The role business can play in protecting the environment

The role business can play in protecting the environment “…shall be likened unto a foolish man, which built his house upon the sand.”
(Matthew 7:26, King James Bible)

There can be little doubt that mankind and indeed the whole planet is facing an environmental crisis. Whether that crisis is brought to a head by global warming, ozone depletion, acid rain, tropical deforestation or top soil erosion, remains to be seen. In this essay we will examine the role business is playing in creating this crisis and what it can do to help protect the environment in the future.

Business produces the goods and services that meet our needs, wants and desires. It is this process that has lead to much of the destruction of the environment that has taken place. This damage continues on a daily basis. However, business is not solely to blame for this; governments and consumers must take some of the responsibility. It is governments who regulate the business community both legally and economically and have allowed this environmental destruction to take place. Consumers must accept their share of the blame as it is they who have consented to consume goods and services produced in an environmentally damaging way. That said it is the unique and close relationship between the production process and the environment that places the burden of environmental protection squarely on the shoulders of business.

The manufacture of products and delivery of services for consumption involve necessarily the usage and conversion of raw materials. This process unavoidably produces waste. Indeed the processed product itself is destined to become waste as well. That is the nature of consumer goods; they are purchased, used and replaced. The production of the product will consume most of the resources, but even its utilization and eventual disposal consumes more. There is no escaping the fact that what goes in, must (inevitably) come out as waste. The fact is that resource scarcity and pollution are two sides of the same coin.

It is clear; that our current methods of production are having a seriously adverse affect on the environment. If these processes remain un-checked, the eco-systems, which we all rely on, will eventually be seriously damaged. The message is clear; we must seek out more environmentally sustainable methods of production. Since the Rio Earth Summit in 1992 it has been internationally accepted that the ultimate goal of the UN environmental policy is sustainable production, which is production in harmony with the maintaining of global life support systems. In other words, sustainable production is the process where the consumption of materials and energy are reduced to a level where the ability of the environment to regenerate and assimilate the waste is maintained. This will have to be achieved in the face of a global demand for goods and services by a population which is likely to double in size before it stabilizes. Achieving sustainable production in the light of this demand is an enormous challenge.

What needs to be done is clear. Business has to reduce the environmental cost of production. However, we have not yet seen any radical shift in business practices which will bring about such a reduction. It is difficult for business to deny the need for environmental protection; however its response to the problem seems hap-hazard. At first the business community adopted programs which would simply fine tune their then existing practices. More recently they have been modifying their management techniques more drastically with a view to meeting the challenge head on. It seems to be recognized now that meeting these challenges requires a complete re-think of how business is conducted.

The investments and innovations of business have driven economic growth and satisfied consumer demand but, because of the resources consumed and the side effects of waste and pollution, they have become unfortunately the main contributors to environmental destruction. New techniques and more efficient methods of production need to be found. It is clear now that economic growth without heed to the environmental cost can no longer be the main objective of business; growth without recognition of the environmental cost is unjustifiable. We know that new technologies and processes are not sufficient to meet the demands of the issues at hand. It would also be foolish for us to rely solely or even heavily on the possibility that science and technology will cure the ills of the past and provide us with new streams of growth for the future. Fundamentally there is a need for a change of attitude towards production and consumption, but more importantly there is a need to become ethically aware of the total, comprehensive cost of business, that is not just its economic cost but also its social and environmental costs. We must discover new and innovative ways to organize the business culture within the existing free market economy, under governmental and social regulation while promoting sustainable production and growth for the future.

On a global scale there are conflicts in business as to how this might be achieved. There are those in the emerging economies who protest that the environmental destruction to date has been caused by the developed world. The developed world has been careless and reckless in its treatment of the planet and has benefitted significantly from this negligence, but now that impending disaster has been detected they insist that all economies, including the underdeveloped, must bear the burden for its rectification. Emerging economies argue that they did not cause this problem and as such it is the responsibility of developed economies to take the initial and principal corrective action. This position was recognized by the UN during the Kyoto summit on climate change in 1997.

Under Kyoto, industrialized countries agreed to reduce their collective green house gas emissions by approximately five percent compared to the year nineteen ninety. The main contributors to this reduction will be the European Union together with the United States and Japan. The United Nations agreed to a set of “common but differentiated responsibilities”. The parties agreed that the largest share of historical and current global emissions of greenhouse gases has originated in developed countries. Per capita, emissions in developing countries are still relatively low and the share of global emissions originating in developing countries will grow to meet their social and development needs. Failure to adhere to the protocol will result in a financial fine for the country in breach. (United Nations Framework Convention on Climate Change)

Every developed country attending the conference has ratified this protocol with the exception of the United States of America. They argue that the United States should not be a signatory to the protocol because it did not include binding targets and timetables for developing as well as industrialized nations or “would result in serious harm to the economy of the United States”(U.S. Senate Byrd-Hagel Resolution). The United States President George W. Bush has indicated that he does not intend to ask congress to ratify the protocol, not because he does not support the principles, but because of the exemption granted to China. China is now the world’s largest gross emitter of green house gas and would be able to continue to adopt a “…business as usual” approach if not regulated. He further argues that “… America’s unwillingness to embrace a flawed treaty should not be read by our friends and allies as any abdication of responsibility. To the contrary, my administration is committed to a leadership role on the issue of climate change … Our approach must be consistent with the long-term goal of stabilizing greenhouse gas concentrations in the atmosphere”. (President Bush Discusses Global Climate Change 11th June 2001)

Some argue that the United States failure to ratify the protocol has more to do with the economic cost of ratification rather than with fairness. Conservative estimates indicate a reduction of approximately four percent in the Gross Domestic Product of the United States economy should they ratify and abide by the protocol. Essentially the argument is this, if the treaty is ratified, the pollution intensive jobs in the developed economies will be relocated to emerging economies because the cost of doing business there will be less.

It is essential that the problem of climate change is addressed on a global scale by business. When the Kyoto protocol is analyzed objectively, it can be seen to have many far reaching implications for the businesses of developed countries. As long as consumers demand cheap, affordable goods, business will endeavor to provide them. If this requires the relocation of production to emerging economies then business will do that, as they have responsibilities to their share holders to optimize profits and dividends. Unless society demands that business be responsible for environmentally friendly, sustainable production and is willing to accept the extra cost, then, disregarding the social and environmental costs, production will be relocated to the lowest economic cost countries. One can conclude that it is up to business to sort out the problem of pollution, but that business is anchored by consumer demand.