Absolute Essentials of Green Business

Alan Sitkin

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429515699
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This short textbook provides a core understanding of the intersection between business and the natural environment. The sector's rapid expansion means that many university programmes are focusing to a greater extent nowadays on the career opportunities generated by the ecological imperative – a curriculum increasingly referred to as "green business".

Climate breakdown is a devastating issue facing contemporary society. With six out of the ten largest multinationals listed in the 2018 Fortune Global 500 being active in the energy sector, it is no surprise that more and more business schools are offering modules addressing the management of natural resources. The business world has made some progress incorporating green principles into their strategies and operations, but progress needs to accelerate in line with global agreements to prevent catastrophic ecological and environmental problems. Absolute Essentials of Green Business stands out because of its singular focus on a subset of this wider curricular area. By covering both the macro (framework) and micro (business strategy) aspects of the topic, the book's structure is in line with the way modules of this nature are taught in universities today.

Students of business and environmental studies will benefit from reading this concise textbook in order to develop their understanding of a fundamental element of the social science curriculum.

1 Introduction to green business

“$500 notes burn best”

ESSENTIAL SUMMARY

Like any discipline, green business reflects a context that learners would do well to understand before assessing how this new field of study applies to their future professional choices. The first thing that stands out is the multidisciplinary nature of green business, explained in the chapter’s initial section through an overview of the historical circumstances guiding its emergence. Quite unusually for a social discipline, however, green business also has deep roots in natural science, to the extent that it is valuable for learners to re-familiarise themselves with certain basic principles that they will have acquired during their earlier education. Lastly and in line with this book’s decision to question why green business has not spread more widely already, the chapter’s final section analyses explanations for the corporate world’s relative estrangement from environmentalism – the purpose being to determine how this gulf might ultimately be bridged.

Section I. The ecological mindset

Since the dawn of time, most civilisations have struggled to situate humankind’s connection to its natural environment. In the prehistoric era, before advances in technology and science created more rational ways of analysing this relationship, the predominant attitude was to fear nature’s potential for creating harm (through natural disasters, dangerous wildlife or starvation). Such fears were compounded by general ignorance of the physical processes underlying events over which our ancestors had little if any control. Early animists would often attribute a spirit to a place – its so-called genius loci – and view natural elements as moody gods with the power to either nurture or destroy humankind. Precautionary tales about nature abounded in ancient civilisations, exemplified in Greek mythology by stories about Prometheus or Icarus being punished or killed because they sought, respectively, to steal fire or fly close to the sun. More than living in harmony with the natural world, early populations felt a need to obey it.

Over time, most societies began assuming a more aggressive stance towards nature even as some voices continued to advocate harmonious coexistence. In the Judeo-Christian Bible, this ambivalence is witnessed in the contradictory statements from the book of Genesis that humans should “preserve the land” (2:15) but also “fill the Earth and subdue it” (1:26). Eastern religions also offered mixed messages, with many of Hinduism’s Vedic scriptures expressing reverence for the natural world while simultaneously doubting its reality. Without purporting to review the sum total of historical attitudes towards nature, suffice it to say that as different civilisations gained confidence in their ability to control nature, it lost its mystical properties and began to be seen as something that might be instrumentalised – all the more so given the widespread belief in the inexhaustibility of natural resources.

Over time, the combined effects of population growth, industrialisation and resource demand would cause many if not most inhabitants of Planet Earth to take their physical environment for granted. Later this would spawn a counter-reaction that focused, conversely, on the need to protect nature. This latter mindset, known today as ecological thinking, has opened the door to what contemporaries call green business.

It is important to clarify the diverse nature of the various strands comprising ecological thinking. Each has its own background and reflects different sensitivities that can best be understood in the context of the circumstances in which it arose.

Early strands of ecological thinking

It was in 1869, shortly after Charles Darwin published his text on the scientific principles driving the evolution of species, that German philosopher Ernst Haeckel coined the term “ecology”, derived from the Greek for house (οικος or oikos) and speech (λόγος or logos). Thus, ecology involves talking about every aspect of a community’s ability to survive in a particular place – an approach that is intentionally holistic and multidisciplinary, with objects of study always being viewed in the context of the many different factors that enable life.

Haeckel was not the first scholar to engage in such thinking, however. In the late 18th century, for instance, the English demographer Thomas Malthus devised a series of laws showing how population growth causes crises due to the competition for finite resources. This paradigm still applies, one example being the link between today’s accelerated resource depletion and new demand emerging from many emerging economies. In many cases, ecological distress is still best analysed in population size terms.

