Ethical Issues Regarding the Natural Environment of impatience than does a social discount rate because individuals tend to be more myopic than societies when dealing with consumption— individuals place more value on immediate consumption than on future consumption. Private interest rates are generally higher than social interest rates and can be as high as 10 percent. We have deliberately set the interest rate at such a high percentage to reflect a high degree of impatience, in order to entice firms to quickly 533 come into compliance. Ahmed M. Hussen, Principles ofEnvironmental Economics: Economics, Ecology and Public Policy (New York, NY: Routledge, 2000), 324. Editors' note: Seventy-six notes were deleted from this essay because of space constraints. Readers interested in detailed citations should consult the original article. Sustainability: Business's New Environmental Obligation Joseph Desjardins INTRODUCTION Does business have any special obligations to protect the environment? In an essay that has b e c o m e a classic within the business ethics literature, N o r m a n Bowie concludes that business does n o t have any special environmental obligations, at least n o t in the n o r m a l u n d e r s t a n d i n g of this p h r a s e . In Bowie's words: "Business does n o t have an obligation to protect the e n v i r o n m e n t over and above what is required by law." Bowie's conclusion is typical of mainstream theories of corporate environmental responsibility. These views hold that business is free to pursue profit as long as it complies with the law a n d causes n o avoidable h a r m to others. From the classical model of corporate social responsibility associated with Milton Friedman to the m o r e r e c e n t stakeholder theory, environmental concerns function as side constraints upon business's pursuit of profit. Business may have some negative duties regarding the env i r o n m e n t , duties n o t to pollute a n d n o t to cause o t h e r avoidable h a r m , b u t business has n o positive duty to c o n d u c t itself in ways that contribute to long-term ecological a n d envir o n m e n t a l well-being. Under this standard model of corporate environmental responsibility, society gets two opp o r t u n i t i e s to s h a p e business's activities in respect to the environment. We can press for e n v i r o n m e n t a l responsibility t h r o u g h t h e products we d e m a n d as consumers, or we can pass legislation requiring business to act in environmentally responsible ways. Absent cons u m e r d e m a n d a n d legal mandates, business itself has n o ethical responsibility to consider the e n v i r o n m e n t a n d is free to pursue profits even if this might otherwise be j u d g e d environmentally harmful. Given his philosophical a n d environmental starting points, Bowie's a r g u m e n t is well reasoned a n d persuasive. However, I believe that the entire framework in which his position is developed is misguided. Simply put, this is the w r o n g way to think a b o u t business, the e n v i r o n m e n t , a n d ethical responsibility. A range of economic, environmental, a n d ethical realities at the start of t h e twenty-first © 2007 Joseph R. Desjardins. R e p r i n t e d by permission of t h e author. Portions of this essay have b e e n previously published in Business, Ethics, and the Environment: Imagining a Sustainable Future ( U p p e r Saddle River, NJ: Prentice Hall, 2007). 534 Ethical Issues Regarding the Natural Environment century require that we reconceptualize business's environmental obligations and redesign business institutions to meet standards of sustainability. Before explaining this claim, let us review the state of the world at the beginning of the twenty-first century. THE NEED FOR A NEW PARADIGM Why the need to reconceptualize and redesign business? Several undeniable facts about the world in which we live make this case. First, a large percentage of the world's population, mostly children and the overwhelming majority of them morally innocent in every way, lack the basic requirements of a decent human life. Lack of clean drinking water, nutritious food, health care, education, work, shelter, clothing, and hope is a daily reality for billions of people. Population growth, even at the most conservative rates, will significantly exacerbate these problems in the near future. Because population growth is highest in those areas in which people are already most at risk due to the effects of poverty and oppression, these ethical challenges will only worsen in the future. To meet these fundamental human needs on such a grand scale, the world's economy must produce substantial amounts of food, clothing, shelter, health care, andjobs and distribute these goods and services to those in need. Clearly, then, significant worldwide economic activity must occur if these harms are to be addressed at all. Furthermore, these challenges will impact the nature and practice of virtually every business. An increasingly integrated global economy means that fewer and fewer business decisions anywhere can be made in isolation of the social, political, environmental, and economic events happening throughout the rest of the world. Gone are the days when business decisions in the United States or Western Europe could be made in ignorance and independence of financial markets in China, labor markets in India, or resource markets in the Middle East. Economic activity aimed at meeting the needs of the expanding world's population has already shifted the economic center of gravity away from the United States and Western