BA 342: EXAM 2
Sustainable Development (Bruntland Commission Definition)
"Development that meets the needs of the present without compromising the ability of future generations to meet their own needs"
Lightbulbs and Stakeholders
**What's the impact if we eliminate incandescent bulbs? - Individuals: decrease choice, cost saving, replacement, resistance to change, disposal & recycling - Companies: business model change, maintenance, regulations, competition, savings - Gov't: politics, decrease in resources, regulations, incentives, systemic change - Environment: use less resources, less waste, disposal issues, energy saving, decrease in pollution, lower carbon emmissions
Triple Bottom Line
*3 P's* 1. Profit (Economic) 2. Planet (Environment): is our business model environmentally sound? 3. People (Social): are we treating our people well? -economic, environment, social = corporate language
Issues Related to Regulation
*Costs of Regulation* 1. Direct Costs: more visible costs associated with increased agencies, aggregate expenditures, and growth patterns; costs of adminitering regulatory agencies 2. Indirect Costs: forms, reports, questionnaires, etc to satisfy requirements of regulatory agencies 3. Induced Costs: innovation may be affected (lesser resources towards research), new investments in plant and equipment may be affected, small business may be adversely affected
Circular Business Model (Economy)
*Make - Use - Return* -RM--> design--> prod. man.--> distribution--> consumption (use, reuse, repair)--> collection--> recycling or Residual waste and REPEAT -choose raw materials more carefully -design for sustainability -manufacturing = zero waste -distribution = efficient, close together, less fuel **people are moving more towards circular --> comes from industrial ecology
3 Big Why's / Big 3 Drivers (First Tier)
*Order of importance* 1. Population growth 2. Intensity resource usage rate 3. Climate change - Three lenses: Scientific, political, economical
Linear Business Model (Economy)
*Take - Make - Waste* -design--> RM--> Production--> Use--> Disposal -how we've done business forever -model is being rapidly dismantled
Tragedy of the Commons
- "Commons" represents our environment -squares = something common available to all -operating in own best interest -growth and economic development --> able to grow --> everyone has 1 cow, then get 2 -white space = air, water, land, etc. --> we don't think about the commons --> everyone has only thought about *their own self interest* -at some point you have overwhelmed the commons --> ended up overwhelming everyone - Self-interest is likely to lead individuals and organizations to behave in ways that will not sustain our resources - Schuykill Expressway example: great road in the 60s, tragedy of the commons killed it --> many exits --> development (food, gas, industrial) --> road is overwhelmed --> building out of *own self interest*
Sustainability Business Case Data
- *Leadership:* McKinsey study; 75% CEO's sustainability performance key to long term growth - *Operations:* Dupont; past 10 years energy project cut cost $2 bil, GHG's down 75% - SHRM 2011: *Phase 1 (Compliance): 48% *Phase 2 (Integration): 45% *Phase 3 (Transformation): 7% - *Customers:* McKinsey study; 87% customers care about env, 54% willing to pay premium for sustainability - *Investors:* Bloomberg study; since 2003 market grown 22% annually, now at 26.5 T
Regulation
- A Federal Regulation Agency: *Has decision making authority *Established standards/ guidelines benefitting and restricting business conduct *Operates in the sphere of domestic business activity *Has its head/members appointed by the President *Has its legal procedures governed by the Administrative Procedures Act
Environmental Legislation
- A slew of recent legislation for companies to comply with - In the EU *RoHS *WEEE *EVL *Waste tire directive *Green Dot Packaging directive - These directives were driven by increasing concern for the environment - Expensive for companies and consumers - In the US *Conflict Minerals *Slave (forced) Labor - More pending globally *Japan *China *Australia (immediate adoption of WEEE and RoHS) *Possibility of 50 different producer responsibility directives in the US
Risk Mgmt & Sustainability
- Actuarial, enterprise, real estate - Environmental, social liability - Economic & political risk - EcoSystem (air, land, water, fish, forest) - Monitoring, reporting, auditing - Directors & officers liability (governance) - Climate change - Litigation - NGO's - BIG Issue: environmental and social risk = enterprise risk (VERY strong impact)
Adam Werbach: Saatchi & Saatchi S (Marketing & Sustainability)
