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Environmental Challenges

and Corporate Responses

Prof. Shamama Afreen

Environmental challenges

Atmosphere Toxic chemicals and hazardous waste Freshwater Land Oceans Biotechnology and biodiversity

Receives maximum focus Public awareness high Air quality and atmospheric protection regulated intensely Ozone issues important part of corporate agenda
international agreements, consumer pressure and competition in CFC alternatives

Air pollution issues important for corporations

half of global GHGs related to corporate operations
automobile emissions, oil production, CFC emissions, electricity production and use

Corporations produce and use toxic materials International deliberations on ozone depletion and climate change regulatory changes still ongoing

Corporate response
Elimination of CFCs and other ozone depleting substances

Some of the largest chemical companies decided to pursue CFC

substitutes Strongly supported international agreement on CFCs. Corporate responses also influenced by national, regional and

international political agenda on ozone depleting substances.

Toxic chemicals and hazardous waste

One of the most important environmental issues related to corporations. Toxic chemicals discharged into the environment directly (fertilisers, pesticides) and indirectly (mining, industry effluents, fuel burning). Pesticides and herbicides kill between 10,000 and 40,000 people in developing countries every year Many of these chemicals banned in developed countries Unscrupulous dumping of waste by corporations in developing countries (Pepsi Cola Bottling Corporation). Lead smelting operations increasingly being shifted to developing countries pollution control standards in developed countries very stringent

Corporate response
Management of toxic materials gaining importance in corporate agenda

Responses mostly driven by regulatory changes and international agreements

Important international agreements on transboundary movement of toxic chemicals and hazardous waste
The Code of Conduct on the Distribution and Use of Pesticides London Guidelines for Exchange of Information on Chemicals in Intl Trade

Corporate response also driven by highly publicized accidents in chemical factories Responses include policies and programs related to accidents as well as environmental issues

Past 300 years - Withdrawals from worldwide freshwater sources have grown more than

35-fold water shortages

Important issue for corporations in agribusiness and other sectors In developed countries industry largest consumer of freshwater After industrial use, water returned to water cycle heavily polluted (direct discharge or waste site leakage)

Main polluting sectors pulp and paper, chemicals, petrochemicals and refining,
metalworking, food processing, textile In developed countries industrial waste discharges tightly regulated; in developing countries largely uncontrolled

Corporate response

Pollution control laws effective in creating incentives for corporate response to water challenges Corporations now involved in water conservation In developed countries most effective and economical way treat and recycle water

Land resources include minerals, fuels, agriculture, forestry Central to most corporate products and processes

Heavy dependence led to environmental problems desertification, soil loss, deforestation, land
degradation Corporate harvesting of forests major cause of primary forest destruction in temperate and tropical countries Family farms being replaced by corporate driven agribusiness Loss of soil nutrients, land and water

pollution from pesticides and herbicides,

Disposal of hazardous wastes and toxic materials on land causes leaching into drinking water supplies

Corporate response
Mixed corporate response Majority companies have not established land management policies Very few corporations (esp. in developing countries) have safety zones around manufacturing plants Afforestation programs being established by many corporations More comprehensive land policies and programs undertaken by the largest corporations.

Ocean degradation pollutants directly dispersed into oceans or indirectly
reach there from rivers and atmosphere Ocean protection relatively unregulated. Main contaminants urban sewage and runoff, plastics from land and sea dumping, synthetic organic compounds (pesticides, industrial chemicals), oil from transportation and spills Corporates not major polluters of oceans contribute most of the arsenic,

mercury, chlorinated hydrocarbons and other toxics.

Corporations active in mining and metal and chemical processing, oil production generate much of industrial waste dumped at sea.