Europe and towards Asia. The extensive economic activity required to address these goals must rely on the productive capacity of the earth's biosphere. Two facts about that biosphere are at the core of my argument. First, the economy is but a subsystem within earth's biosphere, and therefore the biosphere establishes the biophysical parameters of economic growth. Second, that very biosphere is already under stress due to the level and type of activity that characterizes the present world economy. Given these realities, those of us living in the consumerist economies of the developed world are faced with three alternative conclusions. First, wc can have faith in the assumption that the world's economy can continue to grow indefinitely and that the world's poor will be able to satisfy their basic needs and even attain prosperous lives and a higher standard of living. We can assume, in other words, that there are no practical biophysical limits to economic growth and that business as usual can be expanded globally and into the long-term future without catastrophic environmental consequences. Second, we can conclude that the world's poor will not, cannot, or should not strive to satisfy their basic needs or for prosperous lifestyles and that they will or should remain poor. Third, we can conclude that alternative economic institutions must be created to meet world demand without further destroying the biosphere. We have good reasons to doubt the legitimacy of the first option. Imagine the present American and Western European paradigm of Ethical Issues Regarding the Natural Environment economic growth a n d consumerism expanding to the earth's entire population of slightly m o r e than 6 billion people. Envision a world in which the 1.3 billion people presendy living in China used as many resources a n d created as many wastes as the 300 million p e o p l e of the United States. O n e estimate has it that if China c o n s u m e d oil at the rate of the U n i t e d States, it would consume 80 million barrels of oil each day, which alone is m o r e than the world's total p r o d u c t i o n of 74 million barrels a day. If the Chinese e c o n o m y ever r e a c h e d the level of C O s emissions as t h e p r e s e n t U.S. economy, China alone would p r o d u c e double the present worldwide C 0 2 pollution. 2 T h e earth's clim a t e is already reacting to the p r e s e n t levels of C 0 2 a n d o t h e r g r e e n h o u s e gas emissions caused by m o d e r n industrial society. Imagine that same world in which n o t only China, b u t the 1 billion people of Indiaj o i n the economic party at the same rates. Add to that a n o t h e r billion p e o p l e living in Indonesia, Brazil, Russia, Pakistan, Bangladesh, a n d Nigeria. The second option is not a real choice either. Believing that the world's poor will not, cannot, or s h o u l d n o t strive for m o r e p r o s p e r o u s lifestyles is, at best, a policy of self-deception. This leaves the third as the only realistic a n d ethically satisfactory option. Unless a m o d e l of business can be created that allows significant economic activity without further depletion of the biosphere's ability to support b o t h life a n d the very economic activity on which it depends, h u m a n s are facing a global ecological, economic, political, a n d ethical tragedy. A b a c k g r o u n d a s s u m p t i o n of most mainstream theories of c o r p o r a t e e n v i r o n m e n t a l responsibility is that profits a n d the environm e n t r e p r e s e n t a zero-sum game. Resources devoted to protecting the e n v i r o n m e n t come at the expense of profitability, the pursuit of profit excludes environmentally responsible practices. But this assumption is unwarranted. Consider how this assumption plays o u t in Bowie's view. Business c a n n o t b e e x p e c t e d to 535 act in environmentally responsible ways unless c o n s u m e r s d e m a n d it or t h e law requires it. Requiring business to d o otherwise violates t h e " o u g h t implies can" m a x i m : ethics cann o t r e q u i r e us to act in ways t h a t we c a n n o t . I n t h e business c o n t e x t in which Bowie applies this m a x i m , this m e a n s t h a t business c a n n o t b e r e q u i r e d to act in ways that would p u t itself o u t of b u s i n e s s by b e i n g unprofitable. If consumers d e m a n d environmentally responsible p r o d u c t s , t h e n business can b e b o t h environmentally responsible a n d profitable. If t h e law r e q u i r e s it, t h e n e n v i r o n mentally responsible businesses are n o t at a competitive disadvantage with less responsible businesses. Absent c o n s u m e r d e m a n d or legal m a n d a t e s , business c a n n o t b e e x p e c t e d to p u t itself at risk by pursuing environmental goals. But this b a c k g r o u n d assumption underestimates the range of managerial discretion. Independently of environmental issues, business managers a n d executives enjoy a wide range of decision-making discretion. There are countless ways to pursue a n d attain profitability even within a single firm or industry. We s h o u l d a b a n d o n the assumption that environmental responsibilities are side constraints o n "the" pursuit of profit, as if there is only o n e way to pursue profits a n d ethical obligations are a barrier to that. Rather, we should recognize that some avenues to profitability are environmentally risky, others environmentally p r u d e n t a n d sensible. Sustainable societies g e n e r a t e b o t h new responsibilities a n d new opportunities for business