- Adam Werbach: environmental activist, developing sustainable strategies - Define sustainability: need the needs of current generation without sacrificing needs of future generation - *Four Sustainability Components:* (1) protect the environment (2) care about cultures (3) social responsibility (4) economic sustainability - How to use sustainable strategy to empower innovation - TEN cycle: (1) transparency (2) engagement (3) networking (outside the business with NGO's) - Solves 3 problems: (1) helps a business develop better products that cost less and are more efficient (2) engage employees, increase productivity and increase retention (3) sell more products
Interaction of Business, Government and the Public
- Although govt may be the official representative of the public, we should not assume that representation occurs in a straightforward manner
Teachers Retirement (Risk Mgmt & Sustainability)
- Better governance, integrity, higher returns, - ESG principles, env, social, governance
Clash of Ethical Beliefs
- Business belief: *Individualistic ethic *Maximum concession to self-interest *Minimizing the load of obligations society imposes on the individual *Emphasizes inequalities of individuals - Govt belief: *Collectivistic ethics *Subordinate of individual goals and self-interest to group and group interests *Maximizing obligations assumed by individuals and discouraging self-interest *Emphasizes equality of individuals - Govts considers themselves inspectors regulators and punishers of business transgressions - Businesses consider govts as obstacles, constrains, impediments to economic progress - Mckinsey Survey: 50% of business people expressed serious frustration with govt intervention, govt doesn't understand economics of industry, blames business for society problems, hard to determine how to work productively with govt
SASB (Sustainability Accounting Standards Board)
- Capital markets have investors - Vision: envisions a world where a shared understanding of corporate sustainability performance allows companies and investors to make informed decisions that drive value and improve sustainability outcomes - 1973: FASB - Only 20% of value is based on tangibles, need to know underlying social and economic impact - Mission: develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors
Privatization
- Changing a public organization to private control or ownership to capture the discipline of free market and spirit of risk-taking - Producing vs providing a service - Arguments for: publicly owned companies are less efficient and less flexible - Arguments against: certain business activities cannot be safely handled by private sector, ex: federalization of airport security - Privatization works best when the pursuit of profit does not work against larger social goals - Nature of top mgmt, functioning of the board, strategic actions of the firm all contribute to privatization strategy's success - Success largely depended on context
Corporate Political Spending
- Channels through which corporations can make political contributions - Can contribute to corporate funds to trade associations and other tax exempt groups that will subsequently support a candidate or cause - Arguments for: *First amendment: right to free speech and that not only individuals, but also groups of individuals, have that right *Limiting groups' right to political advocacy would violate free speech of the people who belong in that group *Corporations and unions have the right to express political opinion - Arguments against: *Corporations have access to large amounts of money and that creates a serious imbalance of power *Possibility of agency problems, managers may promote their interests rather than that or shareholders' *Business is not likely to focus on common good *Golden rule of politics: he who has the gold, rules
Driver #3: Climate Change
- Climate framing - TIME article (1973): The Big Freeze vs. TIME article (2007): the Global Warming Survival Guide -Scientific: many people interested in studying -Political: grants, give money, competition among nations -Economic: cost and innovation expenses - Bottom Line: Global govts have concluded that the world "must" address GHG emissions and climate change (UN and IPCC), agreements to address this impacts global business leaders directly through (1) incentives, (2) regulation and (3) public pressure
Closed Loop Supply Chains
- Close supply loop chains consist of primary supply chains, secondary supply loops of the whole product, its components, materials etc - A supply loop is constrained when a process cannot deal with the entire output of its upstream process - The reasons can be: *Limited access to used products *Limited technical feasibility of reprocessing *Limited market demand for the reprocessed secondary resources
SAS Company on Sustainability
