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Chapter 11:
ENVIRONMENTAL MANAGEMENT
CHAPTER 11 CHAPTER AND ADDITIONAL QUESTIONS
In studying this chapter, students should consider the questions below.
“CQ1” refers to “Chapter Question 1.” This question appears at the end of the textbook
chapter.
“AQ1” refers to an “Additional Question 1.” This is an “additional” question related to
the chapter. It is not listed at the end of the textbook chapter as a “Chapter Question”.
These items are numbered within the two categories based on the order in which the
answer appears in the chapter.
CQ1: Describe the nature of climate change and its impacts.
CQ2: How have federal, state, and municipal governments responded to environmental
problems?
CQ3: What are the competitive advantages of being eco-friendly?
CQ4: What specific actions can businesses take to improve their environmental performance?
CQ5: Describe how to manage the environmental change process within an organization.
AQ1: How can organizations communicate eco-friendliness to employees and suppliers?
CQ6: What are the key features of an Environmental Management System?
CQ7: How can an organization assess environmental risk and apply the Natural Step framework?
AQ2: Describe green packaging and building initiatives.
AQ3: Describe environmental performance indicators and how to offset an organization’s carbon
footprint.
CHAPTER 11 LEARNING OBJECTIVES
After completing this chapter, students should be able to:
Understand climate change and government responses to environmental problems
Articulate the competitive advantages of being eco-friendly
Manage the environmental change process
Create an Environmental Management System plan
Develop measureable environmental goals and objectives
Assess environmental performance
CHAPTER 11 OVERVIEW
Treating the Earth with respect is one of the greatest ethical and management challenges.
This chapter summarizes environmental problems and the efforts of environmental organizations,
government, and businesses to address them. Environmental management is a competitive
advantage that can save the organization money, enhance its reputation, and attract and motivate
employees. The chapter examines how superior environmental performance can be achieved by
screening suppliers, adopting an Environmental Management System and The Natural Step
framework, conducting environmental risk assessments, designing eco-friendly products,
operating in green buildings, and monitoring environmental performance indicators.
CHAPTER 11 LECTURE OUTLINE
Teaching Objective: To increase awareness of climate change issues and how to improve
environmental performance.
Suggested Time: Two to three hours of class time is recommended to present this chapter.
I. Chapter Question 1: Describe the nature of climate change and its impacts.
Environmental trends
II. Chapter Question 2: How have federal, state, and municipal governments
responded to environmental problems?
Environmental organizations
Government regulation
International agreements
III. Chapter Question 3: What are the competitive advantages of being eco-friendly?
IV. Chapter Question 4: What specific actions can businesses take to improve their
environmental performance?
Media green company inventory
V. Chapter Question 5: Describe how to manage the environmental change process
within an organization.
VI. Additional Question 1: How can organizations communicate eco-friendliness to
employees and suppliers?
Green mission statement
VII. Chapter Question 6: What are the key features of an Environmental Management
System?
VIII. Chapter Question 7: How can an organization assess environmental risk and apply
the Natural Step framework?
IX. Additional Question 2: Describe green packaging and building initiatives.
X. Additional Question 3: Describe environmental performance indicators and how to
offset an organization’s carbon footprint.
CHAPTER 11 SUPPORTING MATERIALS
Textbook Inserts
Ethical Dilemma Analysis
What would you do?
Let’s Build a Building
In the Real World: Enron
Exhibits
Exhibit 11.1: Energy Sources per Nation
Exhibit 11.2: 2009 U.S. Weather Disasters
Exhibit 11.3: Key Environmental Regulations During Richard Nixon’s Administration
Exhibit 11.4: Competitive Advantages of Being Eco-Friendly
Exhibit 11.5: Green Actions
Exhibit 11.6: 15 Simple Steps for Greening Your Lifestyle
Exhibit 11.7: Managing Environmental Change
Exhibit 11.8: Starbucks Environmental Mission Statement
Exhibit 11.9: Sustainable Products Checklist
Exhibit 11.10: Environmental Management System (EMS) Plan
Exhibit 11.11: Identifying Environmental Risks
Exhibit 11.12: The LEED Version 3.0 Rating System
Thematic Boxes
Tips and Techniques
Best Practice in Use
CHAPTER QUESTION 1: DESCRIBE THE NATURE OF CLIMATE CHANGE AND
ITS IMPACTS.