in the twenty-first century. This m o d e l is what I refer to as sustainable business. SUSTAINABLE BUSINESS F o r s o m e observers, t h e s e c o n s i d e r a t i o n s might suggest a "doom a n d gloom," pessimistic outlook. While we should n o t underestimate 536 Ethical Issues Regarding the Natural Environment the real and significant ecological dangers we "Waste equals food," in the words of William face, this is also the time to call forth human McDonough and Michael Braungart. Just as creativity, imagination, and ingenuity. The call the detritus of decomposed material is turned for sustainability should also be understood back into fertile soil within biological systems, as a call for entrepreneurs to imagine the fusustainable business must be designed so that ture and help create the sustainable business its by-products are themselves the resources firm of the twenty-first century. for new productivity. Business in the twenty-first century must be A second feature of sustainable business practiced in a way that is economically vibrant shifts the goal of production from goods and enough to address the real needs of billions of products to services. Human beings need surpeople, yet ecologically informed so that the prisingly very few products: food, water, and earth's capacity to support life is not diminished clean air are obvious examples, and so far at by that activity and ethically sensitive enough least, only the first two have become comthat fundamental human needs are met in the modities. Human beings do need many services: process. Economics, ecology, and ethics form education, health care, shelter, security. As the three pillars of a sustainable society. consumers, we need very few of the products Fortunately, some early versions of such a purchased in the marketplace. What we actumodel of business are beginning to appear. ally want, although we often do not fully unWhat has been called, alternatively, "sustainderstand ourselves, are services. As the able business," "the next industrial revolution," popularity of auto leasing shows, consumers or "natural capitalism" provide models for want convenient personal transportation, not business which can, in the words of the U.N. necessarily ownership of an automobile. As Commission on Sustainability, "meet the needs the information technology industry is showof the present without jeopardizing the ability ing, consumers want easy access to software, of future generations to meet their own." It is Internet, and e-mail, not ownership of a soona new business model that emerges out of a to-be-outdated piece of computer hardware paradigm shift in economics, management, or software written on 3K-inch floppies. As Inand ethics. We must, to borrow the phrase of terface Corporation has shown, people want economist Herman Daly, abandon the ecofloor-covering services, not carpet ownership. nomic model that takes unguided growth as This list goes on. the economic goal and replace it with one that This focus on services rather than products targets economic development.4' has important implications for both business What is the model of business that emerges and consumers. By emphasizing services rather from this new economics? First, we should recthan products, business has strong financial ognize that there is not a single, unique way in incentives to create longer-lasting, more which a sustainable business should be orgadurable products that are easily recycled back nized. Several models have been described in into the product stream. Significant entrethe literature, but we can abstract some compreneurial opportunities exist here for cremon aspects of these various models. 5 The first ative business leaders to seize this initiative in aspect is a significant increase in economic efcreating a service economy. Significant ecoficiency brought about by design changes innomic opportunity also exists as one-timespired by biological processes. This alternative product purchasers become long-term-service business model should be based on a principle lessees. Consumers benefit if they are helped of biomimicry in which wastes of the producto escape what has been called a commodity tion cycle are recycled back into a closed loop. fetish. Ethical Issues Regarding the Natural Environment A n o t h e r aspect of this alternative model requires business to invest in natural capital. For too long, business ( a n d growth-based economics) has treated the productive capacity of the earth's biosphere as an u n e n d i n g reve n u e stream. Earth's productivity was something that could be spent without cost. Only in the last few d e c a d e s have t h e t r u e costs of spending down o u r natural capital b e e n understood. T h e better m e t a p h o r is to think of t h e e a r t h ' s productivity as capital, as somet h i n g capable of g e n e r a t i n g r e v e n u e in the form of interest but not something that should be spent to the p o i n t where it is incapable of c o n t i n u i n g to be a source of income. A prud e n t financial strategy is to s p e n d interest b u t n o t capital. T h e earth has d e m o n s t r a t e d a remarkable ability to p r o d u c e life-sustaining necessities indefinitely, b u t only if we maintain sufficient savings in reserve to generate these necessities indefinitely. O n e of the most interesting things a b o u t this alternative m o d e l of sustainable business is the h u g e p o t e n t i a l it h o l d s for e n t r e p r e neurial activity. Creative business leaders will find vast opportunities for new business ventures that transform business from