Creosoting Co. (p. 462) 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 2

COURSE STRUCTURE Business Environment Pink: complete Royal Blue: current Role of Business in Society MNCs and Globalization Stakeholder: Natural Environment Social Contract of Business Impact of Business on Society Stakeholder: Consumers Stakeholder: Employees Business Interdependent System State Society Government: Impact of Society on Business Laws Society: Ethics & Corporate Social Responsibility 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 3

DVD HEAT; STAKEHOLDERS §In DVD Heat is GM a stakeholder? §Firm is not a stakeholder §Why yes? §If it is a competitor §Define competitor? §Produce similar products and want to ↑ market share § In Heat: GM/Toyota are competitors because? § Both trying to develop technology to ↑ fuel economy § Toyota made Prius; GM continued to make SUVs/Hummer’s § Toyota ate GM’s lunch!!! 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 4

DVD HEAT: STAKEHOLDERS §Define consumer? §A person who buys a specific good or service § Want good quality at a reasonable price §Can we identify consumer as a stakeholder when talking about global warming? §No! §The general public/citizens are impacted by global warming! 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 5

THIS CHAPTER §Nature of industrial pollutants §Practices that allowed them to ruin ecosystems §Regulations developed to remedy offenses §Success? 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 6

THE MAJESTIC HUDSON RIVER (P. 456) Henry Hudson: English navigator § Journeyed up (1609) seeking a new trade route to China § Trading posts – furs, fish, limestone, clay, timber § Acquired a rich history § Forts blocked British army § Fulton – steamboat 4 mph § Irving – Rip Van Winkle, The Legend of Sleepy Hollow 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 7

HUDSON VANDALIZED § Free markets § Ironworks, sawmills, chopped forests, waste disposal § PCBs § New artificial chemicals - inflammable, heat resistant § 1929: 2 GE electrical equipment factories used PCBs § Lubricants, insulators § 1977: Environmental Protection Agency (EPA) banned use § Cancer (1/1, 000 if ate ½ pound of fish) § GE released 1. 3 million lbs. into the Hudson over 50 years § Through hosing equipment and draining water § Contaminated sediments, food chain, drinking water 1 / 12 / 2 § 200 miles into the Atlantic ocean 21 § Will poison river for centuries 20 TBUS 102 AB-AUTUMN 2015 -7 JAIN 8

EPA & GE § GE asked to clean and pay for dredging 197 miles Resisted § § Followed all laws!!!! § Claimed PCBs harmless, degrades naturally, stirring ↑release § Public relations (PR) campaign § Make residents oppose EPA § Lawsuit – EPA authority unconstitutional § Negotiated agreement 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 9

EPA & GE (2) §Settlement in 2 phases § Phase 1: 2009 = 6 mile hot spot around GE § Collect mud, send upstream on barges, sift, transport mud to Texas, entombed in clay-lined pits § 6 months, 100 vessels, 500 workers, 24/7, 6 days/week § Removed 36, 000 lbs of PCB (80%) § Spent $451 million; $1 billion since 1990 s § Samples show ↑ PCBs in water/fish than before § Phase 2: Will end 2017 -2019; $500 million § Socially responsible “Ecomagination” strategy 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 10

STAKEHOLDERS AND IMPACTS § Corporation? § GE § Questionable business practice? § Dumping PCBs (chemicals) in the Hudson – 1. 3 million lbs. § Minimizing problem – harmless, will degrade naturally, anti-govt. campaign, lawsuit against EPA § Stakeholders: Secondary § Fish eaters/general public - ↑ risk of cancer (why not primary? ) § Government § Media § Impact § Contaminated food chain, drinking water, sediments § Poison will remain for centuries 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 11

POLLUTION § Substances in the environment that inconvenience or endanger humans § Sources of pollution 1. Natural sources § Forest fires release particles/toxic metals such as mercury § Water collects asbestos flowing over rocks, gravel, sand § Natural radiation (US) ~ 50 chest X-rays § Tons of oil seeps from fissures in ocean floor 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 12

