SIX

ENVIRONMENT EXPLOITATION

On November 2, 2014, the Intergovernmental Panel on Climate Change, consisting of scientists and other experts, warned that “failure to reduce emissions . . . could threaten society with food shortages, refugee crises, the flooding of major cities and entire island nations, the mass extinction of plants and animals, and a climate so drastically altered it might become dangerous for people to work or play outside during the hottest times of the year.”¹ Is capitalism neutral in its effects on the natural environment and planet earth? Do companies produce and distribute their products and services in a way that is generally good for the environment or generally bad for the environment? If the latter, how can companies be motivated to adopt practices that will lead to a more sustainable world? Is there a contradiction between business objectives and environmental objectives?

There is a range of views on this question. Paul Hawken, an eminent ecologist, believes that businesses can adopt ecological practices without hurting their bottom line and, in fact, maybe improve their bottom line.² He emphasizes three things that companies must do: (1) end waste, (2) shift to renewable power (e.g., solar and hydro), and (3) create accountability and feedback.

At the other end of the spectrum, John Bellamy Foster, another well-known ecologist, views capitalism as intrinsically incapable of protecting the environment. He says if we want to save planet earth, we would have to change our system to socialism.

For much of American business history, businesses paid little or no attention to their impact on the environment. America had abundant land, trees, water, fish, and coal. The American mindset was to master nature and to exploit its seemingly infinite resources. As Americans moved west, wetlands were destroyed, deforestation was rampant, and prairie grasses were cut down to make room for growing crops. To increase the crop yield, pesticides such as DDT were sprayed to protect the crops against insects and diseases.

In the 1930s, the country experienced a terrible Dust Bowl, resulting from overplowing and the loss of rich topsoil, made worst by years of no rain. As our cities expanded, so did air and water pollution expand. Los Angeles’s famous smog problem was produced by the rapid growth in the number of automobiles on the roads, allowing workers to commute over a huge territory. The fish in Lake Erie started to die because of dumped chemicals and other pollutants. Polar bears are struggling for life on melting icecaps as a result of climate change. And industry moves ahead installing more oil rigs in the Atlantic, ignoring the oil rig disasters in the Gulf Coast.

CLIMATE CHANGE AND ENERGY NEEDS

There remains a clash between climate change and energy needs. The United States has cheap coal deposits that can be burned and turned into electrical energy. But burning coal releases carbon dioxide (CO2) into the atmosphere, causing a heat trap. This makes the weather warmer on earth and explains the melting icecaps. Melting icecaps cause the sea level to rise, threatening many coastal cities and leading to more dangerous hurricanes fed by warmer water and increasingly acidic oceans. Things will get worse if the earth’s temperature rises more than two degrees centigrade.

The extra heat not only warms up the ocean but also pulls moisture from the soil, causing longer-lasting droughts. As trees and other vegetation dry, the frequency and size of fires also increase. Food crops such as corn, wheat, and rice are negatively impacted by heat stress. Such changes are pushing bacteria and disease-carrying species, like mosquitoes, ticks, and other pests, beyond their native ranges. There is so much animal and plant loss occurring that it threatens to eliminate 20 percent to 50 percent of all living species on earth in this century.

Clearly the solution is to reduce the pollution from coal and other fossil fuels and get energy from more neutral sources such as solar panels, wind turbines, and water power. The shift to renewables hurts the coal companies economically, and they will inevitably battle attempts in our courts to curtail use of coal. It also hurts consumers because these neutral energy sources cost more. This is one example of the many tradeoffs involved in trying to meet the needs of commerce while protecting the environment.

THE RISE OF THE ENVIRONMENTAL MOVEMENT

Although most businesses paid little attention to the environment, there were always some lonely voices reminding us of nature’s beauty and fragility. Henry David Thoreau taught us about the beauty of the woods and the flowers and the creatures. Walt Whitman wrote poetry celebrating nature. John Muir, the naturalist, urged us to protect the wilderness. His friendship with President Theodore Roosevelt helped produce our national parks movement. The Audubon Society, started and managed largely by women, was formed not only to protect birds, but to love nature. An ecology movement started in the 1920s, making us aware of the interdependence of nature, where every plant and animal species is connected with other species. In 1962, Rachel Carson wrote Silent Spring, about the danger to our water resources from pesticides and other chemicals flowing into them.³ A movement toward environmental justice grew, urging us to live in more harmony with nature. The book The Limits to Growth, published in 1972, told us that the world’s rapid growth in population and consumption could cause us to run out of essential, nonrenewable resources if we don’t begin to practice care in the use of our resources.⁴ Under President Richard Nixon, the Environmental Protection Agency (EPA) was set up to exercise some control over potential damage to the environment. Environmental groups, such as the Sierra Club, The Nature Conservancy, Friends of the Earth, Worldwatch Institute, and many others, staked out environmental areas in which they would exercise their vigilance and influence.