the old industrial m o d e l to the new sustainable model. Thus, Bowie's fear that doing good is too much to ask of profit-seeking institutions is illf o u n d e d . Sustainable business does n o t ask mangers to forego profits (although it would require that profits from ecologically destructive activities be a b a n d o n e d ) ; it only requires t h a t profits be o b t a i n e d in ecologically sustainable ways. T h e ecological guidelines for this new app r o a c h to business are, in their most general form, relatively straightforward. T h e entire economic production process takes resources from the biosphere;, turns them into products a n d services, a n d g e n e r a t e s by-products (or wastes) in the process. T h e ecological guidelines for sustainable business mirror the two sides of this production cycle. Resources going 537 into the p r o d u c t i o n process should b e used only at the rate at which they can be replenished by t h e productive capacity of the biosphere. By-products and wastes of this production process s h o u l d be g e n e r a t e d n o faster t h a n the earth's capacity to absorb t h e m . More specifically, we can recognize that econ o m i c resources c o m e in a variety of types. Some are n o n r e n e w a b l e , either in principle or in practice. O n c e a species becomes extinct, h u m a n s will never again have the ability to use it. O n c e oil or coal is b u r n e d , it is g o n e forever, in any practical sense of the word. Thus, use of n o n r e n e w a b l e resources ought, eventually, to b e e l i m i n a t e d b u t s h o u l d , in t h e m e a n t i m e , be r e d u c e d to a m i n i m u m . O t h e r resources are renewable, some only within certain p a r a m e t e r s , others practically without limit. Agriculture, fisheries, and forests are renewable, but only if we use them at modcrate rates. Used wisely, the earth can p r o d u c e biological resources at a sustainable rate indefinitely. O t h e r resources—energy p r o d u c e d by t h e sun, h y d r o g e n , wind, tides, a n d geothermal sources—are for all practical purposes infinite. An efficient, wise, a n d ethical sustainable business will use these infinitely available resources first, m o d e r a t e its use of o t h e r renewables, a n d wean itself from reliance o n nonrenewables. Similar guidelines can be developed on the waste a n d by-product side of business. Waste is a bad thing, b o t h economically a n d ecologically. Sustainable business must strive to eliminate all of the wastes created along each step of the p r o d u c t i o n cycle. In general, all wastes are sent back into the earth's biosphere and, to b e sustainable, must n o t be p u t t h e r e beyond the capacity of the biosphere to absorb them. For some by-products that will be easy. Much agricultural waste, for example, can be recycled b a c k i n t o the e a r t h as m u l c h . F o r o t h e r by-products, the pollutants of m u c h of the petrochemical or nuclear industry for example, that will be impossible. Such wastes will 538 Ethical Issues Regarding the Natural Environment need to be eliminated. But, to emphasize, business wastes are n o t only an ecological h a r m , they are also an e c o n o m i c h a r m . As the word itself suggests, wastes are unused resources a n d any business that has a lot of waste is an inefficient a n d poorly r u n business. G r e a t economic opportunities exist for discovering ways to transform this waste into useful resources. THE BUSINESS CASE FOR SUSTAINABILITY As previously outlined, both history a n d ethics can encourage us to think of sustainability a n d business as a zero-sum game: environmentally sustainable decision comes at a cost of profitability; p u r s u i n g profits r e q u i r e s business m a n a g e r s to forgo e n v i r o n m e n t a l responsibility. But the possibility exists that what is right in terms of sustainability, may also be right in terms of business p e r f o r m a n c e . O n e of t h e three pillars of sustainability, after all, is economic sustainability. If we expect business to address the significant global e c o n o m i c a n d e n v i r o n m e n t a l challenges of the twenty-first century, we n e e d vibrant a n d stable, i.e., profitable, businesses. Simply p u t , a sustainable business must b e a profitable business. C o n c l u d i n g that business should n o t prod u c e environmentally responsible goods a n d services unless a n d until consumers d e m a n d t h e m also misrepresents t h e dynamics of the marketplace. Consumers cannot d e m a n d what doesn't exist a n d what they d o n o t know about. For example, Toyota did n o t wait until consumers d e m a n d e d hybrid cars before they began designing a n d manufacturing the Prius. Toyota itself h e l p e d create t h e m a r k e t for hyb r i d cars. In contrast, by c o n c e n t r a t i n g o n past d e m a n d patterns, A m e r i c a n a u t o m o b i l e manufacturers were left b e h i n d in the hybrid market. Similarly, waiting for legal m a n d a t e s o u t of a fear of b e i n g p l a c e d at a competitive disadvantage has itself p r o v e n to be a competitive disadvantage. Business at the cutting edge of sustainable products a n d services will enjoy the advantages that go along with b e i n g the first to market. They are also likely to be the o n e w h o h e l p establish future standards. T h e sustainability paradigm starts with the assumption that the time is approaching when business institutions will either evolve into more sustainable enterprises or will simply cease to exist. T