44. Business and the Environment

Issues relate to pollution, global warming, sustainable development. Businesses today are making more effort to measure and publicise their performance, as it is a growing concern to many stakeholders.
Introduction: The environment acts as a external constraint. The importance has grown in virtually every developed and developing country. Remains imperfect.
The environmental issues affecting business
1. Pollution: As societies become wealthier, consumers start to think less about money and more about their quality of life. -Voters put pressure on government. - Firms don't want bad publicity.
2. Recycling: The extraction of natural raw materials is expensive and often environmentally damaging. Higher levels of recycling can reduce the need to extract more. Reduces waste material. (recycling logo)
3. Sustainable development: Resources such as oil, coal and wood may run out. Businesses now try to ensure they use replaceable natural resources.
4. Global warming/ Climate change: caused by excessive production of carbon dioxide. Largely comes from burning fossil fuels (coal,oil) to produce electricity. 'Carbon footprint'.
International environmental standards: 1997, 176 of worlds gov's gathered - Kyoto Protocol. International Standards Organisation (ISO) - environmental cerificate (ISO 14001) - manufacturing.
Environmental auditing: An independent check on the pollution emission levels, wastage levels and recycling practices of a firm. If results are published businesses may invest more into ways to improve these. However, it is no longer a legal obligation.
The environment and marketing: Many firms use environmental friendliness as a marketing tool. Good reputation -> positive encouragement to certain consumers to choose one brand over another.
1. If a firm is successful, advantages: increased sales, stronger brand loyalty, charge premium prices.
2. However, important to remember that stronger reaction to those who damage the environment. Bad publicity -> significant marketing problems
The environment and production:
1. MATERIALS used may be finite (limited supply) i.e. oil. Others replaceable i.e. wood (sustainable). Often finite source is cheaper (plastic).
2. PROCESSES used to manufacture products may be more/less harmful to environment. Energy -> oil and coal -> finite sources. Burning -> generates harmful emissions. Wind power is more environmentally friendly, but expensive.
3. DIRECT harmful POLLUTION emissions cause immediate environmental damage. (Result of accident?)

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44. Business and the Environment

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