ENRIVONMENTAL TRENDS
The number of people consuming the Earth’s scarce resources continues to rise.
The higher the population, the greater the number of organizations needed to meet ever
Organizations not only meet the needs of consumers, but are one of the largest consumers
Organizations can also cause tremendous environmental damage through negligent
behaviors, such as the April 20, 2010 BP oil spill.
CLIMATE CHANGE
There is strong scientific consensus that global warming is occurring.
The National Aeronautics and Space Administration (NASA), which monitors weather
patterns, reports that the 10 hottest years in recorded history have all occurred since 1998.
The Earth’s temperature has increased by 1.4 degrees Fahrenheit since the Industrial
Revolution.
The Intergovernmental Panel on Climate Change, composed of 2,500 scientists and risk
experts, estimates an increase in the Earth’s temperature of between 2.5 to 10.4 degrees
Fahrenheit by 2100 if no major efforts are undertaken to reduce greenhouse gas
emissions.
What causes climate change? According to the Union of Concerned Scientists, “the
primary cause of global warming is from human activity, most significantly burning of
fossil fuels to drive cars, generate electricity, and operate our homes and businesses.”
For ten thousand years, until the Industrial Revolution, the earth’s atmosphere contained
280 CO2 molecules per million of atmospheric gases. By 2007, every million molecules
of atmosphere gases contained 384 CO2 molecules.
oScientists predict that within 50 years there will be 550 CO2 molecules per
million if laws and energy policies remain unchanged.
Not everyone agrees with these climate change projections, causes, or consequences.
oScientific knowledge about climate change is always incomplete and uncertain.
oScientific projections into the future are based on a series of assumptions that may
not be valid.
oThe data may be manipulated for political or religious reasons.
oA small number of scientists maintain that continual record highs do not prove
that global warming is occurring.
Weather changes can be cyclical rather than accumulative as extreme
droughts and floods have been experienced at other times in history
In addition, they argue, there is no proof that the higher temperatures are
the direct cause of the weather extremes currently being experienced.
CLIMATE CHANGE IMPACTS
oAltered weather patterns have increased the frequency and severity of droughts and
flooding in summer, and snowstorms in winter, which damage the economy.
oReview EXHIBIT 11.2 “2009 U.S. Weather Disasters” highlights the extreme weather
costs for 2009.
oThe situation is likely to worsen internationally as population continues to increase and
underdeveloped nations industrialize. Journalist Thomas Friedman puts population
growth impacts in perspective using an “Americum” unit of analysis.
oAn Americum is any group of 350 million people living an American lifestyle.
oThe world has recently evolved from two Americums (North America and
Europe) to five (add China, India, and a combination of Southwest Asian nations,
Australia, and New Zealand).
oSoon there will four more Americums (another one in China, another one in India,
one in a combined Russia/Central Europe, and one in a combination of South
America and the Middle East).
oTwo Americums have contributed to climate change. What nine Americums will
cause, Friedman ponders, remains to be determined.
DISCUSSION ACTIVITY
Have students prepare, and then give, a three minute elevator talk that describes how business
activities may impact climate change to someone from an alien planet.
CHAPTER QUESTION 2: HOW HAVE FEDERAL, STATE, AND MUNICIPAL
GOVERNMENTS REPONDED TO ENVIRONMENTAL PROBLEMS?