h e two forces of increasing social dem a n d for goods a n d services a n d the decreasing ability of die biosphere to provide resources to meet that d e m a n d are approaching a point at which they will merge. T h a t assumption is less a prediction of d o o m than it is an observation of present realities. But forward-looking, creative, a n d e n t r e p r e n e u r i a l companies will recognize this trend as offering tremendous opportunities rather than as creating barriers. Barring a catastrophe, society will survive a n d vibrant businesses must play a role in that survival. All m o d e l s lor sustainable developm e n t envision a central role for business in a sustainable future. It will, after all, be the businesses of the n e x t industrial revolution that m e e t the real needs of the billions of people living in that sustainable future. T h e businesses that survive in this sustainable world will b e businesses t h a t a n t i c i p a t e this c h a n g e a n d adapt to it o n their own terms. So, can a "business case" be m a d e for the move towards sustainability? In fact, some persuasive reasons can be offered to the business community for why it should move in the direction of sustainability. First, of course, is the h u g e m a r k e t r e p r e s e n t e d by t h e billions of h u m a n beings w h o face u n m e t n e e d s o n a daily basis. All too often economists a n d business m a n a g e r s c o n c e p t u a l i z e c o n s u m e r dem a n d in ways t h a t i g n o r e t h e n e e d s of t h e billions of h u m a n beings who lack food, clothing, shelter, medical care, jobs. There are enormous opportunities waiting for the businesses who r e s p o n d to this market. Ethical Issues Regarding the Natural Environment A convincing a n d detailed case for how this m i g h t h a p p e n has b e e n m a d e by business scholar C. K. Prahalad in his book The Fortune at the, Bottom, of the Pyramid. Prahalad a n d others have argued that e n t r e p r e n e u r i a l a n d creative businesses are finding ways to develop markets a m o n g the world's p o o r e s t p e o p l e . T h e 4 billion people comprising the base of the pyramid (the phrase c h a n g e d by Stuart H a r t to avoid t h e pejorative-sounding "bott o m " ' ) provide a m a r k e t so large a n d diverse that it can be addressed only in ways that are environmentally sustainable. It will simply be impossible to m e e t those needs with products a n d services that are resource a n d energy intensive, environmentally destructive, or socially insensitive. Sustainable enterprises will find h u g e markets at the base of the pyramid that unsustainable business and industry will be unable to satisfy. Beyond the unlimited opportunity for new markets, there are many potential cost savings available from the move towards sustainability. Significant savings can follow from eliminating wastes, reducitig o p e r a t i n g expenses, a n d striving towards ecoefficiency. Waste is a b a d thing, b o t h ecologically a n d financially. A company that reduces and eliminates its wastes will reduce its costs. A company that finds ways to turn waste into a new resource will increase its revenues from already existing assets. Sustainability also creates opportunities to decrease capital costs in building or remodeling facilities. Buildings designed from the start to be energy efficient, with bright, airy, a n d well-ventilated space will decrease costs and improve efficiencies over the long term. William M c D o n o u g h a n d Michael B r a u n g a r t ' s work with a new manufacturing plant for H e r m a n Miller, a large office furniture maker, is a case in point. H e r m a n Miller has a long tradition of socially responsible practices a n d has worked with M c D o n o u g h a n d B r a u n g a r t ' s c r a d l e to-cradle design protocol to develop truly sustainable furniture products. But in the early 539 1990s, H e r m a n Miller also worked with McD o n o u g h to design a n d build their new manufacturing plant in Michigan. T h e new design has paid dividends in the form of lower energy costs a n d increased worker productivity. H e r m a n Miller has also b e e n instrumental in c r e a t i n g t h e U n i t e d States G r e e n Building Council (USGBC) in 1993. T h e council describes itself as "the nation's foremost coalition of l e a d e r s from across t h e b u i l d i n g industry working to p r o m o t e buildings that are environmentally responsible, profitable, and healthy places to live a n d work." 8 Sustainable c o m p a n i e s can also a c q u i r e competitive advantages. N o t only would increased savings, r e v e n u e s , a n d efficiencies place a c o m p a n y in a better position relative to its competitors, b u t sustainable companies are poised to take advantage of "green" a n d sustainable m a r k e t s . Sustainable practices should not be only a marketing tool, of course, but one should not underestimate the growing c o n s u m e r m a r k e t for sustainable a n d environmentally beneficial products a n d services. A n o t h e r aspect of the competitive advantages of sustainability lies in the labor market. H e r m a n Miller discovered t h a t t h e i r g r e e n building became very popular with employees. Improved morale, increased employee loyalty a n d , simply, h e a l t h i e r a n d m o r e attractive working conditions for employees were added benefits of M c D o n o u g h ' s sustainable design principles. Business should also recogni/.e the real possibility of future g o v e r n m e n t regulation that may well r e q u