Questions:
What is an environmental management system?
Why should a company have one?
How as a manager would you overcome disinterest, bureaucratic inertia and in-fighting to implement one?
What impacts has the environment made on business? How is business responding to these impacts? What more will it have to do in the future to respond to people,s material needs and at the same time be environmentally sensitive?
What are some of the problems with the current system of regulatory controls? What changes need to be made to enable corporations to restructure their operations? What incentives need to be changed to enable corporations to be more environmentally sensitive?
Discussion Scenario (Case)
You are a manager in a large energy corporation. Your company has just acquired a large lease in a pristine, wilderness area in New Guinea inhabited by some indigenous people. The lease is located in a thickly wooded, green tropical rain forest. You are the person being counted on to manage the exploration program for this organization. The program will entail the following:
-Shooting 1500 line km. of 2D seismic, and 800 squared km. of 3D seismic. To shoot the seismic the crews will have to cut more than 4000 line km. of tracks through the forest, and in the process about 3500 trees will be chopped down.The local people have a language of their own, their own forms of education, their own system of government, fish, hunt and grow crops for the subsistence of their villages. This activity may disrupt their lifestyle. They appear healthy and have not been exposed to most diseases which we know. Your peers have suggested a large donation of cash to the people.-Once your wells are drilled and production is established there are two options to get the oil/gas out of the area to refining facilities. The first option (NPV = $150 MM, IRR 17) involves building a pipeline approximately 600 km. to the nearest storage facility from where tankers will transport the crude to a refinery 2000 km away. The second option ($180 MM, IRR 13) involves building a pipeline submerged beneath one of the rivers flowing through the region. The pipeline technology is safe and previous pipelines in similar environments have not leaked nor spilled contents into the water. The crude is piped to a floating facility in the ocean nearby for shipment.
Your head office in Luxury City, Canada was contacted by an NGO which claims to represent the rights of the people. They have asked you to stop your work in the area. They have threatened to sabotage your operations in a South American country where you have a lot of production. They have staged protests in front of your corporate head offices, and they have been linked to the bombing of pipelines in other places like Colombia.
What are your recommendations to senior management?Where does your heart lie - shareholder or indigenous people?
What would you decide?
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