MBA605_Business Environment and Regulatory Framework (1)

Natural Environment - II 345 HARMFUL EFFECTS OF PRODUCTION Resource Depletion Ecological Damage due to Resource Exploitation Production Process/Technology Fig. 11.1: Harmful Effects of Production (All the figures in this Unit are reproduced from Francis Cherunilam, Business Environment and Sustainable Development, Himalaya Publishing House, Mumbai, 2011). Figure 11.2 illustrates the harmful effects of the conspicuous or affluent production that characterises the society today. Impact of Affluent/Irresponsible Consumption Harmful Effects Pollution Wastage of on Health Resources Adverse Impact on Sustainability and Human Welfare Fig. 11.2: Impact of Affluent Consumption Development Sustainability and Production Frontier The impact of economic development on the productive potential of the nation (or world) can be explained with the help of production frontier. The production possibility (possibilities) curve (also known as substitution curve, production indifference curve, transformation curve and production frontier) shows all the alternative combinations of two commodities that a nation can produce by fully utillising all its factors of CU IDOL SELF LEARNING MATERIAL (SLM)

346 Business Environment and Regulatory Framework production. In other words, the production possibility curve shows the frontier beyond which production cannot be carried on with the available resources and technology. In Figure 11.3, OO is the current production frontier. If an unsustainable development process is followed, the production possibility curve will shift downwards, for example, to DD. This means a decline in the production potential. When the production possibility curve was OO, the community consumption indifference curve was ICo. When production possibility curve DD, the corresponding community consumption indifference curve is ICd, i.e., the nation as a whole is at a much lower level of consumption. The objective of sustainable development strategy is to prevent the shifting of the production potential downward. It shall also aim at shifting it upwards (e.g., to II) so that the nation will be at a higher consumption indifference curve (ICi), indicating a higher level of consumption. It will be possible by replenishing the renewable resources. I O ICi D ICo ICd D OI Fig. 11.3: Ecological Impact on Production Frontier A community indifference curve shows various combinations of two commodities which yield equal satisfaction to the community or nation. The community consumption indifference curve may be defined as the locus of points representing a constant real income for the community as a whole. An individual consumption indifference curve shows various combinations of commodities which yield the same level of satisfaction to an individual; a community consumption CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 347 indifference curves shows various combinations of two commodities which yield the same level of satisfaction to the community. Social Dimensions Social dimensions connote that the world cannot endure or sustain itself with a minority in growing affluence and the majority in squalid effluence. Hence, development strategies shall aim at ending extreme poverty and hunger; providing a certain level of education, health, sanitation, safe drinking water etc.; gender equality; reducing child mortality; improving maternal health etc. These were among the focal points of MDGs. The SDGs have substantially broadened the scope of the development agenda and placed great emphasis on meeting the basic human needs of the poor and promoting social justice. The social dimensions of sustainable development is very well reflected in the Sustainable Development Goals. As indicated earlier, all the three dimensions of sustainable development are highly interconnected supplementary to each other. Elements of Sustainable Development Strategy The important components of a sustainable development strategy include the following: Vision: A prerequisite for an effective sustainable development strategy is a proper vision, i.e., a long-term view of what the future scenario should be. The economic and ecological aspect of it involves:  An assessment of the future requirements  An assessment of available resources and resources that can be tapped  Land use pattern considering the requirements of various sectors, segments and purposes  Energy strategy  View of the type of agricultural, industrial infrastructural developments  Ecological impacts of different activities CU IDOL SELF LEARNING MATERIAL (SLM)

348 Business Environment and Regulatory Framework The social aspect involves: An assessment of the existing human development levels and the developments targets for the future. Example: The Millennium Development Goals of UN that were to be achieved between 2000 and 2015; UN’s Sustainable Development Goals for 15 years from 2015. Polices: Policies are a very important element of the SD strategy like environmental demarcation of ecologically sensitive area (ESA), costal zone policy, agricultural policy, technology policy, industrial policy etc. Regulations: Regulations are required to implement the policies. Examples: Industries Development of Regulations Act, Pollution Control Acts etc., regulation of constructions, mining, agricultural activities in ESAs, coastal areas etc. Development Plans/Strategies for Achievement of the Vision Strategy is comprehensive master plan for the long term with time-bound action plans and targets for different development components. Technology/Methods/Processes Decision on and adoption of appropriate technologies/methods/processes are very important to achieve the pattern of development envisaged. Resources An assessment of the resources required for the plans and decision on the financing strategies are essential elements of SD strategy. Principles of Sustainable Development We need to arrest the dangerous trends. The Legal Principles for Environmental Protection and Sustainable Development adopted by the UN’s World Commission on Environment and Development include the following General Principles, Rights, and Responsibilities, which are clearly indicative of the role of the Government. Fundamental human right: All human beings have the fundamental right to an environment adequate for their health and well-being. CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 349 Inter-generational equity: States shall conserve and use the environment and natural resources for the benefit of present and future generations. Conservation and sustainable use: States shall maintain ecosystems and ecological processes essential for the functioning of the biosphere, shall preserve biological diversity, and shall observe the principle of optimum sustainable yield in the use of living natural resources and ecosystems. Environmental standards and monitoring: States shall establish adequate environmental protection standards and monitor changes in and publish relevant data on environmental quality and resource use. Prior environmental assessments: States shall make or require prior environmental assessments of proposed activities which may significantly affect the environment or use of a natural resource. Prior notification, access and due process: States shall inform in a timely manner all persons likely to be significantly affected by a planned activity and to grant them equal access and due process in administrative and judicial proceedings. Sustainable development and assistance: States shall ensure that conservation is treated as an integral part of the planning and implementation of development activities and provide assistance to other States, especially to developing countries, in support of environmental protection and sustainable development. General obligation to cooperate: States shall cooperate in good faith with other States in implementing the preceding rights and obligations. Strict adherence to these principles is a prerequisite for sustainable development. World Business Council for Sustainable Development It is heartening to note that the conscience and concerted efforts of many businessmen are engaged in formulating a perspective framework for promoting sustainable development. An important endeavour is the World Business Council for Sustainable Development (WBCSD) founded on the eve of the 1992 Rio Earth Summit to involve business in sustainability issues and CU IDOL SELF LEARNING MATERIAL (SLM)

