Environment, Ethics, and Business
The essay will have a closer look on what is preventing businesses to become more eco friendly and produce goods which are safer for the environment. The essay will discuss the guidelines stated in the report by Edward Freeman, Jeffery York and Lisa Stewart titled environment, ethics, and business. The essay will also put light on Roper Starch’s Green Gauge, in which he discusses the five-part segmentation of the environmental marketplace. The essay will also concentrate on why it is safer and even profitable for businesses to preserve the environment.
Business these days have to shift away from their old beliefs that a business as an entity is just there to provide a service or a product and make profits. This is an old story now, as environment concerns are growing in the minds of people, and they are putting in a great deal of effort to preserve environment. With millions of businesses contributing every day to pollution and harming the environment it is very much important now to move towards much eco friendly business operations. A London based consultancy firm Trucost reported that world’s top firms combined damage to the environment was $ 2.
2 trillion in 2008, more then $ 600 billion was contributed by consumer goods and basic materials producers (Jowit, 2010). Which such devastating impact on environment a close view on the article environment ethics and business published by Institute of Corporate Ethics can help us move towards a greener business environment. An eco friendly business is which controls its activities and produces goods and services to measure, prevent, limits or corrects environmental damage to water, air an soil, as well as problems related to noise, waste and eco-systems (Titley, 2008).
Against Change: The Business View With the world being hit with more harmful natural disasters much of the blame is being put on polluting business operations due to which global warming is occurring. The businesses have taken a lot time to realize that they have responsibility of protecting the environment, mainly because there are still disputes among environmentalists and businesses, as the article states. Firstly many facts put forth by scientist are disputable and there are uncertainties surrounding them that will the fact really come true in the long run.
There are also disagreements about policies to protect the environment as many people can not find a line of best fit between business and environment. Thirdly there is a difference in values, people may want eco friendly environment but may not be ready to let go some of their harmful habits or they may be confused between recycling or consuming green products. The inability to find a workable solution has encouraged lack of response and inaction in businesses. Lack of response has also been stemmed by the mind sets of businesses.
The five mind sets mentioned in the article are seen to be the reason why businesses fail to adapt an ethical and eco friendly business practice. Regulatory mind set mentions that businesses think that following government laws will eventually fix the environment, they abide by the law but don’t put in much effort other than that. This does not encourage them to look for new ideas which may benefit the environment, as they see their only responsibility is to abide by the laws.
This raises questions about the research and policies lead by the government, that are they reliable and will it really help in the wrong run. The other mind set is cost/benefit, this mind set states that businesses look at what benefit they will derive when they put in a cost towards making there business more environment friendly. If the benefits derived are not good the plan will be dropped. BP’s recent oil spill had sparked many opinions that BP itself knew that the quality of the pipe line was not good enough to hold on for long and oil burst was eminent, but did not take actions due to high cost.
Due to this mind set businesses do not incorporate the external environment, as they feel that it will only add up to their cost. The other mind set is constraint mind set which states that the business only exists to create economic value and all other issues such as environment and ethics are considered hindrances in their activity. Sustainable mind set on the other hand tells that the businesses will help preserve the environment for the present generations but may rethink their strategy for the future.
Lastly the greenwashing mind set states that the business can never move away from their objective of profit maximization. This mind set is what traditionally businesses are made up for, the basic target is to find out ways to maximize their profits, even if it means damaging the environment in this process. This mind set also states that the company pretends that they are committed to preserve the environment yet really there ways are still damaging, it’s only an image which they try to create in the minds of the people to generate even more profits.
Aerospace giant Boeing stated that there new Boeing 787 will be more fuel efficient and environment friendly (Harry Hurt, 2008), yet studies showed that the greenhouse gas emission was still higher and it was only an exaggerated claim by the company. Against Change: The Consumers View It’s not about the inability of businesses to change but also the consumers, as they are driving these companies foreword by purchasing their products and services. Consumers are also blamed for the inability to act on this issue.
The reason behind this that consumers also have different mind sets regarding their purchasing habits. There are five segments as stated by Roper Starch (Joel Makeover, Cara Pike, 2008). True-Blue green are the first of them who are the most active in preserving the environment, they are considered to be initiative takers and constantly work against businesses harming the environment. Green back greens are the consumers who are willing to pay a higher price for goods who are eco friendly.