ENVIRONMENTAL ORGANIZATIONS
oThe initial impetus to demand, or inspire, organizations to be more environmentally
friendly came from citizens who possessed a strong environmental ethic.
oHenry David Thoreau, one of the best known transcendentalists, conducted a two year
experiment in simple living on Emerson’s property, and published his reflections in
Walden.
oAldo Leopold’s A Sand County Almanac, published in 1949, gave further voice and
direction to the environmental movement and wildlife preservation.
GOVERNMENT REGULATION
oIn 1969, the Cuyahoga River in Ohio caught fire for at least the thirteenth time in a
century due to the chemical toxins from industrial facilities contained in the water.
oReview EXHIBIT 11.3 “Key Environmental Regulations During Richard Nixon’s
Administration,” which summarizes key environmental regulations signed into law by
Republican President Richard Nixon: Clean Air Act (1970), Environmental Protection
Agency (1970), National Environmental Policy Act (1970), Clean Water Act (1972), and
Endangered Species Act (1973)
oSometimes there are tradeoffs between environmental performance and economic
performance at both the firm and national level.
INTERNATIONAL AGREEMENTS
oPollution knows no international boundaries.
oIn 1987, President Reagan signed the Montreal Protocol, an international agreement to
phase out chlorofluorocarbons (CFCs) that erode the ozone.
oThe following year, the EPA launched a Toxic Release Inventory Program to compile data
on toxic chemicals released into the environment by certain industries and the federal
government. TRI data informed communities about local toxins and contributed to better
decision-making.
oIn June 1992, the United Nations sponsored an “Earth Summit” in Rio de Janeiro, Brazil
to discuss greenhouse gases, alternative sources of energy, and water scarcity.
oOne summit outcome was the Climate Change Convention, a non-binding treaty to
stabilize atmospheric greenhouse gas concentrations by first establishing a national
inventory of greenhouse gas emissions that could serve as a comparative benchmark. The
U.S. Congress and President George H. W. Bush approved the treaty.
oA follow-up climate change conference was held in Kyoto, Japan in 1997. The Kyoto
Protocol established a goal to reduce worldwide greenhouse gas emissions five percent
below the 1990 level by 2012.
oThe national goals would be binding for industrialized nations who signed the agreement,
but not developing nations. Nations that surpassed their goals could sell the excess
capacity to nations who did not meet their goals.
oRatified by more than 180 nations, the Kyoto Protocol went into effect in 2005 without
the consent of the United States.
oPresident George W. Bush withdrew from the Kyoto ratification process because
achieving the emissions goal assigned to the United States—7 percent below the 1990
level—would seriously harm the national economy.
oAmerican businesses would have to implement costly new technologies to reduce
carbon emissions. The skyrocketing costs would result in higher priced products.
Fewer people could afford products, which would cause a reduction in sales and
revenue, and a significant increase in unemployment.
oThe Bush administration also argued that the treaty created unfair competition
because developing nations, such as China and India, were exempt from treaty
mandates.
CAP AND TRADE
oFor the most part, the climate change has shifted from whether it is occurring to what
appropriate actions should be taken.
oGovernment policy mechanisms for greening the economy typically include
implementing a Cap and Trade program, a pollution (carbon) tax, and incentives to
develop green technologies.
o“Cap and Trade,” an emissions trading system, is one of the most prominent ideas under
consideration.
oCap and Trade combines federal controls that limit the amount of pollution
permitted with the establishment of a market where businesses can trade licenses
to pollute.
oA company that exceeds its allocated pollution permits must purchase an
equivalent amount of unused permits from companies that polluted less than their
allocated limits, or pay a substantial fine.
CLIMATE EXCHANGES
oIn 2003, the Chicago Climate Exchange was created as a national market to manage a
voluntary, yet legally binding, Cap and Trade program for CO2 and five other greenhouse
gas emissions.
oThe exchange closed in 2010 when participants withdrew their membership because
Congress failed to pass anticipated Cap and Trade legislation.
oAs of 2011, carbon trading on exchanges no longer takes place in the United States.
oIn 2005, a similar Climate Exchange Cap and Trade program was created in Europe.
oThe European Climate Exchange, which has more than 100 members, continues to
operate because of mandatory carbon emissions caps imposed by the Kyoto Protocol on
European nation signatories.
oThere is strong opposition to expanding Cap and Trade programs in the United States.