Corporate response

Largest petroleum corporations have lobbied against tougher international agreements on ocean resources Little regulation ocean protection not high on corporate agenda Corporate efforts concentrate on minimizing oil and chemical spillage Outside the extractive-based sector, few efforts to protect oceans

Biotechnology and biodiversity

Biotechnology and genetic engineering are rapidly increasing markets Many devastating environmental effects of biotechnology being experienced Increased use of pesticides and herbicides Increased tolerance to pesticides and herbicides Spread of high-yield monospecies agriculture and plantations loss of species diversity Corporations faced with conflict of fulfilling short-term demands for higher profits and long-term financial-environmental obligations

Corporate response
Biotechnology still relatively new area benefits and problems still being understood Most biotech firms large US-based corporations Lobbied against agreements that could protect interests of developing countries Problems arise when corporates use biotech in developing countries where regulation absent or weak. Corporates need to assess voluntarily their impact on biodiversity

Corporate environmental management structures: Policies

Indicate organizations overall commitment to environmental action Include: Conservation and protection of natural resources Waste minimization Pollution control Continuous improvement Provide a public statement from management to Workers, Investors Politicians Regulators Environmental groups Other companies

Corporate environmental management structures: Policies

Policies generally encompass following areas: Definition of environmental protection R&D Production and product issues Health Environmental protection technologies Methods of control and environmental information gathering Role of workers Environmental protection aims Emergency plans Public information Customer relations

Corporate environmental management structures: Policies

Some trends The largest corporations are twice as likely to have an environmental policy as the smallest Extractive sector is more likely to have an environmental policy than finished

goods, agricultural or service sectors

Corporations that impact environment greatly respond more comprehensively to environmental challenges Corporations that have extensive capital and managerial resources also more responsive

Corporate environmental management structures: Programs

Programs are usually issue specific

Concern issues such as


Soil pollution Health Safety Disposal of wastes Sustainable development

Corporate environmental management structures: Programs

Some trends

Companies in extractive and finished goods sectors and largest corporations

more likely to have environmental programs Highest program priorities relate to energy programs. Many corporations link environment, health and safety. More and more companies are including sustainable development in their environmental management agenda

Corporate program priorities

High priority areas: Energy related activities Health and safety activities Traditional environment activities Waste/disposal related activities Low priority areas: Sustainable development activities

Afforestation programs
R&D for GHG reduction Renewable energy

Biodiversity conservation and preservation of endangered species

Protection of wetlands/rainforests in developing countries

Corporate Environmental Management Styles



Sustainable development

Corporate Environmental Management Styles: Compliance

Least progressive

Represents ways in which corporations have traditionally responded to

environmental challenges Respond to fulfill legislative demands Any innovative practices are geared towards better compliance with

environmental laws

Corporate Environmental Management Styles: Preventive

Goes beyond regulation compliance

Aims at pollution prevention and waste minimization

React to growing waste disposal costs, raw materials or insurance costs enjoy capital savings Respond in a preventive and protective way to green trends Respond to maintain and protect markets

Eg. Chevrons SMART program

Eg. ARCO Chemical prevent industrial accidents and pollution

Corporate Environmental Management Styles: Strategic

Incorporates EH&S aims into overall economic strategy
Seeks to exploit the growing green market Responds to environmental challenges in a more proactive manner anticipates, pursues potential green markets Undertakes environmental R&D

Incorporates cradle to grave ethos environmental and resource issues are part of all
stages of a products life cycle Goes beyond efficient production and liability minimization

Sees the environment as an economic opportunity enters the market for environmental
services and equipment

Corporate Environmental Management Styles: Sustainable Development

The most proactive management style Only few corporations at this stage Have Developing country policies

Ethical sales policies

Commitment to environmental disclosure Climate change policies

Afforestation policies
Take leadership role in responding to environmental challenges Possible desire to create a sustainable corporation

Sustainable Development Style

Desirable activities to be undertaken by such organizations:
Adopt global standards Develop special worker and management training programs for developing country operations Develop company standards in countries which lack sufficient or enforced regulations Facilitate transfer of useful technologies Take into account local communities and cultures

Sustainable Development Style: Toyota

Interestingly, Toyota is a vehicle manufacturer possibly the most

environmentally degrading industry

But, active in progressive environmental practices

Believes in continuous improvement associated with incremental

environmental innovations Toyotas policy Our basic principle in environmental management is to emit no pollutants[and]create plants that are environmentally sound, with due regard for the greater good of the community.