International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-1
Module 4: Sustainability and Natural Resources
YOUR CONTENT
Summary
ENGAGEMENT & APPLICATION
Boxed Text Discussion Questions with Suggested Answers
IB in Practice
Global Debate
Get That Job! From Backpack to Briefcase
Bonus Activities
CONNECT TOOLS FOR ASSESSEMENT OF LEARNING
Connect Content Matrix
Connect Activities
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-2
YOUR CONTENT
SUMMARY
This chapter reviews sustainability and how it affects the conduct of business. We look at
frameworks used to describe and analyze sustainability and then summarize ways sustainability
LEARNING OBJECTIVES
LO 4-2 Describe frameworks for sustainability.
LO 4-4 Identify the characteristics of environmentally sustainable business.
LO 4-6 Describe how geographical features of a country or region contribute to natural
capital.
KEY TERMS AND DEFINITIONS
biomass (p. 113)
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. 95)
Organization that provides reporting frameworks for
greenhouse gas emissions and water use
carbon footprint (p. 95)
A measure of the volume of greenhouse gas emissions
caused by a product’s manufacture and use
climate (p. 107)
Meteorological conditions, including temperature,
precipitation, and wind, that prevail in a region
concentrating solar thermal
power (CSP) (p. 115)
A system using mirrors or lenses to collect sunlight for
heating water that powers an electrical generator
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-3
cradle-to–cradle (C2C) design
model (p. 93)
A closed-loop design that recycles and reuses products
environmental sustainability
(p. 91)
State in which the demands placed upon the environment
by people and commerce can be met without reducing the
capacity of the environment to provide for future
generations
geothermal power (p. 115)
Power from heat stored in the earth
Global Reporting Initiative
(GRI) (p. 95)
Sustainability reporting framework developed among
stakeholders
heavy oil (p. 110)
Oil that does not flow easily, presently sourced from oil
sands and oil-bearing shale
inland waterway (p. 106)
Waterway that provides access to interior regions
life cycle assessment (LCA)
(p. 93)
An evaluation of the environmental aspects of a product
or service throughout its life cycle
natural capital (p. 101)
Natural resources such as air, land, and water, that
provide us with the goods and services on which our
survival depends
natural resources (p. 108)
Anything supplied by nature on which people depend
nonrenewable energy (p. 109)
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. 116)
Seventeen elements used in defense and technology
applications
renewable energy (p. 108)
Energy that comes from sources that are naturally
replenished, such as sunlight, wind and water flow
shale (p. 110)
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. 100)
An understanding of how business operates that takes
into account all identifiable interest holders
topography (p. 103)
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
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-4
United Nations Global
Compact (p. 95)
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
International Business, 2e
Geringer, McNett, 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 LECTURE NOTES to
drive home teaching points.
LO 4-1
Describe environmental sustainability and its potential
influence on business.
• Sustainability in the Business Context
I. Sustainability in the Business Context
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.
D. 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.
E. 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 sustainability
• Systems for Achieving Sustainability
o Life Cycle Assessment
o Cradle-to-Cradle Design
Key Terms:
• life cycle
assessment (LCA)
• cradle-to-cradle
(C2C) design model
B. Such “product stewardship” leads organizations to be concerned about the entire life of
their product.
C. Example of pencil illustrates the profound change in organizational thinking influenced by
LCA.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
D. Involves the cumulative impact of product, can lead to reductions and savings of:
1. 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.
III. Cradle-to-Cradle Design
A. Design should close production loop.
1. Resources used in 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.
LO 4-3
Summarize ways to measure sustainability achievements.
• Tools for Measuring Sustainability
o United Nations Global Compact
o Global Reporting Initiative (GRI)
o Carbon Disclosure Project (CDP)
o Footprinting
Key Terms:
• United Nations
Global Compact
• Global Reporting
Initiative (GRI)
• Carbon Disclosure
Project (CDP)
• carbon footprint
• water footprint
IV. Tools for Measuring Sustainability
1. Criteria for measurement and comparison of the effects of our actions.
A. Measurement tools must measure across different sectors (comparability test). See
website for examples (www.sustainabilityreports.com).
B. United Nations Global Compact: framework for voluntary annual reporting.
C. Global Reporting Initiative (GRI): organization of stakeholders who have collaborated to
develop GRI framework.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
emissions reporting.
1. Over 85 percent 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.
• Characteristics of Environmentally Sustainable Business
o Limits as Part of the Sustainability Context
o Interdependence as Part of the Sustainability
Context
o Equity in Distribution as Part of the Sustainability
Context
Key Terms:
V. Characteristics of Environmentally Sustainable Business
VI. Limits as Part of the Sustainability Context
A. Environmental resources (water, soil, air) are exhaustible.
B. Examples in extractive industries: Freeport-McMoRan in Papua New Guinea.
C. Recognizes ecological and social issues with local tribes. Negative example: Shell Oil in
Niger Delta.
