geringer_ch4A.pptx

Sustainability and Natural
Resources

Module 4
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Learning Objectives
LO 4-1 Describe environmental sustainability and its potential influence on business.
LO 4-2 Describe frameworks for sustainability.
LO 4-3 Summarize ways to measure sustainability achievements.
LO 4-4 Identify the characteristics of environmentally sustainable business.
LO 4-5 Describe how the stakeholder model can help businesses achieve sustainability.
LO 4-6 Describe how geographic features of a country or region contribute to natural capital.
LO 4-7 Outline nonrenewable and renewable energy options available and their potential impacts on business.
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Sustainability in the Business Context
Environmental sustainability
State in which the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations
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Sustainability in the Business Context
Brundtland Commission, drafted a widely accepted definition of sustainable development:
it “meets the needs of the present without compromising the ability of future generations to meet their needs.”
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Systems for Achieving Sustainability
Life cycle assessment (LCA)
An evaluation of the environmental aspects of a product or service throughout its life cycle
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Life Cycle Assessment (LCA)
Involves the cumulative impact of product, can lead to reductions and savings of environmental footprint, cost structure, and potential carcinogens in inputs, processes and wastes.
Such “product stewardship” leads organizations to be concerned about the entire life of their product.
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Systems for Achieving Sustainability
Cradle-to-cradle (C2C) design model
suggests that products and services should be designed to completely close the production loop, so that all resources needed to produce them are recycled and reused rather than discarded or left to pollute.
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Cradle-to-Cradle (C2C) Design Model
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Cradle-to-Cradle (C2C) Design Model
Identifies two components:
Technical nutrients – inorganic and synthetic, so reusable.
Biological nutrients – organic and decompose.

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Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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Critical Thinking Question

Why is it challenging to measure how successfully a business is practicing sustainability?

4. Why is it challenging to measure how successfully a business is practicing sustainability?

To be most meaningful, the measures have to be able to serve as a basis for comparisons. That is, the platforms have to meet comparability test. Note that 3BL does not meet this criterion. Designing a platform that can function across sectors is difficult, since it involves many variables. Successful platforms include the Global Reporting Initiative, the Global Compact, and the Carbon Disclosure Project.

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Tools for Measuring Sustainability
United Nations Global Compact
A voluntary reporting scheme for businesses that covers critical areas affecting the conduct of international business—human rights, labor, the environment, and anticorruption efforts
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Tools for Measuring Sustainability
Global Reporting Initiative (GRI)
Sustainability reporting framework developed among stakeholders
Carbon Disclosure Project (CDP)
Organization that provides reporting frameworks for greenhouse gas emissions and water use
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Tools for Measuring Sustainability
Carbon footprint
A measure of the volume of greenhouse gas emissions caused by a product’s manufacture and use
Water footprint
A measure of the amount of water used in a product’s manufacture and use
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Context for Sustainability
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Limits as Part of the Sustainability Context
Limits address the reality that environmental resources are exhaustible.
To recognize the limits of the earth’s atmosphere to absorb emissions, and to incorporate this recognition into the way the business operates, is an ecologically responsible decision that supports sustainability.
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Interdependence as Part of the Sustainability Context
Interdependence describes the complex relationships that sustainable practices create among ecological, social, and economic systems, in which actions in one of these systems may affect the other two, often in ways that are not easily predicted.
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Equity in Distribution as Part of the Sustainability Context
For system interdependence to work, there cannot be vast differences in the distributions of gains.
Equity requires a business model that allocates value added over a wide array of stakeholders.
Vast inequities lead to social disruption and violence.
One approach is to pursue backward integration to gain control over supply chain.

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Controversial Issues
This debate centers around the unknown time we have left to rely on fossil fuels and how to approach preparation for the transition. Although we do not know if we have reached the midpoint of their extraction, we know that they are nonrenewables and that our present economic model depends on them. The debate centers around how to approach this issue. Meanwhile, reliance on fossil fuels at the global level is increasing.
How immediate do you think the fossil fuel crisis may be? How much time do you think we have for our transition to new energy sources?

GLOBAL DEBATE: How Immediate in the Fossil Fuel Crisis?
This debate centers around the unknown time we have left to rely on fossil fuels and how to approach preparation for the transition. Although we do not know if we have reached the midpoint of their extraction, we know that they are nonrenewables and that our present economic model depends on them. The debate centers around how to approach this issue. Meanwhile, reliance on fossil fuels at the global level is increasing.
 
Online and Hybrid: Virtual teams work out an approach to this problem. Present to class, either online or in face-to-face setting.
Face-to-Face: Students develop responses to the questions in class in teams/groups.
1. How immediate do you think the fossil fuel crisis may be? How much time do you think we have for our
transition to new energy sources?

There is no correct answer to this question. Responses might point out signs of the crisis and logics related to various approaches to it.

2. Should our approach to energy be to use up all our fossil fuels, despite their pollution, and then address
transition to the renewables, or should we move to the renewables as soon as we can?

Now or later? The advantages of adjusting now are that the business will be prepared for the future and not blind-sided by a crisis involving the availability of fossil fuel. The downside to this approach is that it is costly at a time when competitors who are not making the transition are not spending in this area. The advantage of later is that the business uses knowledge, processes, and approaches for a longer period, amortizing their initial cost (capital expenditure). The downside is that while they are benefitting from the economies related to this approach, their competitors may be adjusting to the future, ready to take their market share when the crisis hits and they can not deliver.

