Chapter 10

Ecology and Sustainable

Development in Global
Business
McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Ch. 10: Key Learning Objectives

Defining sustainable development
Understanding the obstacles to developing the worlds
economy to meet the needs of the present without
hurting future generations
Assessing the major threats to the Earths ecosystem
Recognizing the ways in which population growth,
inequality, and industrialization have accelerated the
worlds ecological crisis
Examining common environmental issues that are shared
by all nations
Analyzing the steps the global business community can
take to reduce ecological damage and promote
sustainable development
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Ecological Challenges
Ecology
The study of how living things plants and animals interact
with one another in an ecosystem
By some measures the demands of human society have
already exceeded the carrying capacity of the earths
ecosystem

Global Commons
A commons is a shared resource that a group of people uses
collectively
Paradox that if all individuals maximize their own advantage
in short term, commons will be destroyed

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Ecological Challenges
Preserving our common ecosystem and assuring its
continued use is a new imperative for business,
government, and society
Sustainable development
Development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs
Protecting the environment will require economic
development
Economic development must be accomplished sustainably
Sustainable development is an appealing idea but also a
controversial one
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Threats to the Earths Ecosystem

Sustainable development requires that human society use
natural resources at a rate that can be continued over an
indefinite period
Renewable resources (water, forests) can be naturally
replenished
Nonrenewable resources (fossils fuels like oil, coal) once used
are gone forever

Examples of natural resources that are now being

depleted or polluted at well above sustainable rates
Water resources
Fossil fuels
Arable land
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Forces of Change
Accelerating Ecological Crisis
Pressure on the earths resource base is
becoming increasingly severe
Three critical factors have combined to accelerate
the ecological crisis facing the world community and
to make sustainable development more difficult

Population explosion
World income inequality
Rapid industrialization of many developing nations

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Figure 10.1

World Population Growth

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Figure 10.2

World Income Distribution by Deciles

(Tenths) of the Population, 2000

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The Earths Carrying Capacity

The world resource base is essentially finite,
or bounded
Limits to growth hypothesis suggests human
society is overshooting earths carrying
capacity, with drastic consequences if changes
are not made

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The Earths Carrying Capacity

One method of measuring the Earths carrying
capacity, is called the ecological footprint

The amount of land and water a human population

needs to produce the resources it consumes and to
absorb its wastes, given prevailing technology

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How Can Human Society Bring the Earth's

Carrying Capacity Back into Balance?
This is without a doubt one of the great challenges facing
the worlds people. Any solution will require change on
many fronts:
Technological innovation Develop new technologies to
produce energy, food, and other necessities of human life more
efficiently and with less waste
Changing patters of consumption Individuals and
organizations concerned about environmental impact could decide
to consume less or choose less harmful products and services
Getting the prices right Some economists have called for
public policies that impose taxes on environmentally harmful
products or activities
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Global Environmental Issues

Ozone depletion
A bluish gas, composed of three bonded oxygen atoms, that floats in a
thin layer in the stratosphere between 9 and 28 miles above the planet
1974 Scientists chlorofluorocarbons (CFCs) could react with and
destroy ozone
1985 - Scientists discovered a thin spot, or hole, in the ozone layer
over Antarctica
1987 - A group of nations negotiated the Montreal Protocol, agreeing to
cut CFC production, agreement later amended to ban CFCs (This is
an example of world governments coming together to address an
environmental threat)
As of 2009, 195 countries had signed the protocol
The protective layer will gradually recover if regulatory trends continue

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Global Environmental Issues

Global warming
Greenhouse effect occurs when carbon dioxide and other gases
in the atmosphere prevent heat from escaping into space
Since the Industrial Revolution, the amount of greenhouse gases
in the atmosphere has increased by as much as 25%
Caused mainly by the burning of fossil fuels such as oil and
natural gas
If societal emissions of these gases continue to grow
unchecked, the earth could warm by as much as 6.4 degrees
Celsius by 2100

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Figure 10.3

Global Warming

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Causes of Global Warming and Carbon Dioxide

Black carbon
the sooty smoke that is created by the incomplete combustion of
diesel engines and wildfires is the second largest contributor to climate
change, responsible for as much as 18 percent of global warming
Deforestation
Trees and other plants absorb carbon dioxide and remove it from the
atmosphere; therefore cutting down trees contributes to global
warming
Beef production
Methane, a potent greenhouse gas, is produced as a by-product of
the digestion of some animals, including cows
CFCs
Destroy the ozone and are also considered greenhouse gases

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Global Climate Change Initiatives

Kyoto Protocol
Multination agreement in 1997, went in to effect in 2005
Requires industrial nations to reduce greenhouse gas
emissions 5% below 1990 levels
European Union has taken lead on reducing emissions
As of 2006, 161 nations, representing 62% of worlds carbon
emissions, had ratified
U.S. has not ratified, citing harm to U.S. economy

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More Global Environmental Issues

Decline of biodiversity
Refers to the number and variety of species and the range of
their genetic makeup
Scientists estimate that species extinction is occurring at 100
to 1,000 times the normal, background rate due to pollution
and habitat destruction
A major reason for the decline in the earths biodiversity is the
destruction of rain forests
Only half of the original tropical rain forests still stand
Rain forests destruction is ironic because they may have more
economic value standing than cut

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More Global Environmental Issues

Threats to marine ecosystems
Refers to oceans, salt marshes, lagoons, and tidal zones that
border them, as well as diverse communities of life they
support
Salt water covers 70 percent of the earths surface and
supports many species
Key categories of threats to these ecosystems
Fish populations
Coral reefs
Coastal development

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Response of the International Business

Community
World Business Council for Sustainable Development
One of leaders in effort to promote sustainable business practices
Made up of 200 companies representing more than 35 countries
and 20 industries
Goal to encourage high standards of environmental management
and to promote closer cooperation among businesses,
governments, and other organizations concerned with sustainable
development
Promotes eco-efficiency and has documented competitive
advantages for companies
Those that added the most value with the least use of
resources and pollution were more competitive and
environmentally sound
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Voluntary Business Initiatives

Life cycle analysis
Involves collecting information on the lifelong environmental impact of a
product, from extraction of raw material to manufacturing to its
distribution, use, and ultimate disposal

Industrial ecology
Refers to designing factories and distribution systems as if they were selfcontained ecosystems

Extended product responsibility

Companies have a continuing responsibility for the environmental impact
of the products and services, even after they are sold

Carbon neutrality
An organization or individual produces net zero emission of greenhouse
gases; this is usually accomplished by a combination of energy
efficiencies and carbon offsets
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Codes of Environmental Conduct

Some of the leading universal codes include the
following:
Business Charter for Sustainable Development developed by
the International Chamber of Commerce
CERES Principles developed by the Coalition for
Environmentally Responsible Economies
ISO 14000 a series of voluntary standards developed by the
ISO, an international group based in Switzerland

Many executives are championing the idea that

corporations have moral obligations to future generations
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