i r e steps towards sustainability. T h e c o m p a n i e s already involved in sustainable practices are likely to play l e a d e r s h i p roles in fashioning future standards. Again, H e r m a n Miller provides an excellent example. In 1993, H e r m a n Miller was a f o u n d i n g sponsor of the U n i t e d States G r e e n Building Council. T h e USGBC is a n o n p r o f i t organization of architects, construction companies, engineering firms, a n d others in the building 540 Ethical Issues Regarding the Natural Environment industry committed to promoting "environmentally responsible, and healthy buildings for business and homes." The USGBC developed the LEED rating system (Leadership in Energy and Environmental Design), a voluntary classification system of common standards for creating and measuring sustainable buildings. The USGBC used Herman Miller's manufacturing plant designed by Bill McDonough as a model for the LEED certification and rating process. Today, there is a growing movement, especially among state and local governments, to require new construction to conform to minimal LEED standards. In the past, many companies waited until environmental regulations coerced them into action. At that point, many were overwhelmed by the costs of cleanup and compensation. Companies that wait will likely deal with sustainability as a compliance issue take similar risks. By taking the initiative in designing and constructing a sustainable building, Herman Miller helped create and set the standards that less innovative companies will now be challenged to meet. Finally, avoiding future legal liability provides another business reason for the move towards sustainability. There is no better means for managing both regulatory and legal risks than by being proactive in taking steps to prevent problems from occurring. The legal concepts of negligence and forseeability are just waiting to be exploited in holding business liable for the entire life cycle of its products. As municipalities struggle to find ways to dispose of solid wastes or clean up old polluted landfills, an obvious strategy will be to turn to the businesses who designed, manufactured, and sold those products and hold them accountable to take back their products, or pay for their proper disposal and cleanup. Legal developments in Europe and elsewhere already foreshadow this future. Beginning in the early 1990s, several countries have passed legislation mandating producer responsibility for the wastes created by their products. Variously referred to as "take-back" laws or "extended producer responsibility," such laws require that business be responsible financially, if not physically, for the eventual disposal or recycling of products that they place into the market. Spurred on by the European Union's Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) directives, over 20 European countries have already passed laws which encourage or require manufacturers to take responsibility for the eventual disposal of such products as batteries, electronics, fluorescent lights, appliances such as refrigerators and air conditioners, televisions, and automobiles. Japan, South Korea, and Taiwan have similar legislation. Business executives who do not anticipate such developments on a wider scale by beginning to redesign their products in ways that make reuse and recycling easier and even profitable are not acting as very prudent risk managers. FINAL REFLECTIONS The concept of sustainability has grown out of the recognition that economic development on a global level cannot be separated from questions of social justice and from ecological stability. The new worldview emerging as an alternative to the reigning paradigm of economic growth and free markets holds that long-term sustainability is the criterion of successful economic and social development. Sustainability involves three equally vital dimensions: economic, ecological, and ethical. Business, within this conceptualization, is no longer understood as having a primary economic goal, with ethical and environmental considerations functioning as side constraints. Business has three equally compelling goals that must be balanced over the long term. Ethical Issues Regarding the Natural Environment Environmental responsibility functions less as a side constraint on n o r m a l business activities a n d m o r e as a central part of the very mission of business in the twenty-first century. NOTES 1. Norman Bowie, Morality, Money, and Motor Cars, reprinted in this chapter. 2. These estimates are from Lester Brown, EcoEconomy: Building an Economy for the Earth (New York: W.W. Norton & Co., 200 J). 3. This definition of sustainability comes from the United Nations World Commission on Environment and Development (the "Bnmdtland Commission"), which published its findings on economic development and the environment in Our Common Future (New York: Oxford University Press, 1987). 4. Herman Daly, Beyond Growth (Boston: Beacon Press, 1996).' 5. My own thinking on this has been particularly influenced by three approaches: Herman 541 Daly's writing on ecological economics and especially in Beyond Growth; Amory Lovin, Hunter Lovins, and Paul Hawken's Natural Capitalism (Boston: Little, Brown, 1999); and William McDonough and Michael Braungart's, "The Next Industrial Revolution," Atlantic Monthly (October 1998). The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits," by C. K. Prahalad (Upper Saddle River, NJ: Wharton School Publishing, 2005). See also Prahalad and Stuart Hart, "The Fortune at the Bottom of the Pyramid," Strategy and Business 26 (2002): 54-67; and Prahalad and Allen Hammond, "Serve the World's Poor, Profitably," Harvard Business Revieiu (September, 2002). 