POLLUTION (2) 2. Human activity adds more contaminants § Pre-IR: § Indoor fuel combustion, smoke inhalation, human/ animal waste, waterborne diseases § Post –IR: § § Smelting, petro-refining, waste incineration Synthetic chemistry: plastics, pesticides, flame retardants Exposure to metals, organic/inorganic compounds, radiation Absorbed by soil and enters food supply § 150 industrial chemicals in human tissue: non-existent 75 yrs. ago § Industrial activity harms health/disturbs natural ecology 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 13

THE BIOSPHERE § Slender margin atop the earth’s surface that supports life § Home to multiple ecosystems § Ecosystem § An animated, interactive realm of plants, animals, and microorganisms inhabiting an area of the nonliving environment § Tiny/short lived: pond or hollow tree trunk § Vast/enduring: tropical forest, coral reef 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 14

THE BIOSPHERE (2) §Ecosystems support human well-being § Produce food, fiber, water § Regulate climate, control flooding, pests, disease § Purify water, create soil, recycle nutrients § Coral reef absorbs carbon, stabilizes seabed's, provides plants/fish habitats, nurtures biodiversity 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 15

THE BIOSPHERE (3) § Human activity primary cause of ecosystem strain § Rising per capita consumption § Increased pollution and waste § Ecosystems exploited § Forests badly managed § 20% ↓; size of Costa Rica cut/year § Coral reefs destroyed § 20% ↓; overgrown with algae § Species eliminated 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 16

BELIEFS: BUSINESS & NATURE § Judeo-Christian (JC) view § Humans separate/superior to nature § Renaissance – 4 new ideas 1. Dualism: Descartes – reinforced JC view § Humans separate from nature § They alone have reason, soul 2. Progress: Darwin’s theory of evolution § Natural progress from lower to higher perfection § Exploit nature for human welfare 3. Capitalism: Adam Smith – nature a commodity § To be exploited for wealth creation § Environmental damage not part of GDP calculation 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 17

BELIEFS: BUSINESS & NATURE (2) 4. Utilitarianism: greatest good for greatest number § Justified assault of nature for economic gain § Pollution noxious but jobs, taxes, & growth outweigh costs § Views arose when nature seen as unlimited resource § Eastern values § Buddhism, Confucianism, Taoism § Emphasis on interconnectedness between people/nature § Lost with IR 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 18

NEW IDEAS: CHALLENGE THE OLD § Leopold (1949) – land ethic § Humans member of an interdependent community § Arne Naess (1970 s) – deep ecology § Human domination of nature should stop § Moral obligation to end destruction of nature § Should no longer be seen just as inputs § Inspired anti-corporate movements § Peter Singer – speciesism § All species have rights, value § Similar to racism, sexism § Homo sapiens (humans) while superior are 1 of many 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 19

SUSTAINABLE DEVELOPMENT § Nonpolluting economic growth that raises standards of living without depleting the net resources of the earth § Related to developing nations § 2. 6 billion people living on less that $2/day § Rapid industrial growth only way to raise standard of living § Industrial development placed B 4 environmental protection § Following IR model of Europe, US, Japan § Faster: 20 vs 100 years § Spells disaster 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 20

ENVIRONMENTAL KUZNETS CURVE § Before IR § Agriculture dominated § Less pollution § Early – Middle IR § High pollution § Cement, chemicals, rubber, paper, metals, machinery 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 21

ENVIRONMENTAL KUZNETS CURVE (2) § Mature IR § Cleaner technology, service industries § More education, shifts in values § Preserve environment, protect public health § Pressure corporations to be socially responsible § Inverted U-shaped curve § As GDP ↑ § Rapid increase, leveling off, and decline → pollution § Developed economies – in decline 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 22

ENVIRONMENTAL KUZNETS CURVE (3) Figure 13. 1, p. 443 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 23

