Environmental Business

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ENVIRONMENTAL BUSINESS. Since the late nineteenth century, scientists have documented how industrial production and consumption practicies have damaged the environment and human health. From early concern over coal-derived air pollution and toxins in the workplace, concern has shifted to nuclear issues, species extinction, solid waste disposal, toxic pollution, pesticides, deforestation, and global warming. As this evidence has accumulated, businesspeople, economists, environmentalists, and consumers have begun to struggle with ways to make businesses environmentally responsible. Some observers believe that "environmental business" is an oxymoron, that business by definition cannot be environmentally sound. Others maintain that business has made sufficient concessions to environmental concerns. By the 1990s, however, a growing number of consumers and businesspeople were striving to incorporate environmental, moral, and ethical concerns into business practices.

According to the U.S. Congress's Office of Technology Assessment, there are five conceptual frameworks that describe the diverse ways in which businesses and government approach the interface between business and the environment. Frontier economics emphasizes economic growth and unlimited resource exploitation. Environmental protection recognizes the environment as an economic externality that must be protected through regulations that ban or limit activities that degrade the environment. Under this view, cost-benefit analysis resolves conflicts between the economy and the environment, with the goal of reducing the quantity and toxicity of waste. Resource management attempts to internalize environmental costs through measures of policy and economic performance, such as green taxes or tradable pollution permits. Resource management maintains that ecological productivity is necessary to the economy and emphasizes resource conservation as well as waste reduction. Ecodevelopment suggests making the economy sustainable by modeling industrial production on ecological systems, which entails moving from linear production systems to closed, circular ones. It stresses designs that avoid toxic materials, replacing nonrenewable with renewable resources, and ensuring recycling of essential nonrenewable materials. Unlike the previous models, ecodevelopment does not see technology as a substitute for natural resources. Lastly, deep ecology calls for harmony with nature and prescribes drastic reductions in human population and the scale of human economies.

For the most part, changes in business practices during the last quarter of the twentieth century fell under the environmental-protection rubric. But as shareholders and consumers began to seek out environmentally responsible companies and regulators sought to mobilize the market to induce environmentally responsible behavior, businesses began to use resource management and ecodevelopment strategies. By 2000 more than $2 trillion had been invested in socially and environmentally screened investment funds in the United States. These investors and consumers could make decisions based upon the information companies are now required to make public such as toxic-release inventories. The requirement that companies measure their pollution and make the information public has led many businesses to adopt processes and technologies that reduce or prevent environmental degradation. In addition, for some time, many companies have been recycling waste; more and more are starting to use products made from recyled materials. A growing sector of the economy is offering products that reduce the consumers' impact on the environment. And some businesses have been developing the expertise to take advantage of emissions trading programs that are likely to be a feature of the twenty-first century marketplace.

The "greening of business" has made "green labeling" an important issue for consumers and businesses. An increasing number of consumers want to purchase products made from recycled materials, produced in environmentally sensitive ways, that help consumers reduce their own energy use or enhance their health. In some cases, such as organic produce, the federal government has assumed responsibility for defining "green products." In most cases, however, private third parties offer certification of environmental and social attributes. In the United States, the three major green labelling organizations are Green Seal, Scientific Certification Systems ("Green Cross"), and Energy Star.

At the beginning of the twenty-first century, it is clear that CEOs ignore the impact of their business practices upon the environment at their peril. It is also clear that government will continue to have a role in shaping the interface between the environment and business, especially since environmental problems do not respect state or national boundaries.


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Susan J.Cooper/c. p.

See alsoAir Pollution ; Conservation ; Endangered Species ; Energy, Renewable ; Energy Industry ; Global Warming ; Hazardous Waste ; Nuclear Power ; Waste Disposal ; Water Pollution .

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