- Commited to making a difference -*about creating new product ideas (innovation) that turn into revenue* -*part of their business model --> have products that are being used to help other people assess what they're doing in sustainability* - Solar farm provides renewable power and offsets CO2 emissions - No trees cut down to build solar farm, eliminated need for concrete support by driving steel post in compacted soil, sheep to maintain grass - Solar thermal system provides water for gym, laundry, cafeteria - Reducing energy demand: regenerative drive elevators, use efficient variable frequencies motors, power generated during ride helps power electrical equipment - LED's , CFL's , automated energy management systems - Low flow plumbing technology, irrigation and drought resistant plants saves water - Recycling: veg scraps are turned to compost for flower beds. Employees collect recyclable materials and educate, committed to recycling maters, toner, laptops, batteries and other electronics - Green building: US green building council and LEED certifications, designed to use less water and energy, one third construction material contains recycled material, source material within 500 mile radius - Toronto HQ: first building to achieve LEED - UK: Bronze accreditation from ITM ICARUS by reducing CO2 emissions related to staff travel - Korea: eliminated 5000 paper cups by using ceramic mug - Australia: reduced energy consumption by 18% equivalent to removing 50 cars - management of green initiatives: internal efforts, solutions for sustainability, other companies can measure, manage and report CSR
Political Action Committees (PAC's)
- Committees organized to raise and spend money for political candidates, ballot initiatives and proposed legislation - Connected PAC's: associated with specific group and can only rais emoney for that group - Nonconnected PAC's: accept funds from any individual or organization - Leadership PAC's: nonconnected PAC's by politicla leaders - Super PAC's: resulted from judicial decisions
Sustainability Investing (Finance & Sustainability)
- Common sense approach - mitigating risk, fiduciary duty, creating value - $1/$9 can be classifies as a sustainable investment - Dow Jones Sustainability Indices - Goldman on Sustainability & Low Carbon: intro to the new world of finance and investment banking and sustainability --> capital --> large amounts needed --> investors - Env, social, gov't factor - IBM: financials not the only cost
McKinsey Resource Revolution (Innovation Example)
- Constrains in food land energy and water all across the planet - Challenge to humanity and innovation - Resource scarcity is driving the third industrial revolution - 2005: rapid rise in energy, gold, steel prices driven by realization that 2.5 billion people were entering middle class and not enough resources to go around - How can we sustain economic growth? - 2010/11: Realization that resource prices is a massive opportunity than threat - Trends moving very fast driven by industrial and information technology - Gas and solar gas (2007: USA importer of natural gas 2011: USA largest producer of natural gas); both growing 20% per year (very fast) - Beginning of new it technologies affecting many domain - Enable to capture productivity growth that we need and more - Idea: innovation, infrastructure and information technology **greater utility using less resources
US Government in Environmental Issues
- EIS (Env Impact Statements) - EPA (Env Protection Agency) 1. Air quality legislation: Clean Air Act (protect human health, property, vegetation, climate), emissions trading (reduce a particular pollutant) 2. Water quality legislation: Clean Water Act (quality protect marine life, and human interaction with water, eliminate discharge of pollutants into water channels) 3. Land related legislation: Solid Waste Disposal Act (nontoxic waste management), Toxic Substances Control Act (disposal or hazardous waste) 4. Endangered species: Endangered Species Act (preventing harm to species endangered or threatened)
Industrial Policy
- Every form of state intervention that affects industry at a distinct part of economy - Attempts to identify winning industries and foster their growth, redirecting resources from losing industries - Recommendation for new ventures: funding research, tax policy that rewards risk, competitive field friendly to new entry - Examples: Geothermal energy, lightbulbs
Accounting & Sustainability
- FASB to SASB - Assurance & audit practices - AICPA Sustainability Task Force - Dodd/ Frank (must report conflict minerals) - GRI - Energy (carbon reporting) - Sustainability reports - Compliance - *BIG issue: Integrated reporting*
Finance & Sustainability
- Financial impact sustainability (trillion $) - Investor demand (investing in sustainable companies) - Regulation - DJSI - Carbon markets - Energy markets - Operations - Bottom line profit - Regulations - *BIG issue: capital life in blood*
Wally Triplet
- First black football player in Penn State (1945) - University of Miami game, said Wally wasn't invited, team decided not to play - 1948: Cotton Bowl Origin - "We Are Penn State" - First black football player to get drafted in the NFL
Economic Regulation
- Focus: market conditions, economic variables, entry, exit, prices, services - Industries affected: selected (finance and banking, railroads, aeronautics, communications) - Examples: Civil Aeronautics Board, Federal Communications Commission - Current trend: Re-regulation (within financial stability)
