Business Challenges

Public Pressure
Customer Demand
Global Environmental Competitiveness
Ethical and Political Imperatives

 

Public Pressure [Back to Top]

The Ground Swell of Environmentalism

We are witnessing a level of grass-roots environmental action without precedent. Communities across the world are more conscious than ever before of local environmental problems. In the United States, communities are responding to such problems in both positive and negative ways. They are engaged in recycling programs, environmental education, land and marine conservation, tree plantings, and wildlife restoration.

At the same time, an aggressive "not in my backyard" (NIMBY) attitude has led more than 7,000 communities to resist local development of undesirable facilities. It is nearly impossible to get permission to build new landfills. There is widespread opposition to hazardous waste incinerators. Communities frequently resist even job-creating new industry, urban development, and highways.

Publics around the world are aware of environmental problems and business responsibility for them. A survey done by the Gallup International Institute in 1992 showed wide agreement that the world environment is in a fairly or very bad state and support for environmental protection over economic growth.

Business corporations, the main engines of industrial growth, face real pressures to respond to these environmental concerns. Customers are demanding safer and cleaner production facilities and waste-recycling programs. Employees are demanding safer and healthier work conditions. Governments are legislating thousands of environmental protection measures each year. Membership in environmental conservation groups, such as the World Wildlife Federation, the Sierra Club, and Greenpeace International, has more than doubled in the past decade. And the media are giving strong voice to these demands.

The broad awareness of the seriousness of environmental problems has prompted corporate action. Many companies are introducing internal programs to make themselves more environmentally responsive, and to development pro-environment attitudes, values, and postures within the firm.

The Green Political Imperative

The ethical imperative depends on voluntary acceptance of responsibility by corporations. The political imperative pressures companies to be environmentally responsible. the past decade has witnessed a dramatic rise in political pressure on corporations to address environmental problems.

In the United States alone, there were thousands of environmental regulations enacted at the local, state, and federal levels. Ironically, this was during the conservative Reagan and Bush administrations, which promised "to get the government off the backs of the people." However, improved administrative systems for monitoring and implementing policies did not accompany the increase in regulation.

The rise of regulation can be attributed to the mainstreaming of reform environmentalism. It is no longer a movement at the margin of society; it is now a concern of the middle classes. The middle classes are moving toward voluntary simplicity involving less material consumption, a slower pace, harmonious relations of people to nature, and an orientation to family life. Decentralization, independent environmental movements have emerged to give voice to these values. In addition, globalization of environmental problems has led to widespread sharing of environmental concerns. These factors make environmental politics permanent, ubiquitous, and resilient.

The rise of radical environmentalism has added fuel to the political fire. Elections at all levels increasingly involve environmental issues, linked to the traditionally important issues of the economy, defense, social programs, and foreign policy.

Public concern is both positive and negative. More and more people are involved in community waste recycling programs, use of environmental friendly products and services, and energy conservation. On the other hand, the NIMBY ("not in my back yard") phenomenon is changing local politics in fundamental ways. Before Three Mile Island and Love Canal, the public trusted the government and corporations to deal with technological risks, presuming that these institutions had enough technological expertise to protect them. But these events showed that the public was not safe.

Also, corporate and government administrative institutions have progressively become more complex and inaccessible, motivating people to take an active role in local risk decisions. So people started to involve themselves in protecting their communities, instead of relying on governments and corporations. Now communities around the country seek control over technological risks to the environment.

Outside the United States, the green political movement is even more noticeable. In Europe, green parties made significant gains in the past two decades. In Germany, Norway, and Denmark, green parties are now a national force. In these and other countries, major political parties have developed strong environmental platforms. Sometimes these platforms are only of rhetorical and symbolic value. In other cases they are not practical in their goals. Nonetheless, concern for ecology is now a very potent variable in electoral politics here and overseas.

The unification of European markets in 1992 has brought uniform environmental, safety, and health standards to the member countries. The guiding principal for these standards is prevention of further environmental degradation. Articles 100A and 130T of the Single European Act define the minimum standards. They are both more stringent and more comprehensive than existing standards, even in nations that are environmental leaders. They also allow individual member states to adopt, voluntarily, standards that are even more stringent.