The result is that today, businesses and households are much more ecoconscious. Manufacturers now produce household appliances that list their energy consumption. Households sort their packaging into paper, glass, plastics, and garbage. There is increased interest and even profits to be made in reworking, reusing, and recycling. The EPA has required certain industries and companies to invest in pollution-control equipment to reduce the output of carbon emissions. That is the good news.

We are entering a new energy era with the process of fracking (where rock is fractured by hydraulically pressurized liquid to get at deep-rock gas and oil reserves) and the availability of cheap abundant natural gas. Coal plants are shutting down. Four nuclear plants are being built. We are reducing our dependence on oil, which led in the past to our heavy military involvement in the Middle East.

Over thirteen countries—including China, Taiwan, South Korea, and Russia—are investing in building nuclear reactors as their preferred source of energy.⁵ Nuclear energy will cause less damage to the world’s climate and environment than oil but will pose the dangers of nuclear plant explosions and the disposition of nuclear waste material.

COMPANIES ADOPTING AN ECOLOGICAL CONSCIOUSNESS

Today, more than forty global banks, and many insurance companies, demand proper examination of ecological costs as a condition for funding or insurance coverage. More companies are finding it smart to move toward sustainable business practices. A company that acts sustainably considers the potential impact of its processes and products on the local environment and society as a whole. A good example is Timberland, a maker of outdoor clothing, equipment, and boots. Management at Timberland decides carefully on all the materials purchased and chooses only suppliers who themselves are practicing deep sustainability.

Another good example is the clothier Patagonia, which advises: “[We] aim to close the loop on the product life cycle—to make old clothes into new and keep them from ever reaching a landfill or incinerator. Reduce what you buy. Repair what you can. Reuse what you no longer need. Recycle what’s worn out. Reimagine a world where we take only what nature can replace. . . . Together we can reduce our environmental footprint.”

The late Ray C. Anderson, CEO of Interface Inc., the world’s largest carpet-tile company, became an influential ecological advocate. At age 60, he read Paul Hawken’s book, The Ecology of Commerce, and he suddenly saw himself as a plunderer. He decided never again to manufacture carpeting in the former wasteful way. He reinvented his worldwide factory operations and pleaded with other executives to reduce waste and carbon emissions. His company profits actually increased and he became a “recovered plunderer.” “What started out as the right thing to do quickly became the smart thing. . . . Cost savings from eliminating waste alone have been $262 million,” he told an audience of business executives. “We are all part of the continuum of humanity and life. We will have lived our brief span and either helped or hurt. . . . Which will it be?”⁶

Among the top 100 companies practicing sustainability are BASF, BMW, Bombardier, Siemens, and Samsung.⁷ They have accepted that pursuing growth, profitability, and sustainability are compatible goals. But we need more companies, nonprofit organizations, and government units to join this movement. We are still far behind reaching the point where we can relax.

ENVIRONMENTAL PROBLEMS CONTINUE TO HAUNT US

In his book Capitalism 3.0, Peter Barnes says capitalism still produces environmental and social costs that are rising faster than the production benefits.⁸ He claims that if we subtracted the environmental costs from our GDP, the net GDP might be half the size.

Tim Jackson, in his book Prosperity Without Growth: Economics for a Finite Planet, observes that while we are getting more production for any carbon we emit into the atmosphere (we have become 25 percent more efficient globally in the past forty years), our actual carbon output is up by 80 percent.⁹ More people are finding more ways to burn fossil fuels. Jackson reports on our overuse of important materials such as copper, bauxite, and iron ore. He points out that if the rest of the world reached our economic level, world supplies would be exhausted within twenty years. He says we are addicted to wanting new products that themselves are constantly upgraded, leading to a “throwaway society.” Citizens have anxiety about being judged by what they own; they strive for acceptance by acquiring new things. Jackson sees the highly competitive capitalistic society as having one purpose: to sell “more.” He concludes: “Prosperity for the few founded on ecological destruction and persistent social injustice is no foundation for a civilized society.”¹⁰

The United States remains the world’s second largest consumer of energy and materials after China. Our preference for beef over other food items makes for expensive land use, not to mention the added problems of high methane emissions and human obesity. Our preference for new products and their constant upgrading is also increasing the problem of how we dispose of our physical goods.