Social Regulation
- Focus: people in their roles as employees, consumers and citizens - Industries affected: all industries - Examples: Equal Employment Opportunity Commission, Environmental Protection Agency, etc - Current trend: Re-regulation (Consumer Financial Protection Bureau, etc)
Coalition
- Forms when groups realize that they have something in common and join forces - Support for individuals or organizations - Ad Hoc Coalition: Lobbying to address a particular issue for a particular period of time
What Business Lobbyists Do
- Get access to key legislators (connections) - Monitor legislation - Establish communication channels with regulatory bodies - Protect firms against surprise regulation - Draft legislation, slick ad campaigns, direct mail campaigns - Provide issue papers on anticipated effects of legislative activity - Communicate sentiments of association or company on key issues - Influence outcome of legislation (promote helpful legislation, defeat harmful legislation) - Assist companies in coalition building around issues that various groups may have in common - Help members of congress get reelected - Organize grassroots efforts
30% Club Initiative
- Goal of achieving a minimum of 30% women on FTSE-100 boards - Spreading around the world, USA 2014 - 50% coming into company are women, very few in leadership - Cross company mentoring - Higher education initiative - Women for media database - Milennials
GRI (Global Reporting Initiative)
- Goal: increase transparency - *Framework for reporting sustainability* - (1) Enabling Policy (2) More Reporters & Better Reporting (3) Moving Beyond Reports (4) Innovation & Collaboration
Green Consumers, Employees, Investors
- Green Consumers: customers who express preference for more environmentally friendly products/services - Green Employees: play a major role in promoting environmental practices - Green Investors: want to put their money where environmental values are being identified, interested in advancing social causes
Other Business Drivers (Second Tier)
- Innovation & design - Energy - Water - Waste - Govt regulation - Govt incentives - GHG's (carbon) - Public interest - Non-govt impact - Operations - Facilites - Media
A4S International Integrated Reporting (Accounting & Sustainability)
- Integrated reporting for the future - Goal: transformation of corporate reporting - Influences business behavior - Value creation and preservation
IPCC
- Intergovernmental Panel on Climate Change - 1988, International body for assessing the science related to climate change - Provide policymakers with regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation - IPCC Assessment Reports cover the full scientific, technical and socio-economic assessment of climate change -Boss of climate change for the planet -How does climate change work in the world?
Role of Government and Businesses
- Issue: What tasks should be handles by govt and what by businesses? - Social oriented goals are not factored into business decision making and processes - Govt has to ensure that goals reflecting social concerns have to be achieved - Govt articulates and protects public interest
Dow Jones Sustainablility Index
- Launched in 1999 as the first global sustainability benchmark - Tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria - Companies report out using GRI framework --> creates indices - Companies want to be highly rated on this list
Triple L (Penn State Strategic Plan)
- Learn (teach) - Live (projects) - Lead (share with others) - Good stewardship = good business - Penn State strategic plan theme for 2016: "Ensuring a sustainable future"
Driver #2: Intensity Resource Usage Rate
- Level 1: CPI "basket of goods" represents our intensity of resource use - Level 2: emerging middle class (read article) - We need 5 Earths for the world population to live equal to the U.S lifestyle - Bottom line: Developing populations do and will increase the demand for resources. How can businesses assist in supplying greater utility with less resources? - How to change the intensity equation: Conservation and Innovation
Others
- Major employer: govts employ millions of people - Purchasers of goods: one of the largest purchaser of goods from private sector - Subsidies: influences business behavior; made available to agriculture, fishing, transportation nuclear, housing , other special categories - Transfer payments: influences business behavior by providing money for welfare, social security and other entitlement program - Competitor: completes with public sector - Loan guarantees: lends money directly at lower interest rates to small businesses than those of private competitors - Taxation: tax deductibility, incentives, depreciation policies, tax credits - Monetary policy: Federal reserve - Moral suasion: govt's attempts to persuade businesses to act in the public interest by taking or not taking particular course of action
SKF Example
