978-1259317224 Chapter 4 Part 1

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

Module 4: Sustainability and Natural Resources

Use this Instructor Guide to incorporate the unique content of this product and facilitate your

Face-to–Face, Online, and Hybrid classes. This guide has been designed to be interactive and links

have been created within each title in the Table of Contents to guide you to each section. You

can also link back to the main page by clicking at the button at the bottom of each page.

Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching

this module:

YOUR CONTENT

Summary

Learning Objectives

Key Terms & Key Terms with Definitions

Content Outline

ENGAGEMENT & APPLICATION (FACE TO FACE & ONLINE & HYBRID)

BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS

IB IN PRACTICE

GLOBAL DEBATE

GET THAT JOB! FROM BACKPACK TO BRIEFCASE

Team Exercises

Supplemental Lecture

Tools & Tricks

Controversial Issues

Teaching Suggestions

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

Time-Saving Hints:

Connect Content Matrix

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

YOUR CONTENT

SUMMARY

This chapter reviews sustainability and how it affects the conduct of business. We look at frameworks

the critical aspects of natural capital that we review.

LEARNING OBJECTIVES

LO 4-1 Describe environmental sustainability and its potential influence on business.

LO 4-2 Describe frameworks for sustainability.

LO 4-3 Summarize ways to measure sustainability achievements.

KEY TERMS AND DEFINITIONS

biomass (p. 112)

A category of fuels whose energy source is photosynthesis,

through which plants transform the sun’s energy into chemical

energy

Carbon Disclosure Project (CDP)

(p. 94)

Organization that provides reporting frameworks for greenhouse

gas emissions and water use

carbon footprint (p. 94)

A measure of the volume of greenhouse gas emissions caused by

a product’s manufacture and use

climate (p. 106)

Meteorological conditions, including temperature, precipitation,

and wind, that prevail in a region

concentrating solar thermal

power (CSP) (p. 114)

A system using mirrors or lenses to collect sunlight for heating

water that powers an electrical generator

cradle-to-cradle design 93

A closed-loop design that recycles and reuses products

environmental sustainability

(p. 91)

State in which the demands placed upon the environmentby

people and commerce can be met without reducing thecapacity

of the environment to provide for future generations

geothermal power (p. 114)

Power from heat stored in the earth

Global Reporting Initiative (GRI)

Sustainability reporting framework developed among

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

(p. 94)

stakeholders

heavy oil (p. 109)

Oil that does not flow easily, presently sourced from oil sands and

oil-bearing shale

inland waterway (p. 104)

Waterway that provides access to interior regions

life cycle assessment (LCA)

(p. 92)

An evaluation of the environmental aspects of a product or

service throughout its life cycle

natural capital (p. 100)

Natural resources such as air, land, and water, that provide us

with the goods and services on which our survival depends

natural resources (p. 106)

Anything supplied by nature on which people depend

nonrenewable energy (p. 107)

Energy that comes from sources that cannot be replenished, such

as the fossil fuels—petroleum, coal, and natural gas—and nuclear

power

rare earths (p. 115)

17 elements used in defense and technology applications

renewable energy (p. 107)

Energy that comes from sources that are naturally replenished,

such as sunlight, wind and water flow

shale (p. 109)

A fissile rock (capable of being split) composed of laminated layers

of claylike, fine-grained sediment

solar photovoltaic power (PV)

(p. 114)

Power based on the voltage created when certain materials are

exposed to light

stakeholder theory (p. 99)

An understanding of how business operates that takes into

account all identifiable interest holders

topography (p. 102)

The surface features of a region

triple-bottom-line accounting

(3BL) (p. 100)

An approach to accounting that measures the firm’s social and

environmental performance in addition to its economic

performance

United Nations Global Compact

(p. 94)

A voluntary reporting scheme for businesses that covers critical

areas affecting the conduct of international business—human

rights, labor, the environment, and anticorruption efforts

water footprint (p. 95)

A measure of the amount of water used in a product’s

manufacture and use

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International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

CONTENT OUTLINE

The following section provides the flow of information using the LEARNING OBJECTIVES as a guide, KEY

TERMS learners will need to take away from the course and a notation of when to use POWERPOINT

SLIDES with LECTURE NOTES to drive home teaching points.

