Chapter Ten Business’s Environmental Responsibilities

1. Chapter TenBusiness’s Environmental Responsibilities Jerry Estenson

2. Classic View of Ethics in Business Environment • Maximize profit within the law • Utilitarian • Greater overall good of optimally satisfying consumer preference

3. William Baxter • Search for optimal level of pollution that would best serve society’s interests. • Caveat Emptor (protect consumer safety and allow for individual bargaining • No perfect “state of health” • Allow market to balance risk and benefits • Air safe enough to breath water safe to drink without costing to much

4. Julian Simon • Allow for human ingenuity and incentives to work • Allow the market to work to balance supply and demand for resources • Natural objects have no value but that placed on them by humans. The term “nature” has no normative connotation • Preserving biological diversity is appropriate if it satisfies more consumer preference than the alternative

5. Market serves four environmental goals • Reducing pollution • Conserve resources • Preserve natural areas • Support biological diversity

6. Market Failures • Cost of such things as pollution are borne by third parties • No market exists to create a price for important social goods (protection of animals versus using threatened animals – Rhinoceros, tigers, elephants • Buying is an individual decision consequences are borne by group • Market does not respond until there is a major screw up

7. Mark Sagoff – The Economy of the Earth • Environmental issues not economic issues • Confusion between wants/preferences: • What one is willing to pay handled through a cost-benefit analysis • Beliefs and Values • Purely personal and subject • Conflict resolved non-rational means • Dialog and democratic processes • Ignores the individual role of being both a consumer and a citizen

8. What is business to do? • Business needs to meet “Moral minimum” • Bowie – cause no harm to humans, obey the law and refrain from unduly influencing environmental legislation • Citizen are free to create laws and exercise consumer preference

9. Issue with this Rx • Underestimate business ability to influence law making • Underestimates business ability to influence consumers • Law is a crude tool • Models used to deal with corporate social responsibility underestimates managerial discretion

10. Critical flow model ignores the cost of resources and waste generation • Daly’s model • Recognizes business is part of a subsystem with Earth’s biosphere • Recommends long-term consumption of resouces • Manage waste • Manage energy and recognize the losses we are now generating • Limit grow using a biophysical perspective

11. Pillars of Sustainable Development • Economically, environmentally and socially satisfactory • Meet the needs of those future generations • Meet the needs of those who lack food, water, and other necessities • Hawken, Lovins – Natural Capitalism • Productivity of natural resources • Redesign to utilize a model biological process (cradle to grave • Model business as a provider of services (light, floor covering) • Invest in natural captial