The November 1989 report by the Community Environment Ministers entitled "1992, The Environmental Dimension," has gone farther. It articulates four new principals that are reshaping environmental policies of member states:

  1. Make the polluter pay.
  2. Delegate decision-making to the most local level of political authority.
  3. Take economic efficiency and cost effectiveness into account.
  4. Be legally efficient, that is, use readily enforceable legal instruments.

Environmental sentiment in Japan is also on the rise. Japan is home to some of the worse environmental disasters: the Minamata mercury poisonings and congestion and air pollution in Tokyo are just two examples. And the world environmental community has criticized Japanese industries for drift-net fishing, ruthless cutting of rain forests, and trading in ivory and turtle shells.

However, two factors have slowed environmental progress in Japan. First, powerful business forces have stalled regulation. Second, much of the environmental damage caused by Japanese industrial intersects occurs outside Japan: deforestation in Asia and South America, overfishing in international waters, and killing elephants in Africa.

Since the breakdown of Communism, the opening up of the former Soviet Union and its Eastern European satellites has revealed an environmental nightmare. This region suffers tremendous pollution and environmental degradation, especially near industrial sites. These problems are far greater than any encountered in the industrialized West. Former Soviet leader Mikhail Gorbachev was the first to acknowledge environmental problems and the need to deal with them urgently. Since his departure in 1990, and the ensuing economic and political confusion, the environment has again taken a low priority on the political agenda.

However, the environment is now an important element in international relations, and many treaties are concerned with the cross-national aspects of environmental problems. These include the Convention on International Trade in Endangered Species, the 1987 Montreal Treaty on Substances That Deplete the Ozone Layer, the 1988 Protocol on Nitrous Oxide, the 1989 Basel Convention on Control of Transboundary Movements of Hazardous Wastes, and the World Industry Conferences on Environmental Management (WICEM).

The United Nations Conference on Environmental Development, held in July 1992 in Rio de Janeiro, Brazil, created the most comprehensive international environmental agreements. These include treaties for controlling global warming, ozone depletion, toxic waste export, deforestation, desertification, food security, and population control. These treaties will lead to establishing new laws, environmental programs, research, and organizations.

The conference also ratified the business environmental charter and put hundreds of new sustainable development programs on the world political agenda. The first environmental conference in 1972 led to the setting up of environmental protection agencies and laws in dozens of countries. Similarly, this conference will further expand national and international commitments to the environment.

There are significant non-market forces in place worldwide, pushing corporations to be ecologically responsible. The environmental movement has now developed strong political and social allies in local cultures. Environmentalism is not likely to disappear. It will be a permanent part of the economic and social landscape of the future.

Benefits of Corporate Greening

  1. Can drive down operating costs by exploiting ecological efficiencies. By reducing waste, conserving energy, reusing materials, and addressing life-cycle costs, companies can make financial gains.
  1. Can help create competitive advantage, and earn the loyalty of customers looking for eco-friendly products, packaging, and management practices.
  1. Can create unique and inimitable environmental strategies, thus distinguishing companies and making them into environmental leaders.
  1. Can help companies expand in global markets.
  1. Is good for public relations and corporate image. It can help companies establish a social presence in markets, and gain social legitimacy.
  1. Can reduce long-term environmental risks associated with depletion of resources, fluctuations in energy costs, product liabilities, and pollution and waste management.
  1. Benefits the ecosystem and the environment of communities in which companies operate. It can result in reduced community expenses for the health effects of industrial pollution.
  1. Is ethically desirable and politically unavoidable.
  1. Helps companies get ahead of the regulatory curve. It may even allow industry to preempt regulation.

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Customer Demand [Back to Top]

The Environmental Challenge Facing Corporations

The environmental challenge corporations face today is their complete changeover to forms that can be sustained by the environment. Corporations must seriously address the issues of safety, health, and environmental protection. Such greening will affect nearly all aspects of a company. It involves creating a new vision of what the company is and wants to be.

Environmental, safety, and health concerns have already spawned many functional tasks within companies, such as are shown in the table below.