Another notable thinker from the early 19th century was German botanist Alexander von Humboldt, who applied rudimentary ecological principles to forestry projects across Latin America and India. It is significant that the countries where Humboldt conducted his experiments were places of great political and economic interest to England and Spain, the colonial powers of the day – an early example of how material interests are as much a driver of scientific study of the natural world as the desire for pure knowledge is. Given the preponderance of agricultural economics during this era, it is also no surprise that Humboldt’s discoveries disseminated quickly throughout European farming. Ties between science and business have a long history.

Having said that, the motivation driving many other 19th-century writers with an interest in the environment was not material but spiritual – a mindset that also exists today. In 1854, New England essayist Henry David Thoreau wrote a seminal compilation entitled “Walden” extolling humans living in harmony with nature. Similar attitudes were advocated 40 years later in California by John Muir, explorer of Yosemite Park and founder of the Sierra Club, and in England by the author Beatrix Potter, who purchased large tracts of land in the Lake District to prevent development. Potter’s actions exemplified the fears felt by some in Europe and North America that their idyllic countryside was being destroyed by factories, denounced by the poet William Blake as “satanic mills”. Vestiges of this attitude can be seen in certain modern land planning laws, including “green belt” restrictions limiting growth on metropolitan peripheries.

The first half of the 20th century was an industrial era marked by the rise of Fordist mass production and consumption. There were a few notable ecologists, like US President Theodore Roosevelt, whose administration created his country’s first national parks. By and large, however, the environment was a peripheral issue in most societies at the time, especially in countries at the earlier stages of industrial development – an international differentiation marking green business studies to this day. One poignant example is Russia’s old Soviet regime, which in its rush to conquer a vast territory undertook the astounding step of reversing the direction of major rivers to enhance their economic utility. Another was the uncontrolled deforestation of vast swathes of Latin America and Asia – following a pattern of poor soil practice long witnessed in the older industrialised countries (exemplified in the 1930s by the Oklahoma “Dust Bowl”). All in all, this was an era when economic development tended to supersede ecological priorities most everywhere.

The rise of mass environmentalism

Improved economic well-being during much of the late 20th century coincided with growing acceptance of an ecological imperative. Such changes raise questions about the extent to which a green mindset derives from a “social ecology” reaction to environmental imperatives – a mindset grounded in science and real social–political interactions – or from a “deep ecology” stance rooted in a quasi-religious attitude. The debate continues even today (Figure 1.1).

Figure 1.1 Different Strands of the Ecological Mindset.

The social ecology approach can be witnessed in the chain of events that followed the mid-20th century “Green Revolution” that used technology to increase agricultural productivity. A key element of this agenda was the introduction of pesticides such as Dichlorodiphenyltrichloroethane (DDT) that seriously damaged water systems (and bird populations) worldwide. The rising volume of industrial effluents was having the same effect, one notorious case being Japan’s Minamata Bay disaster, where mercury outflows from a local factory poisoned local fish stocks, increasing cancer rates and the number of children born with deformities. The end result was the 1962 publication of a book that became a seminal work for the global environmental movement: Silent Spring, written by the American marine biologist Rachel Carson. The resonance of this text was such that governments worldwide started establishing quality authorities and enacting legislation meant to change business practices. One direct effect was that many chemical companies began researching new ways of increasing crop yields. Within a few decades, this would contribute to the development of genetically modified (GM) organisms, becoming in time another topic of controversy for environmentalists. The lesson from this chain of events is that much in the same way that environmentalists highlight the interdependency of natural processes, there is also an ecological relationship between the different business, political and social forces whose actions affect the environment. Ecology is as much as social science as a natural one.

It was towards the late 1960s and early 1970s that the global environmental movement finally achieved self-awareness. Professors at the University of California, Santa Barbara, having witnessed the devastation wreaked on the local coastline by an oil spill in 1969, launched one of the world’s first environmental studies programmes. The economic foundations for this new discipline were laid in seminal texts produced by a new vanguard of scholars. These included Garrett Hardin’s The Tragedy of the Commons (1968), Paul Ehrlich’s The Population Bomb (1968) and E. F. Schumacher’s Small Is Beautiful: Economics As If People Mattered (1973). Some observers also trace this rise in environmental awareness to Apollo moon flight images taken of a beautiful but vulnerable Planet Earth – imagery that sparked a famous 1972 treatise by British scientist James Lovelock, “Gaia as seen through the atmosphere”.