Then there are Sprouts, who are very late adapters to idea of buying eco friendly products. The last two are Grousers and Basic browns, the grousers are disinterested in considering eco friendly goods, on the other hand basic browns feel the environment issue is a big problem for them to solve, and that’s why they are least worried about it. These different mentalities of consumers are also blamed for businesses to not consider a greener approach, and fail to accept it as their responsibility of preserving the environment.
The major reason is that no matter how much pollution they create their products are still selling and are still making profits the very reason for their existence. Roper Starch comments on this that media and government awareness program can help people jump to the safer segments, such as true blue green and green back greens. Shades of Green Theory The report environment, ethics, and businesses also incorporate the levels of environment friendly strategies which businesses can adopt.
First of the four levels is Light green, this attitude tells that the company compliances with the environmental laws passed by the government. With compliance to these laws the firm can think how they can improve on customer relations, more innovative products can help boost their sales. The next level is Market green principle, which is that the business concentrates on the customers need to have environment friendly products. This can be beneficial for the firm as customers nowadays are willing to pay a higher price for goods which they feel are safe for the environment.
If the customer feels that the business is fulfilling its responsibility it is likely that the business will be more popular in the eyes of the customer and they will surely reward it with their loyalty. Then there is stakeholders green, at this level a firm tends to satisfy the environmental needs of more then one stakeholder, such as employees customers or shareholders. It may encourage suppliers to meet environmental requirements and by also looking at its own manufacturing standards, ensuring that it is less harmful.
The last level is dark green, in which companies act as leaders in sustaining the environment, and continuously work towards it. Companies like Du Pont , Wal-Mart and General Electrics can be considered as one. These companies have launched green initiative and are also stressing on seriousness of sustainability. Why Go Green Businesses now feel that going green is the way forward, this does not mean they will have to cut on their profits, it maybe for the short run but in the long run it will be much more profitable and beneficial.
Large companies such as GE and Du pont have actually become more profitable going green. With oil and raw material such as steel aluminum and copper prices rising, looking for sustainable energy and less cost effective methods will help in lowering bills, moreover also contributing in preserving environment. Wal-Mart are using smaller plastics container to transport detergents, which in turn uses less petroleum to manufacture those containers, it also help transport more containers at a time from plane. This reduces bills and also puts less damage on the environment.
Bank of America on the other hand have shifted from using receipts made up of 20 pounds to 15 pounds, this has saved them money on transportation and storage worth $ 500,000 a year. With consumers becoming more aware of the environment issues and regularly looking for products and companies which are deemed safer for the environment, it is an opportunity for firms to become environment friendly and reap rewards of customer loyalty. Customers are willing to pay more eco friendly goods, recent survey showed that people in America are willing to pay 15 % more for eco friendly goods.
Companies using renewable energy such as wind and solar have reduced cost significantly, example DuPont, with oil reserves shrinking and prices soaring everyday renewable energy is the answer. These methods can give businesses a non price competitive advantage. Companies who are environmentally responsible tend to generate higher profits if they market themselves accordingly. Advertising on billboards is expensive, even giving out pamphlets is expensive too, reduce cost and preserve environment by advertising on internet.
For example Toyotas Hybrid had been well marketed on the internet and television for being an eco friendly car, it is now a top seller surpassing GM and Ford. Which such benefits of growing green the businesses should start changing because now it’s a priority to go green; the plus point with it is that it is also profitable. References Titley, Brian. 2008, Comparative Advantage and Green Business, pages 71, retrieved on retrieved on 29 July 2010 from www. berr. gov. uk/files/file46793. pd Harry Hurt 2008 Feb. 19. The Toxic ten, retrieved on 29 July 2010 from http://www. portfolio. com/news-markets/national-news/portfolio/2008/02/19/10-Worst-Corporate-Polluters/index5. html Juliette Jowit 2010 Feb. 18 .
World’s top firms cause $2. 2tn of environmental damage, report estimates. Retrieved on 29 July 2010 from http://www. guardian. co. uk/environment/2010/feb/18/worlds-top-firms-environmental-damage Freeman, Edward. York, Jeffery. Stewart, Lisa. 2008, Environment, Ethics, and Business. Pages 25, retrieved on 29 July 2010 from www. corporat-ethics. org