While the list in the table look impressive, they present several problems. First, many corporations do only a few of these tasks. Others do most of these tasks, but in a fragmented way and without coordination. Different groups located in different parts of the company do each task. Third, most companies do these tasks with a "regulatory compliance" mentality. They do the minimum necessary to satisfy regulations.

This compliance attitude and fragmentation misses a major opportunity for parlaying environmental tasks for competitive advantage. If organized as a comprehensive environmental strategy, these tasks can save costs, enhance revenues and profits, and provide competitive advantage.

Corporations need to:

Create new missions, goals and strategies.

Conserve such inputs as energy and raw materials.

Develop environmentally friendly products and packaging.

Develop more efficient and cleaner production systems.

Minimize and manage wastes and polluting emissions.

Develop green organizational structures, systems, cultures, and competencies.

It's not going to be easy. Managers face formidable barriers to greening their companies--regulatory compliances, structural roadblocks, limits on resources, lack of information, inadequate technologies, and no conceptual frameworks to help them achieve their greening goals. Managers also face the contradictory pressures of managing short-term profitability while striving for long-term environmental performance.

Few upper level managers in U.S. companies are experienced or trained in dealing with environmental problems. This is not surprising. even until 1990, not a single major business school in the United States offered a comprehensive course in environmental management. Today, finally, several leading businesses schools are initiating such courses.

Corporate Environmental Tasks

Environmental protection: Deals with reducing environmentally harmful emissions and effluents from industrial facilities. Also involves energy and materials conservation.
Waste management: Identification and remediation of hazardous waste sites. Programs for minimizing waste generation.
Product integrity: Programs for ensuring safety over the entire life of the product, from production to disposal.
Worker health: Programs for ensuring healthy working conditions, compliance with occupational safety and health laws, monitoring health hazards.
Media and government relations: Managing relationships with the media and regulatory bodies.
Risk, liability, and insurance management: Programs for minimizing technological and environmental risks. Minimizing corporate liability from product injuries and technological hazards.
Crisis management: Programs for preventing incidents that could trigger corporate crises. Developing corporate capability for managing crises.
Public and community relations: Communicating with external stakeholders and public on environmental and health issues. Coordinating emergency plans with communities.

 

Environment - Related Tasks

Industrial safety: Deals with Making industrial facilities safe for workers and the public.
Industrial security: Programs for ensuring security of corporate assets. Loss minimization programs.
Product development: New product research and development, testing and launch.
Marketing: Product planning, sales, pricing, distribution, and promotion.
Total quality management: Programs for ensuring product quality.

Global Markets

A third business reason for becoming environmentally responsive lies on the demographics of global markets. A significant part of consumer demand in the future will come from the developing world. Three-fourths of world population currently lives in these countries; by the year 2030, nearly 84 percent of world population will. Many such countries have a significant middle class with sizeable purchasing power - between 300 million and 500 million worldwide.

Multinational companies are eager to penetrate these vast markets. In the past this meant simply transferring existing products and technologies to other countries. But it is no longer ecologically practical to push Western consumerist lifestyles and products on developing countries. Instead, the products, technologies, and production and distribution systems must be compatible with their social aspirations, economic conditions, and ecological resources.

The history of technology transfer to developing countries is full of economic and ecological mistakes. Often the products/technologies were obsolete "sunset" technologies that were being dumped on the developing world. For example, until the mid-1970s, Western computer companies routinely passed off outdated computers to the Third World. Even as late as 1985, they were selling them punch-card computer systems (a 30-year old technology).

There was little consideration given to environmental influences of transferred technologies. The World Bank and other international financial institutions financed many economic development projects that had disastrous environmental consequences. Companies exported hazardous products banned in the West to developing countries with weak regulations. These products included asbestos, DDT pesticides, untested drugs, and hazardous wastes, along with outdated production facilities.

In 1984, several Western governments signed the Montreal Protocol on ozone depletion. This treaty called for a world-wide phaseout of CFCs by the year 2000. The same year, Western multinational companies were selling CFC technology to developing countries.

