Corporate Environmentalism 8803 Business and the Environment Beril

Corporate Environmentalism 8803 Business and the Environment Beril Toktay College of Management Georgia Institute of Technology

Overview q The economic context q The historical context q Making sense of how it all fits together

The Three Economies Source: Hart, Capitalism at the Crossroads

Environmental “Footprint” In the United States, it takes 12. 2 acres to supply the average person's basic needs; in the Netherlands, 8 acres; in India, 1 acre. The Dutch ecological footprint covers 15 times the area of the Netherlands, whereas India's footprint exceeds its area by only about 35%. Most strikingly, if the entire world lived like North Americans, it would take three planet Earths to support the present world population. Source: Donella Meadows "Our 'Footprints' Are Treading Too Much Earth, "Charleston (S. C. ) Gazette, April 1, 1996. Source: Hart, Capitalism at the Crossroads

The Wake-up Call First recorded photo of smog in Los Angeles, 1943 “the smell of money” q Vast clouds of smoke boil into the sky from the Glendale city dump in October 1946. Burning garbage in dumps was a common practice then. -- From “The Southland's War on Smog: Fifty Years of Progress Toward Clean Air, ” May 1997 Publication of Silent Spring in 1962

Sustainability Buzzwords q q q Environmental management Corporate social responsibility Green design Industrial ecology Triple bottom line Shareholder value Eco-efficiency Pollution prevention End-of-pipe Clean fuel Cradle to cradle q q q Renewable energy Design for environment Dematerialization Sustainable development Closed-loop supply chain Biomimicry Industrial ecology Life-cycle management Urban reinvestment ISO 14001 Brownfield redevelopment

Sustainable Value Framework Building tomorrow’s opportunity Nurturing Internal Capabilities Innovation & repositioning Growth path Cost and risk reduction Legitimacy & reputation Engaging External Constituencies Managing Today’s Business Source: Hart, Capitalism at the Crossroads

Historical Evolution 1963 Silent Spring published Regulation: Rapid proliferation End-of-pipe regulation, “pay to reduce -ve impact” Mandates specific technologies Focus on hazardous waste, emissions, pollution Industry: Compliance focused Focused on internal manufacturing processes “Resistant adaptation” 1984 Bhopal tragedy

Historical Evolution 1984 Bhopal tragedy 1987 Brundtland report “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. ” 1989 Exxon Valdez Oil Spill Industry initiatives “Beyond compliance” Regulatory change - outcome based - information based - market based 1992 Rio World Economic Summit

Historical Evolution 1992 Rio World Economic Summit 1995 Brent Spar incident Strategic view of sustainability Stakeholder involvement Alliances with NGOs Corporate Social Responsibility International collaboration

Sustainable Value Framework Tomorrow Internal Strategy: Sustainable Technology Strategy: Sustainable Development Develop sustainable competencies of the future Create a shared roadmap for meeting unmet needs Corporate Payoff: Innovation & repositioning Corporate Payoff: Growth path Strategy: Eco-efficiency Strategy: Product Stewardship External Minimize waste & emissions Integrate stakeholder views Into business processes Corporate Payoff: Cost & risk reduction Corporate Payoff: Reputation and legitimacy Today Source: Hart, Capitalism at the Crossroads

Sustainability Framework Tomorrow Biomimicry q Renewable energy q Clean technology q Internal q q q Pollution prevention Waste reduction Environmental Mgt ISO 14001 Risk management End of pipe Triple-bottom line q Sustainable development q Urban reinvestment q Brownfield development q External q q q Today Life-cycle management Design for environment Closed-loop supply chain Dematerialization Cradle to cradle

Flow of Course Fundamentals Eco-efficiency Product Stewardship Sustainability Strategy Environmental Impact Pollution Prevention Design for Recovery Alliances and Communication The Role of Companies Waste Reduction Selling Services Product Differentiation Core Dilemma: Tragedy of the Commons ISO 14000 Extended Product Responsibility Corporate Social Responsibility Commercial Returns Sustainable Development The Role of Legislation Life-cycle Analysis Risk Mitigation

Concepts q. A historical perspective q Framework to classify sustainability initiatives q The limits of the win-win argument q The limits of the shareholder value argument

Suggested Readings q Carson, Silent Spring q Hart, Capitalism at the Crossroads q Elkington, Cannibals with Forks q Frankel, In Earth’s Company