LO 4-

1

Describe environmental sustainability and its potential

influence on business.

• Definition

• Sustainability in the business context

• Systems concept

• Need to think about present and future

• Early efforts

Key Terms:

• Environmental

sustainability

Lecture Outline and Notes:

I. Definition of environmental sustainability

A. Maintaining something

B. Brundtland Commission drafted a widely accepted definition of sustainable development:

it “meets the needs of the present without compromising the ability of future generations

to meet their needs.”

C. Requires us to change the way we manage everything.

II. Sustainability in the business context

A. Systems concept. Local and global at the same time.

1. Need to think about present and future, simultaneously

2. Need to think about ecological, economic and social systems

B. Early efforts involved business operations

1. Resulted in conservation and savings

2. Then businesses moved to the value chain, and then to the larger picture with the

supply chain.

LO 4-2

Describe frameworks/systems for achieving sustainability

Key Terms:

B. Such “product stewardship” leads organizations to be concerned about the entire life of

their product.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

LCA.

D. Involves the cumulative impact of product, can lead to reductions and savings.

1. of environmental footprint,

2. cost structure,

3. potential carcinogens in inputs, processes and wastes.

4. Patagonia example: 1 tee-shirt required 700 liters of water with industrially-produced

cotton. Company switched to organic cotton, which requires less water.

II. Cradle-to–cradle design

A. Design should close production loop

1. Resources use din production are recycled and reused as part of the design

2. System cycles all materials and generates no toxic wastes. (Waste = Food)

B. Identifies two components

1. Technical nutrients, inorganic and synthetic, so reusable.

2. Biological nutrients, organic and decompose.

3. Example: Petroleum-based carpet manufactures (Interface, etc.) reprocess technical

nutrients (old carpets) to produce new product.

III. Accounting and Finance

A. Accounting controls rest of assumptions about people’s basic nature.

1. Tight controls suggest lack of trust.

2. Loose controls suggest people will act honestly when not closely monitored.

B. Example of U.S. expatriate paying taxes —in NY and Italy.

IV. Preferred leadership styles

C. Vary by culture

A. Paternalistic? Heroic? Focused on group or individual?

LO 4-3

Summarize ways to measure sustainability achievement.

• Carbon Disclosure Project (CDP)

• Footprinting

o Carbon

o Water

Key Terms:

Initiative (GRI)

• Carbon Disclosure

Project

• carbon footprint

• water footprint

I. Criteria for measurement and comparison of the effects of our actions

A. Measurement tools must measure across different sectors (comparability test). See

D. Carbon Disclosure Project: nonprofit that provides reporting frameworks for sustainable

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

water use and reduction of greenhouse gas emissions, including carbon emissions

reporting.

1. Over 85% Fortune Global 500 report to CDP.

2. Becoming standard framework for supply chain reporting

E. Footprinting

1. Carbon footprint: volume of greenhouse gas emissions associated with product,

throughout life cycle. Complicated calculation.

2. Water footprint: amount of water used in a product’s manufacture and use.

Complicated because we use water locally but discharge it globally

LO 4-4

Identify the characteristics of environmentally sustainable

business

• Limits to resources

• Interdependence of systems in which businesses

operate

• Equity in supply chains

Key Terms:

• life cycle assessment

• cradle-to-cradle design

I. Limits

A. Environmental resources (water, soil, air) are exhaustible.

B. Examples in extractive industries: FreeportMcMoran in Papua New Guinea

C. Recognizes ecological and social issues with local tribes. Negative example: Shell Oil in

Niger Delta.

II. Interdependence

A. Sustainable practices create complex interdependence among ecological, economic and

social systems.

