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CHAPTER 10
MANAGING FOR SUSTAINABILITY
INTRODUCTION
Growing public concern about sustainability has prompted political, corporate, and civil
society leaders to become increasingly responsive to environmental issues. In the United
States and other nations, government policymakers have moved toward greater reliance
on economic incentives, rather than command and control regulations, to achieve
environmental goals. At the same time, many businesses have become increasingly
proactive and have pioneered new approaches to effective sustainability management,
sometimes in partnership with advocacy organizations. These actions have often given
firms a competitive advantage by cutting costs, gaining public support, and spurring
innovation.
PREVIEW CASES
Levi Strauss & Company
U.N. Sponsored Climate Talks
Environmental Defense Fund
Teaching Tip: Preview Cases
These Preview Cases illustrate new approaches to environmental
protection by companies, governments, and NGOs. In a new 2015
program, Levi Strauss & Company sold $500 million worth of
“sustainably enhanced” garments. The European Union experimented
with market-based approached to reduce greenhouse gas emissions.
The Environmental Defense Fund partnered with many companies to
improve their environmental performance. The preview cases are
designed to highlight trends towards voluntary business efforts to
reduce or prevent pollution, market-based mechanisms, and industry-
environmentalist collaboration. All three trends are described at
greater length in the chapter.
Teaching Tip: Patagonia
Similar to Levi Strauss & Company, Patagonia is implementing highly
sustainable business practices. A good 8 minute PBS video on the
topic can be found at: http://video.pbs.org/video/2365549614/.
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CHAPTER OUTLINE
I. ROLE OF GOVERNMENT
A. Major Areas of Environmental Regulation
Air pollution
Land pollution
B. Alternative Policy Approaches
Civil and criminal enforcement
Teaching Tip: Environmental Justice
Since land values are often lower in predominantly minority
communities, environmental racism may be the indirect result of
decisions to site waste facilities on inexpensive land. This raises an
interesting ethical issue for class discussion. Can a company’s decision
to site a waste facility in a predominantly minority community be
considered racism if the primary motivation was economic?
A video that may be used in conjunction with this discussion is
“Fenceline: A Company Town Divided” (PBS, 52 minutes, first aired
2002). This film tells the story of a conflict between Shell Chemical
Company and the Dimond community of Norco, Louisiana. The
Dimond community was a largely African-American neighborhood
that was immediately adjacent to one of Shell’s chemical plants.
Members of the community felt that they were subjected to very high
levels of chemical contamination, and they wanted to be able to move
away from the community and to be reimbursed by the company. For
more information, go to:
http://www.logtv.com/films/fenceline/default.html
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II. COSTS AND BENEFITS OF ENVIRONMENTAL REGULATION
III. MANAGING FOR SUSTAINABILITY
A. Stages of Corporate Environmental Responsibility
IV. THE ECOLOGICALLY SUSTAINABLE ORGANIZATION
A. Sustainability Management in Practice
B. Environmental Auditing and Reporting
C. Environmental Partnerships
V. SUSTAINABILITY MANAGEMENT AS A COMPETITIVE
ADVANTAGE
A. Cost Savings
B. Brand Differentiation
C. Technological Innovation
D. Reduction of Regulatory and Liability Risk
E. Strategic Planning
Teaching Tip: Alternative Policy Approaches
Figure 10.2 summarizes some of the advantages and disadvantages of
alternative policy approaches to reducing pollution. Students could be
broken into four groups, with each assigned to one policy approach.
They could be asked to discuss for a particular kind of pollution, such
as air or water how their policy approach would be implemented, and
if they think it would be effective. They could then be asked to report
their conclusions to the rest of the class.
Teaching Tip: The Ecologically Sustainable Organization
Students could be asked to select a business with which they are
familiar and to make recommendations for steps the business could
take to become an environmentally sustainable organization.
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GETTING STARTED
KEY LEARNING OBJECTIVES
LO 10-1: Knowing the main features of environmental laws in the United States
and other nations.
LO 10-2: Understanding the advantages and disadvantages of different regulatory
approaches.
LO 10-3: Assessing the costs and benefits of environmental regulation.
competitiveness of the U.S. economy.
LO 10-4: Defining an ecologically sustainable organization and the stages through
which firms progress as they become more sustainable.
LO 10-5: Understanding how businesses can best manage for sustainability.
LO 10-6: Analyzing how effective sustainability management makes firms more
competitive and improves their financial performance.
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evidence shows a positive relationship between sustainability practices and stock
market and financial performance.
KEY TERMS
acid rain
cap-and-trade
chief sustainability officer (CSO)
clean economy
INTERNET RESOURCES
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www.environmentalleader.com Briefing for executives
www.sustainability.com SustainAbility (consultancy)
sustainable business
DISCUSSION CASE
HYDRAULIC FRACTURING – CAN THE ENIRONMENTAL IMPACTS BE
REDUCED?
Discussion Questions
1. What is hydraulic fracturing, or fracking, and what are its costs and benefits?
Teaching Tip: Health Risks of Fracking
A PBS video segment, running 8:20 minutes, describes hydraulic
fracturing and focuses on its health risks for nearby residents.
http://video.pbs.org/video/2004467940.
Teaching Tip: Discussion Case Video
Two long-form videos that may be used in conjunction with this case
are: “ Gasland Part II: The Issues Have Reached New Depths” (2013)
found at: http://www.imdb.com/title/tt2795078/ and “Fracknation: A
Journalist’s Search for the Fracking Truth” (2012) found at:
http://fracknation.com/.
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2. Using the classification system presented in this chapter, what type(s) of pollution
is (are) generated by fracking?
3. Using the classification system presented in this chapter, what type(s) of
government regulation has (have) been used to address the concerns you
information disclosure (Department of the Interior regulations required companies to
disclose the chemicals they used) and environmental standards (the Department of the
require disclosure of hazardous chemicals; incentivize behavior through marketable
permits (for example, governing the quantity of water used); and enforce the laws
4. What are the benefits to companies of moving beyond compliance and developing
more sustainable methods of fracking?
These companies might benefit through reduced liability and risk, and by creating new
5. What factors might influence a company to use more or less environmentally
responsible methods of fracking?
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State-level regulations were strong (e.g., California)
them (e.g., New York)
reputational risk