NEWS FLASH: EMISSIONS CHEATING § EPA has cited VW for emissions cheating § Accused of and admitted to violating emissions control in about 500, 000 million cars in the US(2009 -2015) § Met standards in the lab; 40 X higher on the road § VW - Jetta, Beetle, Golf, Passat; Audi A 3 § Revoked Green Car of the Year Awards § Jetta (2009) and Audi (2010) § Share prices dropped by 20% http: //money. cnn. com/2015/09/21/investing/vw-emissions-cheating-shares/ 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 24

ENVIRONMENTAL POLICY: US § Dominant approach § Pass laws regulating: § Air – emissions § Land – waste § Water – effluents § Main agency – Environmental Protection Agency 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 25

ENVIRONMENTAL PROTECTION AGENCY (EPA) § Created 1970 § To protect human health/preserve natural environment § Executive branch – largest regulatory agency § Implements/enforces laws passed by Congress § 40 years; 4500+ rules (make up laws) § Budget § 1970 - $1. 0 billion; peak 2009 - $14. 86 billion § Real dollar values funding in 1978 ↑ than in 2009 § Employees § Capped at 17, 000 § Trend ↓ since 2001, largest single year ↓ in 2011 -12 (2. 3%) 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 26

ENVIRONMENTAL POLICY: AIR § Clean Air Act (1970): 6 goals 1. Reduce emissions 2. Control hazardous air pollutants 3. Prevent acid rain 4. Address indoor air pollution 5. Stop ozone depletion 6. Reduce greenhouse gases § Kyoto Protocol (International treaty/agreement) 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 27

ENVIRONMENTAL POLICY: AIR (2) 1. Reduce emissions of 6 substances § Carbon monoxide, nitrogen dioxide, sulfur dioxide, ozone, particulate matter, and lead § Cause cardiovascular/respiratory diseases, seizures § Source: § 47% industry § 34% vehicles § ↓ 60% in 40 years § 42% citizens still live in areas that exceed standards 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 28

ENVIRONMENTAL POLICY: AIR (3) 2. Control hazardous air pollutants § Cause cancer, brain damage, birth defects § Source: § 40% vehicles § 20% utilities, refineries, chemical plants, steel/paper mills § 30% dry cleaners, gas stations § 9% fires §↓ 39% in 20 years 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 29

ENVIRONMENTAL POLICY: AIR (4) 3. Acid rain § Chemical reaction of sulfur/nitrogen in air that returns as acid § Lakes in NE: 18% so acidic complete loss of fish § Adirondack Mountains: 33% streams acidified §Cap & Trade (1995) § Economic incentives to ↓ pollution 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 30

ENVIRONMENTAL POLICY: AIR (5) 4. Indoor air pollution § Americans spend 80 -90% of life indoors § Indoor air top 5 human health risks § Sources: § Asbestos, tobacco smoke, cooking by-products, chlorinated water, pressed wood, air fresheners, cosmetics, glue, paint, dry cleaning, insecticides § Radon: colorless, odorless radioactive gas seeps up from soil - lung cancer § Can only regulate radon 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 31

ENVIRONMENTAL POLICY: AIR (6) 5. Arrest ozone depletion § Thinning (30%)/holes in atmospheric screen that keeps out ultraviolet energy § Source § Manufactured gases with chlorine/bromine § Gases survive 50 -100 years in the atmosphere § Refrigerants, fire extinguishers, solvents, pesticides 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 32

ENVIRONMENTAL POLICY: AIR (7) §Montreal Protocol (1987) – International treaty § Plan to phase out 97 ozone depleting chemicals § Miracle - 95% ozone depleting chemicals now out of production § Depletion arrested to 1980 levels, not reversed § Will save 6. 3 millions US lives from skin cancer 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 33

ENVIRONMENTAL POLICY: AIR (8) 6. Greenhouse Gases § Trap sun’s heat instead of radiating back into space § Source: § Carbon combustion – wood/fossil fuels § 85% of GHG is carbon dioxide § 40% ↑ 160 years § Oceans have absorbed 80% of this warming § Global rise in sea levels 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 34