3. If you’ve begun the transition, explain what you’re doing. If you haven’t, why not?

This question asks students to apply the argument to their personal consumption lives.

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The Stakeholder Model for Sustainable Business
Stakeholder theory
An understanding of how business operates that takes into account all identifiable interest holders
calls for managers to consider the network of tensions caused by competing internal and external demands that surrounds the business.
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The Company in a Societal Context
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The Stakeholder Model for Sustainable Business
Triple-bottom-line accounting (3BL)
An approach to accounting that measures the firm’s social and environmental performance in addition to its economic performance
Does not allow for comparisons across companies because measurements, especially social and environmental areas are not standardized.
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Geography: Describing Our Natural Capital
Natural capital
Natural resources such as air, land, and water that provide us with the goods and services on which our survival depends
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Topography – Mountains
Separate people, impede exchange and interaction
Results in language and culture differences
Create regional markets, often with altitude adjustments

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Topography – Deserts and Tropical Forests
Separate markets
Increase cost of transportation
Create population concentrations

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Topography – Bodies of Water
Attract people
Facilitate transportation
Inland waterways provide access to interior markets

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MINICASE: The BlueGreen Alliance: A New Way of Sustainability Thinking
Is the BlueGreen Alliance a partnership of convenience, or does it have the potential to build a new way of approaching sustainability, with limits, interdependence, and equity?
Unions may prefer protectionist measures to preserve jobs. Do you think this policy can fit a sustainable approach? Why or why not?

MINICASE: The BlueGreen Alliance: A New Way of Sustainability Thinking

BlueGreen Alliance is a growing collaboration of U.S. unions and environmental organizations that have collaborated to work on environmental and employment problems that are directly linked. They aim to build a cleaner and fairer economy.
1. Is the BlueGreen Alliance a partnership of convenience, or does it have the potential to build a new way of approaching sustainability, with limits, interdependence, and equity?

BlueGreen Alliance is not a partnership of convenience, since, at least initially, they were opposed on many issues. Yet they did find common ground, and focusing on that, grew. Certainly it is a collaboration that has educated many in all organizations. And it may help all to see that recognizing limits, interdependence and equity is good for all. This is an opinion question, yet the possibility of a new way of thinking has been begun.

2. Unions may prefer protectionist measures to preserve jobs. Do you think this policy can fit a sustainable approach? Why or why not?

A protectionist approach, favoring domestic producers over foreign producers does not initially seem to involve equity or interdependence. So one approach to this opinion question would be to point that out and conclude that a protectionist approach is not compatible with a sustainable approach. One might also argue that support of local jobs that may involve protectionism would be a way to set limits and insure that equity at the local level exists. What matters in the answer to this question is a recognition that a sustainable approach involves limits, interdependence and equity.
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Natural Resources
Natural resources
Anything supplied by nature on which people depend
Renewable energy
Energy that comes from sources that are naturally replenished, such as sunlight, wind, and water flow
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World Energy Consumption by Fuel Type,
1990–2040
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Nonrenewable Energy Sources
Nonrenewable energy
Energy that comes from sources that cannot be replenished, such as the fossil fuels—petroleum, coal, and natural gas—and nuclear power
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World Energy Consumption by Source
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Renewable Energy Sources
Wind power is now a mainstream electricity source
Biomass
Relies on photosynthesis
Ethanol reduces food crop acreage

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Renewable Energy Sources
Solar photovoltaic power (PV)
Based on voltage created when certain materials exposed to light
Fastest growing renewable power technology
Concentrating solar thermal power (CSP)
Uses mirrors or lenses to collect sunlight that heats water
Different technology than PV, growing plants in U.S., Spain

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Renewable Energy Sources
Geothermal power
Power from heat stored in the Earth
Ocean Energy
Sun’s heat on water and mechanical energy of tides and waves
Least mature of alternative energy sources
Hydropower
Moving water to generate power
Largest alternative power source
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World Energy Consumption by Fuel
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Global Renewable Power Capacities, 2004–2011
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Projected Changes in Power Generation by the
World’s Top Five Producers and Consumers of Energy
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Nonfuel Minerals
Rare earths
17 nonfuel mineral elements used in defense applications and in all areas of modern manufacture.
95% of market is controlled by China.
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Team Exercise
Sustainability and green business have become increasingly important issues globally at the same time that these concepts have been popularized and adopted by popular culture. Assign small teams (5 students) to explore in discussion whether the popularization of environmentally friendly, sustainable, green ideas contributes to the growth of sustainability, substitutes marketing for sustainability, or has no effect on it whatsoever. In face-to-face classes, this exercise may be an outside assignment with report backs of 3 minutes in class. In online classes, the discussion can take place in chat rooms, if available, and then the report backs could be shared summaries from each group, posted for classmates’ comments and evaluations.

Sustainability and green business have become increasingly important issues globally at the same time that these concepts have been popularized and adopted by popular culture. Assign small teams (5 students) to explore in discussion whether the popularization of environmentally friendly, sustainable, green ideas contributes to the growth of sustainability, substitutes marketing for sustainability, or has no effect on it whatsoever. In face-to-face classes, this exercise may be an outside assignment with report backs of 3 minutes in class. In online classes, the discussion can take place in chat rooms, if available, and then the report backs could be shared summaries from each group, posted for classmates’ comments and evaluations.
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