Cap and Trade critics argue that the following chain-of-events will happen:
onew technologies for capturing carbon emissions are very expensive
oenergy companies will pass this increased cost on to energy consumers through
higher energy rates
obusinesses will increase product prices and municipal, state, and federal
governments will increase taxes to offset higher energy costs
olow-income people will be disproportionately affected because they have the least
amount of discretionary income
oemployment in the coal industry will be decimated
POLITICAL AND PROFSSIONAL GROUPS’ EFFORTS
oSome U.S. state and city governments have signed their own version of the Kyoto
Protocol.
oMore than 850 mayors representing 80 million citizens have signed the U.S. Conference
of Mayors Climate Protection Agreement committing them to strive to meet or beat the
Kyoto Protocol targets in their own communities.
oMore than 500 higher education presidents have signed the American College and
University Presidents Climate Commitment. Their goal is to reduce carbon emissions on
campuses to zero.
oThe schools agreed to complete an emissions inventory, set milestones and target
dates, integrate sustainability into the curriculum, and share their action plans and
inventory and progress reports with the public.
INDIVIDUAL STATE AND REGIONAL EFFORTS
oIn 2006, California passed the “Global Warming Solutions Act,” which commits the state
to achieve a 25 percent reduction in emissions by 2020 to be in compliance with Kyoto
Protocol provisions.
oTen northeastern states participate in the Regional Greenhouse Gas Initiative (RGGI), a
Cap and Trade program designed to reduce power plant greenhouse gas emissions 10
percent by 2019.
oSix midwestern governors and the premier of the Canadian Province of Manitoba have
signed the Midwestern Greenhouse Gas Accord. An advisory group has recommended
that the participants target 20 percent below 2005 levels by 2020, and 80 percent below
2005 levels by 2050.
oWisconsin’s innovative Green Tier program, initiated in 2006, provides regulatory
flexibility, permit streamlining, and other incentives for businesses that implement an
Environmental Management System (EMS).
WALL STREET INVESTORS
oThe Dow Jones Sustainability Index (DJSI) was created in 1999 as a way to track the
financial performance of leading sustainability-driven companies.
oCompanies are assessed according to triple bottom line criteria: economic,
environmental, and social performance.
oIn 2010, the DJSI World index consisted of the leading 318 sustainable
development companies, among a population of 2,500 companies, in 57
industries.
oAnother market response is the increased availability of funding through venture
capitalists, grants, and prizes.
oSome venture capital funds specifically target environmental markets, such as
solar energy. In the first half of 2008, venture capitalists invested more than $2
billion in 139 green technology start-ups.
oThe federal government offers grants, loans, and tax incentives for companies to
redevelop environmentally contaminated brownfield sites, improve water quality,
upgrade energy efficiency, and develop green technology.
oRichard Branson, the CEO of Virgin Airlines, has offered a $25 million prize for
new technology that can remove CO2 from the earth’s atmosphere.
DISCUSSION ACTIVITY
Put students on teams to examine several different types of environmental websites, discuss their
impressions, and present what they found to the entire class. Websites to consider include:
* White House, Energy and the Environment, available at:
http://www.whitehouse.gov/issues/energy-and-environment
* U.S. Energy Information Administration statistics, available at: http://www.eia.gov/
* U.S. Department of Commerce, National Climatic Data Center, available at:
http://www.ncdc.noaa.gov/oa/ncdc.html.
* Green Tier, Wisconsin Department of Natural Resources, available at:
http://dnr.wi.gov/org/caer/cea/environmental.
* Dow Jones Sustainability Index, available at: http://www.sustainability-index.com/.
* Union of Concerned Scientists, available at: http://www.ucsusa.org/
* Climate Crisis (Al Gore), available at: http://www.climatecrisis.net/