Activist Naomi Klein launched her diatribe against those denying climate change or who think we can live well with climate change in This Changes Everything: Capitalism vs. The Climate (Simon & Schuster, 2014). She says that free markets don’t work when it comes to protecting public goods such as clean air and safe water. She sees greed in the fossil fuel companies and their supporting lobbyists and politicians who make lots of money exploiting the environment. She advocates much more local production as an alternative to buying goods from distant lands, such as China, which ends up consuming so much fuel and polluting the air. She calls for a new social movement of the magnitude of earlier movements that abolished slavery, colonialism, and other terrible conditions.

There is still much to be concerned about. The Limits to Growth: The 30-Year Update (published in 2004) reports that there has been a worsening of the environment since the influential book’s original publication in 1972.¹¹ Here is a small sample of the environmental concerns cited:

• “Sea level has risen 10–20 cm since 1900. Most non-polar glaciers are retreating, and the extent and thickness of Arctic sea ice is decreasing in summer.”
• “In 2002, the Food and Agriculture Organization of the UN estimated that 75 percent of the world’s oceanic fisheries were fished at or beyond capacity. The North Atlantic cod fishery, fished sustainably for hundreds of years, has collapsed, and the cod species may have been pushed to biological extinction.”
• “The first global assessment of soil loss, based on studies of hundreds of experts, found that 38 percent, or nearly 1.4 billion acres, of currently used agricultural land has been degraded.”

WILL THE WORLD BE ABLE TO PRODUCE ENOUGH FOOD?

The earth’s population is estimated to grow from 7 billion to 9 billion people by 2050.¹² The earth will have to support the production of enough food, animal feed, and biofuels to meet the population’s growing needs. Here are the major problems in this area:

• The earth is losing arable land through top soil erosion, resulting from one-crop specialization and deforestation and city growth that removes arable land.
• Agriculture requires a great deal of water, which is diminishing as the planet heats up, water evaporation speeds up, and much water is wastefully used. According to the World Resources Institute, thirty-seven countries face “extremely high levels” of baseline water stress.¹³ In these countries, companies, farms, and residents are highly vulnerable to even the slightest change in supply. Desalination of ocean water offers a big hope but is extremely costly in terms of energy and dollars.
• Agriculture is a major cause of water and air pollution through airborne germs and agricultural drain-offs. Agriculture causes 30 percent of our greenhouse gas emission.
• Much arable land is used to grow grass or soybeans for animal feed. Diets are getting richer in protein, which requires more resources than a vegetarian diet.
• Much grown food is wasted through spoilage during storage or shipment.
• People in developed countries consume much more food than is necessary, causing obesity and other problems.

Clearly citizens and governments must take more steps to improve food production. Some areas in the world have unused land that can be converted into arable land. Farmers must be taught more advanced methods of increasing the yields on arable land. More sources and uses of water and nutrients must be developed. Meat consumption should be reduced as a way to turn grasslands into more farm areas. The use of pesticides should be reduced and more use made of organic farming. Despite the warning from some environmental groups, accepting genetically modified foods would help protect more plants from the need for pesticides.

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Here are the top ten environmental issues that business needs to consider:

1. Climate Change
2. Energy
3. Water
4. Biodiversity and Land Use
5. Chemicals, Toxics, and Heavy Metals
6. Air Pollution
7. Waste Management
8. Ozone Layer Depletion
9. Oceans and Fisheries
10. Deforestation

Each of these environmental issues has been discussed in dozens of books. Here are some of them: Priority One: Together We Can Beat Global Warming; Water: The Fate of Our Most Precious Resource; Pandora’s Poison: Chlorine, Health, and a New Environmental Strategy; Blue Frontier: Dispatches from America’s Ocean Wilderness; The Blue Death: Disease, Disaster, and the Water We Drink; Natural Capitalism: Creating the Next Industrial Revolution; Sustainable Value Chain Management; Energy Management in Business; and The Business Leader’s Guide to the Low-Carbon Economy.

It has been documented that most investments to reduce environmental costs are recouped within twelve to eighteen months. As an example, 3M saved $1 billion in the first year alone on pollution reduction and, over the course of a decade, was able to reduce its pollution by 90 percent.¹⁴

The United States unfortunately lags behind many other countries in paying attention to climate change. Only 40 percent of Americans polled “strongly agreed” that the earth is getting warmer and thought that their politicians should fight global warming, compared to 75 percent of Brazilians. People in Germany, South Korea, India, Turkey, and several other countries also favor more steps to protect the earth.¹⁵

The real need is to convince businesses that sustainability is profitable, that sustainability creates a competitive advantage. Much of the pollution problem can be reduced if we manufacture lighter cars and especially electric-powered cars. We also need to rework our buildings and homes to be more energy efficient. We need to stop using coal and other carbon-intensive energy sources.