- Make equipment for transportation - *Innovation, intensity and industrial policy* - Innovation = Used alternative energy source: geothermal (using the ground, wells and pipes, to heat and cool a place) - Dug 130 wells, cost the $1 mil, saved half on electricity bill, carbon footprint dropped -Intensity = same or greater utility for a lot less resources - Industrial Policy = Who paid for the $1 mil? SKF, Federal, State got, milennials
Kennametal Case
- Make industrial tools; leader in their industry - Latrobe, PA - Case: Plant was ugly with dim lighting - People: safer, morale, conditions, confidence, community - Profit: $900,000 savings/9 months, increased profits, productivity, customers, brand, safety - Planet: saving energy, less waste, decrease CO2 emissions
Green to Gold (Mgmt & Sustainability)
- Many companies get the point of sustainability - Big upside opportunities, reducing costs, risk and setting business apart - sustainability and our people
Why Boys Fail
- Men under performing compared to women in the workplace and educational achievement **lack of young men getting an education is a problem in industries - Lowest grades received by boys (2/3) - Females dominating standardized test scores - 89% boys disciplinary action - Chinese grade school: girls dominating education - Current cap favoring girls - IMPLICATIONS: *Need for higher skills *Socializing issues in college (60-40 window) *Specialized skills (engineering, sciences, women encouraged to move here, or more men ready for college) *Society's expectations *Loss of opportunity *Higher crime
Sectoral Trade Associations
- Midrange representation; within a given industry or line of business - Trade associations have the disadvantage of battling with each other in their attempts to lobby Congress - National Automobile Dealers Association - National Association of Realtors - National Association of Medical Equipment Suppliers - American Petroleum Institute - American Trucking Association - Tobacco Institute
Women in Senior Management
- Most powerful women: Mary Barra, Indra Nooyi, Marilyn Hewson, Ginni Rometty, Abby Johnson - ISSUES: *Leadership advancement *Mentors/coaches *Child care responsibility *Home responsibility *Workforce & organization design *Flexible work arrangement *Society's attitudes *Women's goals vs. business goals *Motherhood penalty vs. fatherhood bonus
Company Lobbying
- Narrow, specific representation; within company - Washington and State Capital Offices - Law Firms Specializing in Lobbying - Public Affairs Specialist - Political Action Committees (PAC's) - Grassroots Lobbying - Company Based Coalition - Former Government Officials
Externalities
- Negative consequences or side-effects of businesses - "Mandate, regulate, litigate"
Walmart & Paige (Supplier & Products & Consumers)
- Paige electric (working as Walmart's supplier): wiring and cable company - zero waste package, reel made by 100% recyclable material 1pac2 - Easy to stack, carry, transport - No splinters -same utility, more profitable, greater stewardship - *Walmart's 3 Main Goals:* 1.4 million people: (1) 100% renewable energy (2) zero waste (3) sell more sustainable products (sustainable score label on products) **major players driving sustainability in their company AND through supply chain --> cascade
History of Government and Businesses
- Pendulum analogy, periods of strong and weak govt intervention - Interstate Commerce Act (1887): Beginning of federal govt regulation of interstate commerce, prevented discrimination and abuses by railroads - Securities act (1933), Securities and Exchange Act (1934): Curbing abuses in stock market, stabilizing market, restore customer confidence - Railway Labor Act (1926) Norris-LaGuardia Act (1932), Wagner Act (1935): Labor legislation - Civil Rights (1964), Water quality Act (1965), Occupational Safety and Health Act (1970), Customer Product Safety Act (1972), Warranty Act (1975): Quality of life
P&G Bob McDonald
- Plants 100% renewable energy - 100% recyclable materials - 0 waste for customers (saved $1 billion) - Waste stream: what are the different wastes coming out?
Business Lobbying
- Process of influencing public officials to promote or secure the passage or defeat of legislation - Goal: promote legislation that is in their organizations' interests and to defeat legislation that runs counter to that
Supplier & Products & Consumers
- Product design/development - Cradle to grave responsibility - Sustainable sourcing - Material selection - Supplier certifications - Manufacturing/operations - Distribution - Disposal/end of life - *BIG issue: sustainable sourcing*
Marketing & Sustainability
- Product development (Ex: Scotts tube free toilet paper) - Sales - Research - Public relations - Reputation - Communication (internal/external) - Do not do "greenwashing" - *BIG issues: innovation, product development, "greenwashing"*
Mgmt & Sustainability
- Recruitment/ retention - Organizational culture and development - Training - Employee engagement (social and env.) - Performance systems compensation - Community & social - PSP - personal impact - Governance - Human resources