7. Stuart Hart, Capitalism at the Crossroads (Upper Saddle River, NJ: Wharton School Publishing, 2005), 108, footnote 4. 8. Information about Herman Miller's long tradition of working towards sustainability can be found on the company's Web site: http://www. hermanmiller.com/. The United Stoles Green Building Council also maintains a helpful Web site, with links to local affiliates, at http^www. usgbc.org/. Genetically Modified Organisms and Business Duties Dennis R. Cooky New technology is o n e of the principal areas in which businesses struggle to find ethical solutions to moral dilemmas. Genetically modified organisms (GMOs) are one case in point. 1 In general, a genetically modified organism results from splicing foreign genetic material— a transgene—into a target organism's DNA to create an organism exhibiting at least o n e new genetic characteristic. T h e r e are already a vast array of GMOs for medical a n d food purposes in t h e m a r k e t p l a c e i n c l u d i n g goats t h a t p r o d u c e spider's silk in their milk, e n o r m o u s cows that give gallons of milk, and pigs, mice, and fish that glow in the dark. Plants have also been modified. Monsanto's R o u n d u p Ready™ crops, for e x a m p l e , are insusceptible to the company's R o u n d u p pesticide (glyphosate). Most plants die when sprayed with glyphosate b e c a u s e it blocks a key e n z y m e — E P S P synthase—in an a m i n o acid pathway. R o u n d u p Ready crops have a bacterium's DNA that is unaffected by glyphosate t h e r e b y allowing ) Copyright 2007 by Dennis R. Cooley. Reprinted with permission. Case: Indian “Suicide Zone” In much of India, the economy is still largely agricultural, which means that the economic growth of the nation is still strongly dependent on the environment. There is much poverty in India, and farmers struggle to produce both enough food and enough income to continue farming. This is not really a moral problem, since the conflict is between farmers and the environment itself. Low rainfall, slow growing crops, weak yields—these troubles are between the farmers and the land. However, when multinational corporations that originate in countries with advanced economies, the opportunity for exploitation arises. Monsanto, an American corporation well established as the leading producer of genetically modified strains of common crops, has begun selling genetically modified cotton seeds to Indian farmers, offering much larger yields for the same number of cotton plants. This seems like a good deal for the farmers, since they will be able to increase the amount of cotton they can produce in the same amount of land. The problem is that Monsanto's seeds are different from the native cotton seeds in a few key ways. First, they require more water than the native varieties of cotton, so the farmers' yields are not better if they do not have adequate irrigation for the new seeds. (And why would they, since they are used to the cotton plants that don't require the extra water?) Second, Monsanto's seeds require specific fertilizers and pesticides that are also produced by Monsanto. Third, the Monsanto seeds are what are called "terminator" seeds, which means that the plants grown from these seeds do not, at the end of their life cycle, produce their own seeds, as plants usually do. This means that farmers who use these seeds have to buy new seeds every year. This is obviously a good deal for Monsanto. If they can entice farmers with larger yields, they end up with customers for life who can only buy Monsanto products. If these were American farmers, we might say that this is a good deal for everyone. Farmers buy seeds, grow the crops, and sell the cotton, then return next year to buy more seeds. Everything might be fine. But these Indian farmers are different from American farmers in two important ways: they are very poor, and usually illiterate. This means that the Indian farmers can't just buy seeds. They have to trade on credit. They have to sign a contract that obligates them to pay Monsanto for the seeds after they harvest the cotton, becoming indebted to Monsanto in the meantime. These contracts probably explain the requirements for growing the genetically modified cotton, including clauses about the fertilizer, pesticide, and irrigation. But the Indian farmers don't know any of this, because they can't read the contracts. So they sign blindly, desperate to escape from poverty with the bigger harvests from the new seeds. When the farmers have to go into further debt when they learn that the special seeds require special fertilizers and they don't improve their yields because they don't have the necessary irrigation, they cannot pay their debts to Monsanto, and cannot buy more seeds the next year (which they wouldn't have to if the seeds were not "terminators"). The farmers are effectively out of business, and many, in their desperation, commit suicide. One effort to counteract the causes of the widespread economic distress and suicide is the formation of community seed banks, which aim to distribute non-patented seeds to farmers so they will not be dependent on Monsanto's products. You might say that the farmers shouldn't sign contracts they can't read, or that they shouldn't assume debts they can't pay, or that the government of India is responsible for educating the farmers, or for regulating the seed trade. But India's government doesn't have the resources or the infrastructure to do those things, and the