B. These inter-relationships are often difficult to predict.

1. Fracking has caused social problems in rural parts of U.S.

2. Outsourcing decisions often have unanticipated social effects—childrens’ education,

subcontractor issues with pollution, safety.

III. Equity in distribution

A. For interdependence to work, there cannot be vast differences in the distributions of gains.

B. Interdependence requires business model that allocates value added over a wide array of

stakeholders.

C. Vast inequities lead to social disruption and violence.

D. One approach is to pursue backward integration to gain control over supply chain.

E. Palmisano of IMB: we need to abandon the corporate colonial model for one that is

globally integrated, where high levels of trust operate among all stakeholders.

LO 4-

4

Identify the characteristics of environmentally

sustainable business

• Limits to resources

Key Terms:

• life cycle assessment

• cradle-to-cradle design

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

• Interdependence of systems in which businesses

operate

• Equity in supply chains

I. Stakeholder model

A. Contrasts with traditional input-process-output model and exclusively profitability-focused

economic approach.

B. Theory developed by R. Edward Freeman calls for managers to consider the network of

tensions caused by competing internal and external demands that surrounds the business.

II. Stakeholder approach forces managers to examine the underlying values and principles of the

business and to articulate them.

A. All stakeholders have a voice in this network of relationships.

B. Examples of businesses that pursue an approach consistent with stakeholder theory

include Johnson & Johnson, eBay, Google, Lincoln Electric.

III. Triple-Bottom-Line accounting a way to share business data with stakeholders.

A. Measures economic (traditionally measured), social and environmental data.

B. Does not allow for comparisons across companies because measurements, especially social

and environmental areas are not standardized.

LO 4-5

Describe how the stakeholder model can help businesses

achieve sustainability

• Stakeholder model

• Stakeholder theory in practice

• Triple-bottom-line accounting as part of stakeholder

model

Key Terms:

• stakeholder theory

• triple-bottom-line

accounting (3BL)

LO 4-6

Describe how geographic features of a country or region

contribute to natural capital.

• Geography—our natural capital

• Location—political and trade relationships

• Topography

• Climate

Key Terms:

• natural capital

• topography

• inland waterway

• climate

• Nonrenewable energy sources

• Petroleum

• Nuclear Power

• Coal

• shale

• heavy oil

• biomass

• solar photovoltaic

power (PV)

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

• Natural gas

• Renewable energy sources

• Wind

• Biomass

• Solar photovoltaic power

• Concentrating solar thermal power (CSP)

• Geothermal power

• Ocean energy

• Hydropower

• Nonfuel minerals rare earths)

thermal power

• rare earths

I. Natural resources: anything supplied by nature on which people depend.

II. Nonrenewable energy sources can not be replenished

A. Petroleum—crude oil

1. Cheap

2. Many industrial applications, including plastics, fertilizers

3. Estimates of world oil reserves are uncertain. Peak oil discovery thought to be in

B. Nuclear Power

1. Clean (no contribution to climate change) but not safe

2. Despite safety issues, growth area.

C. Coal

1. Pollutes heavily, but global consumption growing

2. U.S. has world’s largest recoverable coal reserves.

D. Natural gas—low pollution, growing fuel source

III. Renewable energy sources: growth in sector has outpaced growth in fossil fuels in U.S. and EU

A. Wind power now a mainstream electricity source

B. Biomass

1. Relies on photosynthesis

2. Ethanol reduces food crop acreage

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 4

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

E. Geothermal power

1. Source is heat stored in the earth

2. Growing in Turkey, Iceland, Philippines. Some in U.S.

F. Ocean Energy

1. Sun’s heat on water and mechanical energy of tides and waves

2. Least mature of alternative energy sources

3. Established in France, UK. Growing in China, India, U.S.

G. Hydropower

1. Moving water to generate power

2. Largest alternative power source

3. Both large and small scale applications (China, Ethiopia, rural Africa)

IV. Nonfuel minerals—rare earths—China controls 95%

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