Corporate Environmental Management

1. Corporate Environmental Management OM 6000

2. Class Today • Introductions • Syllabus • Corporate Environmental Management Background • Keith Coulter? • Video on Industrial Ecology

3. Me -Joe Sarkis • Professor of Operations and Environmental Management • 6-7 years here • Many interests (OM, Env, IS, Marketing, Accounting, Finance….etc.).

4. You • Your School Background • Your Work Background • Environmental Issues that you have faced at work or anywhere else

5. Syllabus • We will look at how companies deal with environmental issues. • Today will be readings and brief introduction into some issues. • Next few classes will focus on environmental issues in a number of functional areas for organizations.

6. Breakdown of grade • 1 Team Case Write-up - 30% • 1 Team Industry Evaluation - 30% • Case Executive Summaries - 20% • Class Preparation and Participation - 20%

7. Schedule • Each Week a new case. Case questions on web-site. • One change to schedule – In Two Weeks – Polaroid Case. • Let us take a look at website syllabus.

8. Corporate Environmental Management

9. Basic Philosophical Elements and Issues of the Environment • The Litany • Global Problems • Global Warming - Warmest Years on Record • Ozone Depletion - Big Hole in Atmosphere • Species Decimation • Regional Problems • Deforestation • Acid Rain • Water Pollution - Rivers, Lakes • Local Problems • Pesticides - Hazardous Materials • Waste Disposal

10. Basic Philosophical Elements and Issues of the Environment • Are these concerns realistic? • Are some more realistic than others? • How serious are they? • What are some example implications for business? For these problems?

11. GDP EI EI = Population x x Person unit of per capita GDP Changes in the Environment: The Master Equation EI = Environmental Impact GDP = Gross Domestic Product Population = Population Concerns GDP/PERSON = Affluence Concerns EI/Unit of Per Capita GDP = Technological Concerns What Alternatives Exist to Manage EI Here? What areas Does Commoner think we should focus upon? Paul Ehrlich?

12. Environmental Consciousness • What is man’s role with nature? • Take Dominion over it? Dualistic? • What is meant by that? • Nature exists to serve humans • anthropomorphic view • is environment in “profit” equation? • In calculation of “national” accounts? • Linear “Design” of production. • What is it and why might it no longer be applicable?

13. Stages of Environmental Concern • Conservation • Use resources wisely - nature’s utility is in its service to humans • Preservation • Leave certain areas alone - nature has intrinsic value • Protection • pollution control - protect humans • Sustainability • global perspective, “sustainable growth” (pg. 17), and equity. • What is the basic theory behind equity and sustainability?

14. Ecology • Analysis and evaluation can be carried out at many levels • Individual Organism • Population (individuals of same species) • Community • Ecosystem - non-biological (abiotic) integration. • Biomes - grouping of ecosystems • Analogy to organizations and business?

15. Management Theory and the Environment • Anthropocentric Theories • Ethics and stuff. • Economic • Corporate Social Responsibility • Stakeholder • Normative • Social Contract • Green Management Theories • Ecocentricism • Adjusted Stakeholder • Sustainablity • Resource Based Theory

16. Environmental Ethics and Business • Western Society - Objectifies Nature • Locke - “Something in a state of nature has no economic value and is of no utility to the human race” • Ethics - a concern with actions and practices directed to improving the welfare of people. • What are the environmental implications of this statement?

17. Economic Fundamentalism and Ethics • The corporate social responsibility of a business is to increase profit. - M. Friedman • Those things that cannot be traded on the market have no value. • Where does the environment fit in these definitions for environmental ethics?

18. Corporate Social Responsibility • What is it? • By doing socially responsible things, businesses better human life. • Supposedly ..good ethics is good business. • Is this true? • Is enlightened self interest a good way to push this?

19. Incorporating Environment into Management Theory • Environmental Ethics is a starting point. • Expanding ethics to include nature. • What is the difficulty in doing this? • What does the Biocentric ethic say (Goodpaster?) • Biocentrism • Natural objects have intrinsic value and morally considerable in their own right. • Deep Ecology nature has an ethical status at least equal to humans.

