College of Business Administration

Business Management and the Natural Environment

Discussion Questions for Week 7

"Careful, you may run out of planet."
--December 1997 magazine ad for the Infiniti QX4

Costing the Earth: Efficiency and the Environment

1) Is it possible to place a value on everything in the environment?

2) Considering that only preferences of the current generation are entering into the process of determining discount rates, do you feel market driven discount rates are appropriate for determining public policy?

3) Do moral obligations exist to protect the rights and interests of future persons?

4) Should the rights and interests of future generations be considered as important, more important, less important or not important at all as compared with current generations rights and interests?

5) Should geographically distant persons and or resources be given less consideration than persons geographically close when determining rights and interests?

6) Consider the following quote from Business, the Environment and Local Government :
"Human wellbeing has social, cultural, moral and spiritual dimensions as well as material. Development worthy of the name must seek to support all of these, not some at the expense of others… Development and economic growth are quite different things. It is possible to have either without the other… We need broader indicators than economic growth to measure development by Local Agenda 21."

How do economic growth and development differ?
Is economic growth a good measure of development?
If not, how and what should we use to measure development?

7) Consider direct and indirect costs of production. Do you think that there are costs that are unaccounted for? For example, in a bar of soap. What are some of the potentially ‘hidden’ costs that may not be reflected in the price?

8) Do you feel the government should be responsible for controlling environmental policies? Why or why not?

9) Do you feel that current environmental regulations are sufficient to effectively protect the environment?

10) In business, cost accounting is set up so that costs can be attributed directly to departments that incurred the cost. How can we use that principle to develop systems that accurately assign costs to companies who utilize or affect natural resources?

11) Hawken outlines principles for sustainable business practices. Do you feel these are achievable or desirable under current business practices and personal consumption habits? Why? If not, what would need to occur to make sustainable business practices more likely to occur?

The following additional questions are also offered for your consideration:

The following questions relate to Hawken's The Ecology of commerce.

1. Hawken mentions that innovation and creativity are the result of price increases of essential resources.

List some innovations that have resulted from a price increase of a valuable resource? Since Europe pays the highest in gas, why hasn't Europe been more of an innovator when it comes to non-gas vehicles?
Have gasoline vehicles really improved their efficiency over the past 20 years? (p. 76)

2. Hawken shows that the external cost of a pack of cigarettes is approximately $3.43. The costs reflects health care and labor costs to society:

Is there any incentive for the industry as a whole to incorporate these costs?
If not, Should government step in and force the issue?

When is it appropriate for government to intervene in such matters?
Which studies accurately reflect the true external costs and therefore be used to establish appropriate costing?

How might consumers react to the price increase?
What should the corporations do with the additional income? (Assuming that there is an increase in net income?)
How does this increase efficiency and therefore aid the environment/society?

3. Hawken refers to the early 1980's when prices were very low. He stated that consumers reacted by increasing demand and increasing population. He feels society was making decisions based on incomplete information.

What did he mean? What were the implications of the lower prices?
How might the economy behaved had all external cost been incorporated in to the price of goods and services across the board?
What kind of information would the higher prices convey to consumers?

4. Economic critics of Piguo claim that any forced integration of cost and price would lower productivity, reduce economic output, cause greater costs to be passed on to the consumer, lower real income and slow economic growth and insulate the government further into the economic area."

It that such a bad thing?

5. In referring to large corporations Hawken states "We are afraid to look at the enormity of their shadow, the rigidity of their thinking, their unbridled power hidden behind lobbyists, PR firms and ad Campaigns.

Is this true? If so does that mean we are helpless in our attempts to create a restorative economy? Where do we start?

6. Hawken states, "By invoking the First Amendment privilege to protect their "speech", corporations achieve precisely what the Bill of Rights was intended to prevent: domination of public thought and discourse"

Has the United States gone in the wrong direction with corporations? Have we given them too much power? Why do corporations have more freedom than the common citizen? (p. 108)

7. The American ideal is that bigger is better. Large companies are created to achieve economies of scale.

What is the difference between Growth and Development?
What have been some development strategies of companies?

8. Hawken illustrates how CEOs can implicitly convey pressure to junior executives to behave in a manner that will lead them to meet the corporation's explicit goals. This removes responsibility from the corporation and CEO and places it on individuals. The corporation can make environmental infractions appear as isolated incidents and hold the lower level manager accountable.

To what extent should we allow senior management and boards of directors delegate away their responsibility and therefore their accountability?

9. One of Hawken's principles for sustainable businesses is Sustainable businesses change consumers to customer through education.

Do you agree that when given all of the relevant information concerning a product or a service consumers will make the responsible decision?
How can businesses educate the consumer? Will consumer trust all that the corporation tells them? Will the basic principle of marketing apply to the task of educating the consumer? Could or should the government be apart of this process?

The following questions relate to Welford & Starkey's Business and the Environment:

1. Carrying capacities and sustainability are the measurements of an environmental ecosystem. How is it possible, and is it feasible for businesses to measure their resource flows and environmental change they have on the ecosystem? What would make this possible? Government regulations? Technology? Education?

2. What if there were accepted standards for accurately costing environmental practices? Would the public apply value to these practices? (p. 252)

3. Levett states, "Before volunteering for green business activities, businesspeople have at least to believe there is an issue…" This statement reflects that it is first essential that businesses be made aware of the environmental issues and impacts. What is the best forum or strategy to educate businesses to become environmentally conscience? (p. 263)

4. What can the government do to initiate environmental responsibility? Higher cost through taxes or regulations? Negative publicity ads against non-environmental companies? Monthly rankings of the 'greenest' companies.

5. Large, growing companies are more concerned with new products and technologies than implementing recycling and energy savings, while small, stagnant companies have far more important issues than pursuing environmental savings. How can this methodology and attitude be overcome? (p.263)

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