VII. Interdependence as Part of the Sustainability Context
A. Sustainable practices create complex interdependence among ecological, economic and
1. Fracking has caused social problems in rural parts of U.S.
2. Outsourcing decisions often have unanticipated social effects—children’s education,
subcontractor issues with pollution, safety.
VIII. Equity in Distribution as Part of the Sustainability Context
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.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
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 4-5
Describe how the stakeholder model can help businesses
achieve sustainability
• The Stakeholder Model for Sustainable Business
Key Terms:
• stakeholder theory
• triple-bottom-line
accounting (3BL)
IX. The Stakeholder Model for Sustainable Business
A. Stakeholder model 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.
C. Stakeholder approach forces managers to examine the underlying values and principles of
the business and to articulate them.
D. All stakeholders have a voice in this network of relationships.
E. Examples of businesses that pursue an approach consistent with stakeholder theory
include Johnson & Johnson, eBay, Google, Lincoln Electric.
F. Triple-Bottom-Line accounting a way to share business data with stakeholders.
G. Measures economic (traditionally measured), social and environmental data.
H. Does not allow for comparisons across companies because measurements, especially
social and environmental areas are not standardized.
LO 4-6
Describe how geographic features of a country or region
contribute to natural capital.
• Geography: Describing Our Natural Capital
o Location: Political and Trade Relationships
o Topography
Key Terms:
• natural capital
• topography
• inland waterway
• climate
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
1. Major cities are often located on trade routes.
2. Major trading partners often border each other.
XII. Topography
1. Mountains can often divide people, cultures, and languages.
2. Deserts and tropical forests also often divide groups of people.
3. Bodies of water attract people and facilitate transportation.
i. Before railroads, inland waterways were a major means of transportation.
XIII. Climate
1. Climate limits what people can do.
2. Tropical nations are challenged with no constraints on the growth of weeds, insects,
birds, and parasites.
LO 4-7
Outline nonrenewable and renewable energy options available
and their potential impacts on business.
• Natural Resources
• Nonrenewable Energy Sources
• Renewable Energy Sources
• Nonfuel Minerals
Key Terms:
• natural resources
• renewable energy
• nonrenewable energy
• shale
• heavy oil
• biomass
• solar photovoltaic
power (PV)
• concentrating solar
thermal power (CSP)
• geothermal power
• rare earths
A. These cannot be replenished.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-10
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Education.
1. Cheap.
2. Many industrial applications, including plastics, fertilizers.
3. Estimates of world oil reserves are uncertain. Peak oil discovery thought to be in
1960s.
4. Conventional and unconventional sources (shale, heavy oil).
C. Nuclear Power
2. Despite safety issues, growth area.
D. Coal
1. Pollutes heavily, but global consumption growing.
2. U.S. has world’s largest recoverable coal reserves.
E. Natural gas—low pollution, growing fuel source.
XVI. Renewable Energy Sources
A. Growth in sector has outpaced growth in fossil fuels in U.S. and EU.
B. Wind power now a mainstream electricity source.
C. Biomass
1. Relies on photosynthesis.
D. Solar photovoltaic power (PV)
1. Based on voltage created when certain materials exposed to light.
2. Fastest growing renewable power technology.
E. Concentrating solar thermal power (CSP)
1. Uses mirrors or lenses to collect sunlight that heats water.
2. Different technology than PV, growing plants in U.S., Spain.
F. Geothermal power
1. Source is heat stored in the earth.
2. Growing in Turkey, Iceland, Philippines, some in U.S.
G. 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.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
04-11
H. Hydropower
1. Moving water to generate power.
2. Largest alternative power source.
3. Both large and small scale applications (China, Ethiopia, rural Africa).
XVII. Nonfuel Minerals
1. Rare earths—China controls 95 percent.
International Business, 2e
Geringer, McNett, Ball
Instructor Guide to Module 4
ENGAGEMENT & APPLICATION
BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS
IB IN PRACTICE: Europe Leads the Way: Why the European Union Gets It on Environmental
Issues
This box directly addresses the gaps on progress on environmental issues between the EU and
1. Do you think Europe’s approach to toxic substances could work in the United States? Why
or why not?
This question asks the student to analyze application of the precautionary principle in the U.S.
Among the approaches answers might include an exploration of the cultural assumptions
2. Drawing on what you know about culture, do you think it helps to explain the EU’s
approach to environmental issues? Explain your reasoning.
This question gives the student an opportunity to apply some of the culture frameworks to an
GLOBAL DEBATE: Is the U.S. Exit from the Paris Climate Accord a Smart Move?
This debate centers around the Paris Accord and the exit of the U.S. from that accord. The Paris
Accord is a worldwide agreement to limit carbon emissions. The intent is to limit global