20. Environmental Strategy Concepts and Development • Four Readings related to Business Strategy and the Environment • Porter and van der Linde • Walley and Whitehead • Respondents to Walley and Whitehead • Stuart Hart • What is meant by Win-Win?

21. Green and Competitive: Ending the Stalemate • What stalemate? • Regulation and the Environment a good thing for organizations? Traditional vs. New thought? • Pollution = Inefficiency • Resource Productivity? Why is this important? • How does this argument relate to quality initiatives? • How might TQM work with Environmental programs? • Innovation’s role with Environment and Competitiveness • Two innovation types • End-of-pipe • Prevention • Examples? • Does Regulation drive innovation?

22. Green and Competitive: Ending the Stalemate • Why is Regulation needed for Innovation? • A market drive may be needed to aid innovation. • What is meant by the “rarely see $10 bills on the ground?” • Inexperience causes a barrier to environmental innovation. • Organizational inertia is a barrier • What to do?

23. Green and Competitive: Ending the Stalemate • Environmental Innovation Friendly Regulations • Create pressure that motivates companies to innovate. • Make sure regulations improve environmental quality • Alert and educate companies about ineffeciencies and areas for technological improvement • improve likelihood that innovations are environmentally friendly • create demand for environmental improvement • level the playing field making sure every one makes environmental investments

24. Green and Competitive: Ending the Stalemate • What needs to be done Overall? • Remove “Static” thinking (organizations) • Make Regulations less adversarial more cooperative • Less specific regs….address “whats” let organizations worry about “hows” • Managers need to realize that environmental improvement is a competitive opportunity. (org) • Make environmental decisions internal….not just delegated to adversarial external parties (org) • resource-productivity rather than pollution control model must govern decision making (org)

25. Green and Competitive: Ending the Stalemate • What do they recommend to managers? • Measure direct and indirect environmental impacts (can’t manage what you don’t measure). • Learn to recognize the opportunity cost of underutilized resources • create bias in favor of innovation based, productivity enhancing solutions • develop proactive relationships with regulators/environmentalists.

26. It’s Not Easy Being Green • Should win-win be at the core of an organization’s environmental strategy? • Yes? Why? • No? Why not? • Do they say let’s go back to the old ways? • What should be maintained?

27. It’s Not Easy Being Green • Two era’s of environmental management • (Fisher and Schot) • resistant adaptation • embracing environmental issues with no innovation • win-win derived from second era. • Tradeoffs -Where are the tradeoffs? • What is meant by low-hanging fruit? • Where to make innovations? Is rabbit-out-of-the-hat a way to solve problems?

28. It’s Not Easy Being Green • What is the “trade-off” zone? • What is the value based approach? • What framework do they recommend? • What is “The Triage Framework?” • Does it make sense? • Does it help to more efficiently and effectively guide environmental spending?

29. Which way? • Not all win-win opportunities are insignificant (Clarke) • more efficiency in regulatory system still needed (Clarke) • more strategic vision, not operational as win-win assumes. (Clarke) • Are regulations good/bad for competitiveness? (somewhere in between).(Stavins) • What about the rest of the world? (Greeno) • Are they short-sighted? (Bavaria) • Regulations inefficient and political (Cairncross) • Porter’s arguments were for both sides, regulators/industry (Esty) etc. • Anything interesting of note that you found?

30. Green Management Theories • Resource based view of firm (Hart) • making the environment a strategic and competitive part of the firm. • Three categories • PP • Product Stewardship • Sustainable development • Should not only be theory..but actual normative practice.

31. Corporate Behavior and Reputation • In 1995 • What did consumers think of businesses and environmentalism? Were they doing better? Were they doing enough? • What do you think consumers feel? • A Couple Questions: • Is Corporate Environmentalism a Fad? • Is Corporate Environmentalism a Conspiracy?