ENVIRONMENTAL POLICY: AIR (9) §Kyoto Protocol (International treaty/agreement) §Developed nations ↓ GHG to 5% below 1990 levels §US emits 20% of all GHG, did not sign (Heat: Bali) § Reasoning – signing will hurt the economy § China, India, Brazil, Mexico following in US lead § EPA refused to regulate: oil and auto lobby § Voluntary programs have ↓ by 1/10 th of 1% § 2007 Supreme Court ruled harmful to human health § Still no rule to lower GHG emissions 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 35

ENVIRONMENTAL POLICY: WATER § Clean Water Act (1972) § Stop damage of lakes, rivers, streams § All industries use water to wash, scrub, cool, mix § Contaminated with particles/chemicals § Law reduces effluent outflow from point sources § 14 ounces of wood preservative/million lbs of paperboard § 1 teaspoon lethal § 45, 200 facilities in US releasing this 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 36

ENVIRONMENTAL POLICY: WATER (2) §Run-off from diffuse/non-point sources not regulated § Agriculture – animal waste, pesticide, fertilizer – highest pollutant § Farmers not mentioned in Act – powerful lobby § Urban run-off – water flowing over streets – 2 nd major pollutant § 30 -40% of US water bodies meet standards § 50% rivers, streams; 36% bays, none of the Great Lakes § Recent Supreme Court ruling scaled back EPA power § 1, 000 s of polluters now outside EPAs reach 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 37

ENVIRONMENTAL POLICY: LAND § Resource Conservation & Recovery Act (1976) § Manage solid hazardous waste – cradle to grave § Label, handle, store, treat, discard § New air and water laws § Produce tons of poisoned sludge, slime, dust § Sent to poorly contained landfills § Difficult to administer § Track all waste produced anywhere in US § Neglected 1, 000 s of abandoned toxic waste sites 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 38

ENVIRONMENTAL POLICY: LAND (2) §Difficult to comply § 80% of waste disposal facilities chose to close vs. comply with law § Many industries filed lawsuits against EPA as cost of following law high §Superfund trust set up for abandoned site clean -ups (1980) § Special tax on oil/chemical firms + 0. 12% ↑ corporate income tax § Expired in 1995, Congress appropriates § Of 47, 000 sites, 2. 5% part-complete, 0. 7% fully restored § Average site cleanup - $5. 3 m; 53 mega sites - $48 m+ 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 39

THE AMERICAN CREOSOTING CO. 1909 § Treated railroad tracks with creosote to resist insects/weather § Tons of creosote oozed into the soil for 47 years 1956 § Plant closed, 50 acre site sold to developer § Build 137 homes + shopping mall 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 40

THE AMERICAN CREOSOTING CO. (2) 1990 § Black tar-like mass appeared in sinkhole § Cancerous § EPA replaced 456, 000 tons of soil § Contaminated soil – high temp incineration, disposal in a landfill § 9 years/$340 million § EPA - paint company Tronox, OK must pay for clean-up § Never used creosote, successor through 9 sales 21 0 /2 2 1 2/ T B U S cannot 102 AB-AUTUM N 2 0 washed 15 -7 JAIN § 1 Just as garner asset value/liability be 41

SUMMARY § Industrial processes damage the environment § Cause serious local/global deterioration § Government has passed rigid/expensive laws § Environment § The largest/most expensive area of regulation § Uneven progress made § In addressing air, water, and land pollution 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 42

NEXT CLASS: TUESDAY, OCTOBER 27 TH Assignment §Team #3 Presentation: Union Carbide §Everyone else– DB Post #6 – Union Carbide §Case Discussion: A World Melting Away (p. 464) §Quiz 1 Review: Chapters 2, 13 § All slide decks/DB Posts/Cases/DVDs 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 43

GREEN KNOWLEDGE? § Fun-fact green quiz § http: //environment. nationalgeographic. c om/environment/green-guide/quizzes 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 44

MOTHER NATURE §http: //natureisspeaking. org/water. html 21 1 0 /2 2 1 2/ TBUS 102 AB-AUTUMN 2015 -7 JAIN 45