Such experiences have made developing countries suspicious. They are now realizing that economic development and technology transfer bring along environmental problems. They are demanding state-of-the-art technologies, which are often more hazardous and complex. Simultaneously, their large and growing populations have caused severe environmental degradation. This puts new burdens of managing technological and environmental risks in foreign environments.

The accident at Union Carbide's pesticide plant in Bhopal, India, is one example. The use of infant formula in developing countries is another. It caused tremendous harm. The Formula itself was safe and widely used in industrialized countries. When marketed aggressively in Africa, it caused the deaths and malnutrition of millions of babies. Mothers in these countries used impure water, or diluted it too much to save money, or reused left-over formula. Some users could not read labels and instructions on the packages because they were illiterate.

Multinational companies that hope to succeed in global markets thus will need to develop local institutional capacity to manage the environmental and health risks associated with their technologies. This includes design of environmentally appropriate products and packaging for different local markets. The companies must educate consumers about ecologically safe product use and disposal. They must establish international product stewardship and global standards for pollution control, industrial safety, and environmental management. And they need to develop new environmental management. And they need to develop new environmental impact assessment techniques for foreign environments, and incorporate environmental and health costs into their business calculations.

The payoffs of developing this sensitivity can be enormous. Companies that show concern for environmental and health issues will have a special competitive edge in developing world markets. Merck & Co., Inc., provides an example of how such concerns can translate into business opportunity. Being a pharmaceutical company, it has the "human environment" as its main concern.

Over the years Merck has donated many medicines and pharmaceutical technologies to developing countries. It gave the technology for making antibiotics to Japan in 1950. This enabled the Japanese to cope with infectious diseases in the aftermath of World War II. Merck also gave technology for manufacturing antiseptics to China. Now it is donating medicine to cure river blindness to African countries, where this disease is a scourge to millions of people.

Because of these efforts Merck is a global company today. It has strong presence in most developing countries, which are likely to become huge pharmaceutical markets incoming years.

We should not underestimate the economic benefits that follow such benevolent actions. They offer goodwill, good public image, and more. They reflect enlightened self-interest and good citizenship. A company eventually reaps business benefits from these acts. In the short run, it gets modest tax benefits. In the long run, it creates a positive climate and goodwill in foreign countries. This goodwill eases the company's entry into new markets. It creates a positive public image of the company. It makes the company's presence in foreign countries more acceptable, even welcome.

Purely from a business point of view, greening of corporations makes sense. Greening is compatible with quality management and can enable companies to gain competitive advantage. This can help companies enter the huge evolving markets in developing countries.

Environmental efforts do cost money. However, even in environmentally progressive companies, they do not exceed 1 percent of sales, on the average. Very often environmental costs are recoverable. Many companies, such as 3M and Dow Chemical, have made greening financially self-sustaining. In short, if done right, greening can be a good financial investment.

Greening Global Operations

  1. Develop products, packaging, and production systems suited to each country's natural resource base.
  1. Choose the location of production facilities to minimize transportation, and maximize the use of renewable natural resources.
  1. Choose energy and production technologies that make optimal use of local natural resources and are inherently less polluting. Use solar energy where feasible.
  1. Implement uniform environmental, safety, and health standards in all company operations throughout the world. When internal standards differ from local country standards, use the higher standard.
  1. Transfer best environmental technologies and management practices to all company operations worldwide. Share these technologies with industries in developing countries.
  1. In developing countries with weak industrial infrastructures, invest in building the infrastructure to support your own facility. this may include installing your own electric generators, water pumps, sewage system, housing for employees, and buying up land around the plant to maintain a safety zone.

Techno-Environmental Risk Management in Post-Industrial Society

The technological and industrial progress of the past two centuries has truly been miraculous. In advanced industrial societies it has brought unimagined advantages. This industrial cornucopia has been the source of lavish modern benefits and conveniences. technological advancement has revolutionized agriculture, medicine, transportation, and communication. It has raised life expectancy and standards of living worldwide. It has promised unending and ever-expanding prosperity for all.

This technological optimism of the past is now being tempered. The environmental degradation that technology has brought is raising basic concerns about industrial growth. The environmental risks unleashed by this growth have become acute enough to warrant world attention.