Stewardship Model vs. Others
- Stewardship Model: the responsible management of resources - Our license to operate showing the public and government that we are using our resources wisely - Ex: Alcoa **Responsibility: can you do the right thing? - Video: Avatar vs. nature timelapse video
Sopra Steria (Mgmt & Sustainability)
- Tech company - Goal: empower employees to deliver sustainability activities "Green agents" -taking actions to reduce company's carbon footprint --> employees biking to work - Not only deliver, but also get a sense of feeling that they are sharing the future - Share information, use tech tools internally to educate and empower - Awards, certifications - 1 day challenge: environment theme
Trusts and the Federal Trade Commission
- Trust: Organization that brought all or most competitors under a common control that then permitted them to eliminate most of the remaining competitors by price-cutting - Sherman Antitrust Law (1890): intended to control monopolies, outlawed any contract, combination of conspiracy is trade, prohibited monopolization of any market - Clayton Antitrust Law (1914): Outlawed price discrimination, forbade auto-competitive contracts
Political Involvement
- Two major approaches to corporate political activity: 1. Lobbying 2. Political spending
McKinsey: How Companies can Adopt to Climate Change
- Value chain risks: Physical (weather events), prices (more fees on fossil fuels), product (electric cars) - External stakeholder risks: Ratings (corporations under a microscope), reputation (trust=value), regulation (govt can change policies) - Greenhouse gases (GHS): Water vapor, carbon dioxide*, methane, nitrous oxide, ozone, chlorofluorocarbons - Read article
LEED
-*Leadership in Energy & Environmental Design* - US Green Building Council - Standards for every structure that is built (rating system) - 88 Fortune 100 companies use LEED
World Climate Summit 2015
-COP21 --> first time that all world's governments agreed - Results: Limit to 2 degrees celsius, 5 year review, 100 billion/year - 150 countries signed a deal
EAP
-Excellent Performance -Academic Integrity -Professional Behavior
McKinsey Study Snapshot: Does Diversity Pay
-McKinsey Diversity Study 2015: --> gender diverse 15% more likely to outperform --> ethnic diverse 35% more likely to outperform -Diversity Top 50 Stock Indexes: --> 2017 Study Diversity Top 50 Beat S&P by: Diversity Top 50: 27.78% (3yr) --> 79.61% (5yr) DJIA: 25.08% (3yr) --> 57.41% (5yr)
Do They Connect?
-Men and women both matter -Weakness on both ends
Sustainability and Business
-Sustainability: meet need of today and not compromise on needs of tomorrow -Triple Bottom Line: Profit (Economic), Planet (Environment), People (Social) -Stewardship: responsible mgmt of resources **mindset--> shelter resources vs. use everything up --> mindset of global directors is all about good stewardship
Driver #1: Population Growth
-population is changing exponentially - Scientific lens: all countries in the world measure - Political lens: world leaders get together and talk about providing for its people (UN) - Economic lens: how will we provide goods and services for rising population ($$) - Bottom line: Providing goods and services for 9 billion people by 2043
Language Check
-sustainability = #1 term today (50% use it now) --> sustainability = umbrella --> underneath umbrella = all things we do to engage with the world -corporate social responsibility = #1 term 20 years ago (25% use it now) -25% = other
Unilever
-zero waste --> global footprint -running business through sustainability -How does this fit into triple bottom line?
Impact of Business on Natural Environment
1. Climate change 2. Energy 3. Water 4. Biodiversity & land use 5. Chemicals, toxins, heavy metals 6. Air pollution 7. Waste management 8. Ozone layer depletion 9. Oceans and fisheries 10. Deforestation
PwC Sustainability Maturity Path Value Approach
1. Compliance mode: reduce operation and compliance risk 2. Obligation (Value protection): expected to do = license to operate, reduce reputation risk 3. Efficiency (Value creation): smart to do = operational cost & value chain savings 4. Leadership (Increasing value): innovation & growth, new business, brand enhancement
Reasons for Regulation
1. Controlling natural monopolies - Natural monopoly: largest firm has lowest costs because of economies of scale and drives out competitors - Potential abuse of restricting output and raising prices - Intervention when companies engage in anticompetitive practices 2. Controlling negative externalities - Spillover effects that result when businesses give rise to unplanned, unintended side effects - Also known as social costs, because they are absorbed by society rather than cost of making the product - By forcing all firms to incur costs, regulation can level competitive playing field 3. Achieving social goals - Using regulations to help achieve certain social goals that serve public interest - Related to negative externalities, ex: lowering harmful gases, hiring more minorities - Keep consumers informed (Consumer Product Safety Commission, product safety standards, truth in advertising, - Preservation of national security, fairness, equity, protection of farmers, allocation of scarce resources 4. Others - Some companies are important to the general health of the economy - Control excessive competition
