Chapter 6 Environment Energy

Environment, Energy, Natural
Resources and Ecological factors
Chapter 7
Introduction
Ecological factors affecting business

• Ecological factors influencing business are connected to actions and
processes necessary to protect natural environment and in the same
time maintain or increase efficiency of the corporation. Ecology often
takes form of so called corporate environmentalism, i.e. all actions
promoting sustainability, gaining consumer appreciation of eco-
friendly products and services, creating image of responsible
corporation. There are several ecological factors influencing
management decision and business goals. Proper identification of
natural environment and its influences during strategic analysis (STEEP
analysis, SWOT analysis, TOWS analysis) could lead to better strategic
alignment of company to ecosystem and state regulations.
Ecological laws and regulations
• government policy and policymaker engagement in environmental protection,
• fees and fines for using natural environment,
• regulations of waste disposal, recycling and storing,
• regulations of carbon CO2 and toxic fumes emission,
• relative “value of nature” in political campaigns,
• increasingly stringent environmental regulations on regional, state and
international levels,
• cost of non-compliance with ecological regulations,
• incentives for businesses and customers for using clean products and services,
• activities of government agencies tracking business activities, giving permits,
setting minimal standards for any air emissions, procedures for handling waste
and hazardous materials, etc.
• requirements for implementing environmental standards e.g. ISO 14000,
Social pressure towards clean business
• environmental groups and their activities,

• attitudes towards eco-friendly products and services
(consumer preferences and demand for such products),
• attitudes toward tourism in intact wetlands, forests, lakes
and seas,
• increased scrutiny of ecological impacts by stakeholders and
customers
• human well being in relation to ecosystem,
• values and morality, influence of religious beliefs on
managers and consumers,
Cont..
• costs of protective and proactive environmental measures
• transparency of corporate activity due to global IT
network
• influence of non-government organizations (mobilization
of people through social networks),
• increase of risk of extremism and terrorist attack using
environmental factors (contamination, nuclear waste,
etc.),
• role of biases, passion and emotions in environmental
decision-making
Technological advancements
• carbon footprint of used technology,

• energy requirements for technological processes,
• availability of technologies for emission reduction (chemical-filled smoke,
ash and particles),
• possibility of recycling of waste and components,
• technology used for mining and acquiring of other natural resources,
• competitive advantage of new clean technologies (opportunity to
differentiate from competitors),
• capital requirements for eco-friendly technologies,
• scientific research in area of ecosystems and clean technologies,
• equipment for handling and moving the waste products and hazardous
materials,
• environmental risk assessment and prevention in production processes,
Natural environment influences
• water and air pollution (influencing production processes in high-tech
companies and food production),
• quality of water used for consumption or production
• health problems (employee attrition) in polluted places, healthy
environments improve mental and physical health and reduce
absenteeism,
• quantity of renewable and non-renewable resources available,
• biodiversity of ecosystems and its protection,
• minerals, oil, gas and other natural resources deposits,
• degradation, deforestation and depletion of fisheries and other natural
resources,
• flooding, storms, and other natural disasters caused by human
influences on ecosystems (global warming, etc.),
• climate change, drought and food scarcity could lead to social unrest
Top Environmental Problems and their Impact on Global Business
• Our planet is plagued by environmental problems that

deplete natural resources and strain livelihoods, many
of which are exacerbated by poor industrial practices.
• If left unchecked, environmental problems negatively
impact businesses both directly, as in supply chain
disruptions, and indirectly, as in health hazards that
lead to loss of man-hours and efficiency. Following are
some common environmental problems that
businesses need to address to ensure sustainability
and long-term financial viability.
A. Pollution
• Pollution is one of the world’s biggest environmental
problems, as it tends to be a typical byproduct of
modern life. Air pollution, for instance, is the result of
fossil fuel combustion, as well as various gases and toxins
released by industries and factories.
• Pollution and modern living seemingly go hand-in-hand,
but the costs of air pollution can no longer be ignored.
According to a 2012 study by the Massachusetts Institute
of Technology (MIT), air pollution cost the Chinese
economy $112 billion in 2005 . In Hong Kong, medical
bills and productivity loss due to air pollution amounted
to HK$39.4 billion in 2013 .
B. Waste Disposal
• As populations and industries grow, so does the

problem of proper waste disposal. Communities
accumulate so much garbage that properly
disposing of it has become increasingly difficult.
Solid garbage, for example, is usually buried in
landfill sites or incinerated, which is extremely
harmful to the environment. Decomposing garbage
may attract vermin, give off a foul smell or leach
into groundwater. The smoke given off by burning
garbage contributes to air pollution.
Cont…
• In Europe, Philips has 22 service organizations that are
collecting 40% of lamps that contain mercury. The
company has a recycling rate greater than 95% in the
market. Philips also started to sell lighting as a service
to enhance the collection of their lighting equipment.
They aim to reach more customers as the company
retains ownership of the lighting equipment so
customers don’t have to pay for lighting upfront. In
addition, Philips guarantees comprehensive
environmental management pertaining to the recycling
of their lighting equipment.
C. Climate Change
• “Climate change is a global problem with
grave implications: environmental, social,
economic, political and for the distribution of
goods. It represents one of the principal
challenges facing humanity in our day. If
present trends continue, this century may well
witness extraordinary climate change and an
unprecedented destruction of ecosystems,
with serious consequences for all of us.”
Cont..
• Wheat, for example, is an important food crop that grows in
cool temperatures. Rising temperatures will stress wheat crops
and lower their yields. This explains why, according to a
December 2014 study that was published in Nature Climate
Change ,
every 1°C increase in global temperatures means a 6% fall in w
heat production
. Falling wheat production would make it difficult for food
manufacturers to produce vital foodstuffs such as cereal,
bread, noodles and pasta. Plus, in order to maintain optimal
yields, wheat growers would have to use chemical pesticides
and fertilizers that are hazardous to both human health and
the environment.
D. Drought/Inadequate Access to Water
• The world’s water supply is becoming increasingly scarce. According
to the WHO/UNICEF Joint Monitoring Programme for Water Supply
and Sanitation (JMP),
2.5 billion people (roughly 36% of the world’s population) still lack
access to improved sanitation facilities. 748 million people
continued to get their drinking water from unsafe sources in 2012.
The World Wildlife Fund cautions that by 2025, water shortages will
affect about two-thirds of the world’s population .
• Farms are dependent on water for irrigation, so a decrease in water
supply will drastically affect their productivity. Farms will have
smaller yields, which means manufacturers will also have fewer raw
materials to turn into products and services. Climate change-related
water issues cost Unilever between $300m and $400m every year .
Energy management
• Energy management is the proactive, organized and systematic coordination
of procurement, conversion, distribution and use of energy to meet the
requirements, taking into account environmental and economic objectives.
• It includes energy-saving efforts that focus on making better use
of existing buildings and equipment. Strictly speaking, this limits things to
the behavioral aspects of energy saving
• It's something that energy suppliers (or utility companies) do to ensure that
their power stations and renewable energy sources generate enough energy
to meet demand (the amount of energy that their customers need).
• It's used to refer to techniques for managing and controlling one's own
levels of personal energy.
• It also has relevance in aviation – it's a skill that aircraft pilots learn in some
shape or form like switching off engines mid flight and glide the aircraft at
cruising speed.

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Chapter 6 Environment Energy

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Environment, Energy, Natural

Resources and Ecological factors

• environmental groups and their activities,

• carbon footprint of used technology,

• Our planet is plagued by environmental problems that

• As populations and industries grow, so does the

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