For corporations, the key issue is to understand the relationship of wealth to risk. Risks are a by-product of producing wealth. This was true even in pre-industrial societies, although then the risks were very small. Economic activities were smaller in scale and did not use broadly hazardous technologies. In industrial societies, risks were viewed as side effects or "externalities" of production. Governments were responsible for dealing with them. And the public, via government, imposed taxes that absorbed the costs of dealing with them.

In the current post-industrial society, the relationship of wealth and risk is reversed. The risks are greater, more harmful, geographically more pervasive, longer term, and more difficult to measure. They are often unknown, and easily cross national and other social boundaries, having a negative impact on the quality of life in communities all over the world. Risks are a key aspect of just about everything we do. As Ulrich Beck has said, the post-industrial society is a "risk society" - a society in which all economic and social activity is accomplished by significant risks.

The nature of modern risks is different from the risks of earlier eras. Pre-industrial societies risked disease, pestilence, and natural disasters. Blame for these things could be externalized to God or nature. Modern risks are the result of human decisions - economic, social, technological, and organizational.

Environmental and technological risks are created unintentionally, by organizations and institutions that are supposed to control and manage them. But traditional approaches to risk management have failed. And the people affected by these failures must then try to deal with large, impersonal, and often inaccessible corporations and government agencies. They are frustrated by their limited access and their inability to influence risk-creating decisions. This has made them skeptical about such risk-related institutions as corporations, government agencies, and even scientific bodies.

The public's negative perception of technological risks to the environment is heightened by frequent high-profile industrial accidents such as the Exxon Valdez oil spill, and the Bhopal chemical-plant disaster. These perceptions are not always consistent with the actual damage done. For example, 10 times the oil spill spilled by the Exxon Valdez is poured down sewers and into waterways each year. The public does not complain about this. Yet, the mega-accidents act as powerful symbols of technological risk. They are lightning rods that focus the public's negative perceptions about technology, and elicit resistance to technological expansion.

Technological and environmental risks pose new challenges for corporate managers and public policy officials. It is not sufficient that corporations only optimize such production variables as profits, productivity, jobs, and growth. Corporations must also manage such risk variables as product harm, pollution, waste, resources, technological hazards, and worker and public safety. This is not just an expansion of the management agenda. As pointed out by Vice President Al Gore, it implies shifting the focus of management from production to risk.

An important reason for the emergence of risk as a central variable in modernization is the ecologically unsustainable pattern of industrialization that the world has pursued over the past century. Energy-intensive, resource-intensive, and pollution-creating industrialization has brought many ecosystems to the brink of crisis.

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Global Environmental Competitiveness [Back to Top]

Make environmental considerations and concerns part of any decision you make, right from the beginning. Don't think of it as something extra you throw in the pot. - Richard Clarke, CEO, Pacific Gas & Electric

Avoiding environmental incidents remains the single greatest imperative facing industry today. - Edgar Woolard, CEO, Dupont

Environmentalism will be the next major political idea, just as conservatism and liberalism have been in the past. - Edith Weiner, Partner, Weinter, Edrich & Brown, Consultants

The 1990s will be the decade of the environment. - President, Petroleum Marketers Association

Listen to these voices. They are not the chief druids of the environmental movement. They are corporate leaders exhorting corporations to take environmental issues seriously. They see environmental responsiveness as an integral part of business decision-making and as something that will restructure business and society in the coming decade. They see it as a business imperative.

Corporations that fulfill this imperative will be able to gain competitive advantage; attract and keep customers; reduce exposure to technological risk and liability; minimize regulatory actions against them; satisfy multiple stakeholders; and gain legitimacy. Greening is thus good business policy.

This section looks at the business benefits of greening. It shows that greening can help companies in total quality management, in gaining competitive advantage and in entering global markets.

Total Quality Management

Total quality management is at center stage in the business world, led by the Japanese. Today, in many industries, Japanese companies have been able to outsell their competitors world-wide because of quality. Their success has prompted a broad-based movement in total quality management in the United States and around the world.