Government's Regulatory Influences on Businesses
1. Economic Regulation 2. Social Regulation (types of regulation)
Smeal 3 Levels for Sustainable Transformation
1. Foundational (what & why) 2. Operational (knowledge & skills) 3. Functional majors (Fin, acctg, etc)
Business View of Sustainability
1. Fundamentals: Environmental impact, the role of companies, core dilemma: tragedy of the commons 2. Eco-efficiency: Pollution prevention, waste reduction, ISO 14000. life cycle assessment, risk assessment 3. Product stewardship: Design for recovery, selling services, extended product responsibility, closed loop supply chains 4. Sustainable strategy: Alliances and communication, product differentiation, corporate social responsibility, sustainable development
BIG 5 Sustainability Standards (Sustainability Reporting)
1. GRI (Global Reporting Initiative)* 2. Dow Jones Sustainablility Index* 3. SASB (Sustainability Accounting Standards Board)* 4. ISO 14001 (env): 26000(soc) 5. CDP (Carbon Disclosure Project)
Sustainability Standards (Accounting & Sustainability)
1. GRI: What to measure? Provides framework for how to collect data and report 2. Dow Jones: For investors 3. SASB: Video: Standard setting, material, environmental & social impact, 10k form, SASB developing infrastructure)
Business & Stakeholders
1. Government 2. Employees 3. Consumers 4. Owners 5. Community
Government's Nonregulatory Influence on Business
1. Industrial Policy 2. Privatization 3. Others
Strategies for Corporate Political Activity
1. Information Strategy: providing information to policymakers through activities such as lobbying, research projects, papers and being expert witness 2. Financial Incentives Strategy: making direct financial contributions, providing desired services, reimbursing travel, paying fees to policymakers 3. Constituency Building Strategy: mobilizing grassroots or business cohorts to work together through public relations, political education, press conferences and advertising
Lighting and Sustainability
1. LED: Most energy efficient, 6-8W max, $7 each, 20 year lifespan (lasts longest) 2. CFL: Cheapest that is efficient, 13-15W max, $1 each, 10 year lifespan 3. Std: On its way out, 60W max, $.70 each, 2 year lifespan
IBM Structure of Corporate Sustainability Journey Approach
1. Legal & compliance: base level, follow environmental and social rules 2. Value based and self-regulation: stakeholder model, want to be a good corporate citizen, there are other things that I should be doing 3. Efficiency: money associated with sustainability, companies wake up, start to invest 4. Growth platform: using sustainability as a driver for our business (ex: IBM)
Smeal Strategic Plan
1. Providing extraordinary education 2. Highest quality research 3. Building a culture of: integrity diversity service sustainability
3 R's
1. Reduce - Process Design: Pollution, prevention, materials, lean Production, energy, carbon Footprint - Ex: chrome, shiny metal on cars, dangerous 2. Reuse: - Product Design: Servicize, repair, remanufacture, materials choice - Ex: Xerox, lease for 4 years, now charge per image (servicize) 3. Recycle: - Product Design: Design for environment, materials choice, cost benefits, spare part recovery - Regulatory pressures - Last 5 to 6 years: reduction of carbon
TRIAD #1: Personal (Understanding Diversity)
1. Social - something people care about and disagree over what would be proper protocols (ex: abortion) 2. Personal 3. Emotional **What is your diversity story?
Organizational Levels of Lobbying
1. Umbrella Trade Associations 2. Sectoral Trade Associations 3. Company Lobbying 4. Ad hoc coalition
CHAPTER 12
BUSINESS INFLUENCES ON GOVERNMENTS AND PUBLIC POLICY
CHAPTER 11
BUSINESS, GOVERNMENT, AND REGULATION
Umbrella Trade Associations
Broadest representation - Chamber of Commerce - National Association of Manufacturers - Business Roundtable - National Federation of Independent Businesses
CHAPTER 19
DIVERSITY AND INCLUSION
Sustainability - The Problem
Designing industrial systems that are economically & environmentally sustainable Company need to find ways for these activities to create value (PROFIT) We have to find ways to accomplish our goals & make money If we don't take action, it's likely we'll be forced to take action
GSK Philly Navy Yard
Environmental and Social Standards Communication, Walking, Fitness center, Everywhere is a work space, Glass walls (natural light)
CHAPTER Y
GUEST LELCTURER: DAN GUIDE
CHAPTER 15
SUSTAINABILITY AND THE ENVIRONMENT
CHAPTER X
SUSTAINABILITY MAJORS