The sum total of this corpus meant that by the mid-1970s, ecologists had the intellectual means to sustain a vocal constituency. The activist organisation Greenpeace, founded in Canada in 1972, launched several high-profile campaigns (against nuclear testing and commercial whaling), operating alongside older groups such as World Wildlife Fund (1961) and Friends of the Earth (1969).

At first, these movements barely echoed in the general public. Interest in the environment, crystallising in events like the first “Earth Day” organised on 22 April 1970, seemed largely confined to marginal or academic constituencies. Several governments began to diffuse environmental messages – one example being a campaign launched in France during the 1970s asking citizens to “hunt down waste” (chasse au gaspi) and reduce the mountains of litter plaguing the country’s landscape. Large-scale efforts of this kind were few and far between, however.

The same apathy continued into the early 1980s, an era whose predominant zeitgeist is often deemed to have prioritised individualism and material welfare, famously encapsulated in the dictum from Oliver Stone’s emblematic film Wall Street that “greed is good” – a philosophy diametrically opposed to the abnegation that is one pillar of much ecological thinking. Similarly, many economies like India, China and Brazil that are in the process of emerging today were still suffering from abject poverty at the time –meaning their main priorities were material, with environmentalism generally viewed as irrelevant (and possibly provocative).

By the late 1980s, however, there were clear signs in many countries that green thinking was starting to go mainstream. One indicator was the growing number of politicians seeking to co-opt environmental ideas, often for electoral purposes but also because a series of disasters over the previous 15 years had convinced many of the need to finally face up to the problem. In Germany, the world had already witnessed the first serious attempt by a green movement to gain political power. “Die Grüne”, originally led by Petra Kelly and Joschka Fischer, was born out of anti-nuclear power demonstrations in cities like Hamburg that had earned much publicity and admiration worldwide. At a transnational level, 1987 saw both the Brundtland Commission’s seminal report enshrining the concept of “sustainable development” and the Montreal Protocol’s restrictions on further use of harmful chlorofluorocarbon (CFC) compounds creating holes in the Earth’s ozone layer. This latter action had a decisive effect on the industrial activities of refrigerator manufacturers worldwide. It is also one of the first examples of a global policy, driven by actors’ sense of the ecological imperative, constraining companies’ room to manoeuvre while creating opportunities for commercial expansion (substances replacing the noxious CFCs).

Another key factor was accelerating globalisation. This had a contradictory effect, with the explosion in world trade increasing demands on planetary resources even as the concomitant rise in information exchanges spread global environmental consciousness. Such awareness would disseminate further through the efforts of the “eco-pedagogy” movement that the Brazilian educator Paolo Freire founded in the wake of the UN’s 1992 Rio Earth Summit, based on the idea that all academic learning needed to be rooted in ecological thinking because the impossibility of material happiness meant there was no other alternative. This new value system, diametrically opposed to the one conveyed in traditional corporate marketing campaigns, would pave the way for the rise of “social marketing”, one category of which became “green marketing”.

By the 2000s, most societies worldwide featured active green lobbies whose words and deeds resonated throughout the media. Embodied in global benchmarks like the United Nations Sustainable Development Goals, environmentalism is a bona fide social and political aspiration today – as well as an integral part of the corporate social responsibility (CSR) agenda to which many companies adhere. The recurrence of ecological disasters – like Hurricane Katrina that devastated New Orleans in 2005, the red toxic sludge that overwhelmed the Hungarian town of Kolontar in 2010 or 2018’s record global summer heat wave –has convinced more and more citizens worldwide to view ecological breakdown as an absolute imperative. The question then becomes whether business feels the same (Figure 1.2).

Figure 1.2 Recent Ecological Disasters Sharpening Green Sensitivities.

Section II. Basic science for managers

At one level, green business seeks to overcome the centuries-long estrangement between economics and ecology by asserting the interdependency between the two – a linkage famously expressed in the concept of “natural capitalism”. It remains that this re-connection will only take root if all managers – and not just R&D or manufacturing specialists – are equipped to integrate ecological principles into their business decisions. The first step towards empowering managers with this capability is to ensure a wider diffusion of relevant knowledge.

Green business and general scientific principles

Biology features many elements relevant to future managers’ green business decision-making. At an applied level, the concept of “bio-utilisation” speaks to new uses of organisms as raw materials, exemplified by plant-based plastics. Analogous concepts such as “biomimicry” refer to the use of enhanced design to create goods with properties imitating the natural world. These approaches are part of a general search for sustainability in the original sense of this term, i.e. the capacity of organisms (or ecosystems) to self-perpetuate. Species’ ultimate survival depends on their evolutionary ability to defend themselves...