Total quality management is a way of thinking and a set of management techniques. Its primary objective is quality, not profits. It assesses product and production process quality and seeks continuous improvements in them. It promotes the values and attitudes of quality enhancement. It considers customers, suppliers, and other business associates as partners in quality improvement.

The values underlying quality management and environmental management are mutually reinforcing, so they can be combined to support each other. This compatibility resolves a vexing problem of corporate environmentalism - getting workers to believe in it. But employees convinced about one can easily be convinced about the other.

Some companies combine quality management with environmental management to create total quality environmental management (TQEM). TQEM encourages auditing corporate environmental and safety performance periodically to assess its status. It focuses on improving quality of the work environment and the broader natural environment, emphasizing pollution prevention, waste reduction, and getting things done right the first time (versus cleaning up afterwards).

Procter & Gamble has built its entire environment, energy, and safety program on the idea of TQEM. Through membership in Global Environmental Management Initiative (GEMI), companies such as AT&T, Amoco, Browning Ferris, Boeing, Proctor & Gamble, and Johnson and Johnson are improving both environmental and quality performance. GEMI has successfully created unified quality/environment strategies and promotes a "worldwide business ethic for environmental management and sustainable development."

IBM's Manassas, Virginia, semiconductor plant uses TQEM to deal with regulatory reporting. There are 15,000 pages of state and federal environmental regulations covering the company's activities. The company assigns to individuals and groups the responsibility for implementing each regulation. It monitors progress on implementation. It analyzes reports using quality management techniques and enhances the efficiency of regulatory reporting using a computerized data base. As a result, the plant was able to speed up filing of regulatory reports.

Florida Power and Light Company made dramatic gains in environmental management, using the quality management techniques of cause-and-effect fishbone diagrams and Pareto charts to identify the main shortcomings in its environmental programs. One was employees' lack of understanding of hazardous-waste-handling processes, so the company initiated annual environmental training of employees, and changed waste-handling procedures and labeling programs. By doing this, it reduced the number of annual citations for environmental violations from 32 in 1985, to 21 in 1986, to two in 1990.

Global Environmental Management Initiative (GEMI)

This Washington, DC-based organization is a cooperative effort of the member companies listed below. Its objective is to promote the implementation of the Business Charter for Sustainable Development developed by the International Chamber of Commerce. It has designed an environmental self-assessment program to aid companies in quantifying and tracking their progress on the 16 principals of the charter. It conducts conferences and workshops for corporate managers to share best environmental management practices.

GEMI Members

Allied-Signal - Amoco Corporation - AT&T - The Boeing Company - Browning-Ferris Industries - Digital Equipment Corporation - The Dow Chemical Company - Duke Power Company - Eastman Kodak - Dupont - Florida Power and Light - ICI Americas - Merck & Co. - Occidental Petroleum - Proctor & Gamble - The Southern Company - Tenneco - Union Carbide Corporation - USX Corporation - W.R. Grace & Co.

In 1985, Dupont decided to cut its manufacturing waste 35 percent by technical means. This strategy turned out to be very time-consuming. So, in 1987, it added waste reduction to the agenda of the company's quality management teams. They applied the systematic analysis of quality management to the company's waste problems, leading to dramatic gains. One Dupont plastics plant saved 15 million pounds of plastic waste a year by making only modest changes in production and shipping procedures.

American companies are now implementing quality management widely. Environmental programs can easily piggyback on them. The benefits of quality management also stand to gain. Improving the quality of the work environment and making working conditions safe contribute to worker satisfaction and to better product and process quality. Similarly, improving the natural environment increases community and customer satisfaction. This strengthens community and customer support for businesses.

Green Competitive Advantage

The second business reason for greening corporations is competitive advantage. There are many sources of competitive advantage for companies - low cost, product differentiation, and satisfying market-niche demands are some. Each of these sources of competitive advantage can be given an environmental twist.

3M's "Pollution Prevention Pays" program illustrates the potential for cutting costs through environmental programs. In its first 15 years - 1975 to 1989 - this program established 2,511 pollution prevention projects and cut pollution per unit of production by half. It prevented discharge of more than 500,000 tons of pollutants and saved the company $500 million.