farmers' desperation is likely to be more powerful than any amount of education on the risks they assume when dealing with Monsanto. The American corporation might be operating well within its moral responsibilities if its customers were Americans, but the company knows exactly what it is doing, and human lives are the cost of its business practices in India. Poverty and Pollution From: Moral Issues in Business 8th ed. Shaw & Barry (pp. 565-566) It is called Brazil's "valley of death," and it may be the most polluted place on Earth. It lies about an hour's drive south of Sao Paulo, where the land suddenly drops 2,000 feet to a coastal plane. More than 100,000 people live in the valley, along with a variety of industrial plants that discharge thousands of tons of pollutants into the air every day. A reporter for National Geographic recalls that within an hour of his arrival in the valley, his chest began aching as the polluted air inflamed his bronchial tubes and restricted his breathing. The air in the valley is loaded with toxins–among them benzene, a known carcinogen. One in ten of the area's factory workers has a low white blood cell count, a possible precursor to leukemia. Infant mortality is 10 percent higher here than in the region as a whole. Out of 40,000 urban residents in the valley municipality of Cubatao, nearly 13,000 cases of respiratory disease were reported in a recent year. Few of the local inhabitants complain, however. For them, the fumes smell of jobs. They also distrust bids to buy their property by local industry, which wants to expand, as well as government efforts to relocate them to free home sites on a landfill. One young mother says, "Yes, the children are often ill and sometimes can barely breathe. We want to live in another place, but we cannot afford to." A university professor of public health, Dr. Oswaldo Campos, views the dirty air in Cubatao simply as the result of economic priorities. "Some say it is the price of progress," Campos comments, "but is it? Look who pays the price–the poor." Maybe the poor do pay the price of pollution but there are those who believe that they should have more of it. One of them is Lawrence Summers, chief economist of the World Bank and subsequently Secretary of the U.S. Treasury. He has argued that the bank should encourage the migration of dirty, polluting industries to the poorer, less developed countries. Why? First, Summers reasons, the costs of health-impairing pollution depend on the earnings forgone from the increased injury and death. So polluting should be done in the countries with the lowest costs–that is, with the lowest wages. "The economic logic behind dumping a load of toxic waste in the lowest-wage country," he writes, "is impeccable." Second, because pollution costs rise disproportionately as pollution increases, it makes sense to shift pollution from already dirty places such as Los Angeles to clean ones like the relatively under populated countries in Africa, whose air Summers describes as "vastly under-polluted." Third, people value a clean environment more as their incomes rise. If other things are equal, costs fall if pollution moves from affluent places to less affluent places. Critics charge that Summers views the world through "the distorting prism of market economics" and that his ideas are "a recipe for ruin." Not only do the critics want "greener" development in the Third World, but also they are outraged by Summers's assumption that the value of a life–or of increases or decreases in life expectancy–can be measured in terms of per capita income. This premise implies that an American's life is worth that of a hundred Kenyans and that society should value an extra year of life for middle-level manager more than it values an extra year for a blue collar, production-line worker. Some economists, however, believe that Summers's ideas are basically on the right track. They emphasize that environmental policy always involves trade-offs and that therefore we should seek a balance between costs and benefits. As a matter of fact, the greatest cause of misery in the Third World is poverty. If environmental controls slow growth, then fewer people will be lifted out of poverty by economic development. For this reason, they argue, the richer countries should not impose their standards of environmental protection on poorer nations. But even if economic growth is the cure for poverty, other economists now believe that sound environmental policy is necessary for durable growth, or at least that growth and environmental protection may not be incompatible. First, environmental damage can undermine economic productivity. Second, poverty itself is an important cause of environmental damage because people living at subsistence levels are unable to invest in environmental protection. Finally, if economic growth and development are defined broadly enough then enhanced environmental quality is part and parcel of the improvement in welfare that development must bring. For example, 1 billion people in developing countries lack access to clean water while 1.7 billion suffer from inadequate sanitation. Economic development for them means improving their environment. Still, rich and poor countries have different environmental concerns: Environmentalists in affluent nations worry about protecting endangered species, preserving biological diversity, saving the ozone, and preventing climate change, whereas their counterparts in poorer countries are more concerned with dirty air, dirty water, soil erosion and deforestation.
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