Product differentiation strategies can use greening. Loblaw International Merchants, Proctor & Gamble, and The Limited are differentiating their products for environmentally conscious customers. Other companies such as The Body Shop and Seventh Generation sell only green products, focusing on niches of environmentally sensitive customers in their industries. Still other companies are producing pollution control equipment, such as gas scrubbers, air filters, waste incinerators, sewage treatment plants, and bioremediation systems.

Private-sector expenditures on environmental protection equipment in the United States now exceed $50 billion a year. The global demand for environmentally friendly products is more than $200 billion a year, and growing exponentially. Such demands and opportunities have encouraged companies to make fundamental product and packaging changes to remain competitive.

For example, by replacing ozone-depleting chlorofluoro-carbons (CFCs) with safer alternatives, Dupont has maintained its competitive leadership in this industry segment. The Body Shop has gained competitive edge over giant cosmetic companies such as Unilever, Proctor & Gamble, and Revlon by pioneering an "all natural" line of cosmetics and body care products. In 1991, McDonald's abandoned Styrofoam clamshell hamburger packaging in response to consumer demands and to overcome Burger King's paper packaging.

Five years ago the green consumer segment was a tiny market niche. Today it is becoming a mainstream trend in many consumer-goods industries. Customers are demanding green products and packaging more friendly to the environment. Some consumers are willing to pay higher prices for environmentally sound products, and they are seeking more information about contents, use, disposal, and recyclability. As a result, hundreds of new and reformulated green consumer guides to evaluate them and organizations like Green Seal and Blue Angel to certify them. Selling green consumer products products clearly presents a strategic opportunity.

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Ethical and Political Imperatives [Back to Top]

Green Eggs and Ham
I do not like it, Uncle Sam
Do something quick, about this scam
It's all those green products, damn.
One more hype, and I'll upchuck and scram,
I do not like it, Uncle Sam,
I do not like it, Uncle Sam.
 
Companies are selling green eggs and ham,
They sell "green" wherever they can.
Green detergents, clothing, cars, green Van,
Green mousse for the oily-hairdo man,
Dah'ling, now you can get a "green" tan.
Natural whole wheat, oatmeal and bran,
The entire country is on a green plan.
 
I do not like green eggs and ham.
I do not like them Uncle Sam.
I do not believe eggs can be green,
They can be white, off-white, and cream.
But Green? I've never heard of that.
And that too, without cholesterol and fat?
 
I tell you, I smell a rat.
Would I eat them on a train?
Would I eat them with fried brain?
Would I like them well done?
They tell me "Try them, they are such fun."
Not on a train,
Not with fried brain,
Not well done,
NO, they are not fun.
 
Green eggs? That's too weird you see.
Green ham? What kind of gourmet would I be?
I will not eat them, not one grain,
I will not eat them, I want to stay sane.
 
Shouldn't someone regulate green claims,
Stop these nonsensical consumer games.
Stop charlatans accumulating wealth and fame,
Who should unsuspecting consumers blame?
Come and rescue us Uncle Sam,
From advertisers' clatter and calm.
Al Gore promised a balanced earth,
Of promises we have no dearth,
If we are elected, claimed Bill and he,
Ozone protection we guarantee,
Protect rain forests, biodiversity,
Even a Global Warming treaty,
But now where is your action program,
I do not see it Uncle Sam,
I do not like it Uncle Sam.

Ethics and morality are relative. They depend on beliefs, values, and cuatoms of individuals, groups, regions, and nations. They vary by race, class, caste, culture, ethnicity, religion, and ideology. Then what case can we make for all corporations to pursue an "environmental ethic"? What is the ethical imperative that faces corporations concerning the environment?

The Ethics of Greening

Environmental ethics depend on how we understand the relationship of humans to nature and how we implement that understanding through our organizations and institutions. Historically, most world religions have placed humans at the center of this relationship (anthropocentrism). This bias views humans as separate from nature, and superior to it. Nature exists for the sake of human welfare. Humans arrogate to themselves an unquestionable right to subdue, use, and exploit nature without regard for any limits. Nature has no right to exist for its own sake.

This view has been particularly true for Christianity, the dominant religion of the industrialized West and the value base of modern capitalism. Lyn white (1967) has persuasively argued that Christianity emphasizes the dominion of nature by man. It preaches an ethic of human relations that subordinates the natural world. It sanctions an exploitative environmental ethic.

In the pre-industrial world this belief had functional value. It gave impetus for humans to protect themselves from natural hazards and survive them. It encouraged them to use natural resources to build communities and establish civilizations.

With the arrival of industrial technologies, humans developed immense power and capacity to exploit nature and consume it. As a result, humans have consumed more natural resources in the last 200 years than in the previous million years. This rapid exploitation is altering the earth's natural equilibrium.

Anthropocentrism is now being questioned within Christianity, and within other major religions, too. A new ecological morality is emerging. A new critical mood is on the rise in world religions, questioning the old human-centered world views and acknowledging the rights and inevitability of nature to exist on its own.

Questioning the old values leads us to new visions of ecojustice. People are beginning to see the unfairness of arrogating all rights to humans, and none to nature. They perceive this as unfair to other species, and not in the best interest of humans. Animal-rights protection groups have highlighted the plight of animals. Cruelty to animals caused by scientific research, fur trapping, wildlife hunting and poaching, and loss of habitats are now moral issues.

Eco-justice is also concerned with social justice for "natural resource communities," communities that derive their substance from the natural resources around them. Millions of people (indigenous peoples, tribal people, the rural poor, for example) depend on local natural resources for drinking water and crop irrigation. They get food, medicinal herbs, wood for fuel and shelter materials from local rivers, lakes, forests, and other common resources. Destroying nature destroys their sustenance.

This destruction is done by industrial activities (mining, manufacturing, and mechanized farming) and development projects (dams, roads, and urbanization). Similarly, imposing a market economy on natural resource communities limits their ability to sustain themselves. It forces rural poor to move to crowded urban areas. the gross injustice this creates has led to major conflicts over environmentally harmful development projects.

Even if humans do not respect the rights of nature, it will continue to exist, despite exploitation. However, it may become more hostile to human needs. By recognizing the rights of nature, humans can create powerful laws for protecting nature and preventing a few ruthless people from exploiting its resources, and thereby destroying it for all.

The translations of moral judgements to corporate responsibilities for preservation of nature is a complex issue. Corporations have other social responsibilities. Among other things, they are responsible for earning a reasonable return for investors, creating jobs, ensuring community stability, and providing safe products.

On the surface, some of these social responsibilities may conflict with corporate ecological concerns. Examples are the "Spotted Owl versus logging jobs" in the Pacific Northwest, and the "Snail Darter versus fishing business" in the South. People perceive these situations as conflicts because they are cast in polarizing terms. They position ecological preservation against jobs and business interests.

A narrow view of these conflicts leads to partisan solutions and compromises driven by political considerations. Nature or communities win or lose, depending on the relative political power of environmental groups and industry. The ethical question these conflicts raise is not whether corporations should choose between protecting human interests or ecological ones. Both interests are important and deserve consideration. The central issue here is for corporations to invent a broader souci-ecological ethic.

This broader ethic would apply to all decisions that involve techno-environmental hazards. Decisions would be made on the basis of ecological sustainability, long-term perspective, social participation, transparency, and a longer time frame. Corporate decision processes involving techno-environmental risks should be made as transparent as possible without compromising competitive information. transparency of decision processes helps in monitoring them, and keeps all parties honest. Extending the time frame of a solution allocates the costs for ecological projects over longer time horizons.

Broad social participation in ecologically sensitive corporate decisions allows more socially acceptable decisions. This participation allows more socially acceptable decisions. This participation must be genuine. It must incorporate those groups that will bear risks of technological decisions. Such participation is encouraged through Technology Assessment programs in Europe, and the right-to-know laws (SARA Title III) in the United States. These are efforts to inform communities and solicit their participation in local technological risk management.

How well corporations fulfill their ecological responsibility will determine their legitimacy. Public support for business enterprise as a whole hinges on fulfilling this responsibility. By greening, corporations can meet their moral obligations, augment their legitimacy, and burnish their public image.

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