350 Business Environment and Regulatory Framework give it a voice in the forum. It was the brainchild of the Swiss industrialist, Stephan Schmidheiny, who had long had the foresight to realise that business had an inescapable role to play in the search for sustainable development. He believed that business could act as a catalyst for change toward the achievement of sustainable development; at the same time, business needs sustainable development in order to fulfil its potential. The WBCSD which is a CEO-led, global association of some 200 companies dealing exclusively with business and sustainable development, provides a platform for companies to explore sustainable development, share knowledge, experiences and best practices, and to advocate business positions on these issues in a variety of forums, working with governments, non-governmental and intergovernmental organizations. Members of WBCSD are drawn from more than 30 countries and 20 major industrial sectors. The Council also benefits from a global network of some 60 national and regional business councils and regional partners. From India, Infosys Technologies and Reliance Industries are members. The mission of WBCSD is to provide business leadership as a catalyst for change toward sustainable development, and to support the business license to operate, innovate and grow in a world increasingly shaped by sustainable development issues. The Council’s objectives are to:  Be a leading business advocate on sustainable development.  Participate in policy development to create the right framework conditions for business to make an effective contribution to sustainable human progress.  Develop and promote the business case for sustainable development.  Demonstrate the business contribution to sustainable development solutions and share leading edge practices among members.  Contribute to a sustainable future for developing nations and nations in transition. In order to achieve this, the Council focuses on four key areas: The WBCSD is therefore concentrating its efforts on four major focus areas: Energy and Climate, Development, The CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 351 Business Role and Ecosystems. In order to fulfil this new mandate, the WBCSD work program includes projects and initiatives mixing both on-the-ground action and advocacy, business experiences in implementation and activities challenging sustainability thinking within companies, and the strengthening of its regional network. 4Rs The terms 3Rs (Reduce, Reuse, Recycle) are often used in the discussion on sustainable development. To this, Francis Cherunilam has add one more – Regenerate. The three Rs will help reduce the use of natural resources. The 4th R will help restoration of some of the destroyed/damaged ecology. The 3Rs give a lot of scope for reducing the use of natural resources. Reduce The scope for reducing resource use is enormous at the individual/household and organisational levels (particularly in the industrial and commercial sectors), like reducing the use of electricity and water; using steel cutlery instead of throwaway plastic and paper items; using reusable carry bags for shopping; reducing paper usage by digitalization; economising material usage in product packaging; reducing (economise) input intensity in production, provision of service etc. and so on. Green building and building with rain water harvesting will help conserve resources. There is scope for reducing stationary usage in many organizations. Reuse One famous economist described developing economies like India as reuse economies, appreciating the resource conservation by reuse. Alvin Toffler described the affluent economies as throwaway societies, referring to the use and throw culture. Kenneth Galbraith described affluent societies as effluent societies referring to the effluence caused by affluent consumption including use and throw products. Scope for reuse is plenty and encompasses clothing (including by mending), containers and household appliances (by proper maintenance and repairing, market for used products etc.). Composting and bio-gas generation using domestic waste is a very important area of reuse. CU IDOL SELF LEARNING MATERIAL (SLM)

352 Business Environment and Regulatory Framework Recycle A lot of resource conservation can be achieved by recycling materials left over after the regular use of materials commonly recycled included, paper and paper products, metals, plastics etc. There are recyclable materials in discarded products like electric fan, electric motor, battery etc. There is considerable scope for recycling water in many industries. Putting in place an efficient recycle system by organizations like local governments for effective collection and processing of the recyclable materials is important. In many places, NGOs and SHGs are involved in such systems. Regenerate Regeneration has an important role in restoring destroyed/damaged ecology. It encompasses replanting; restoring pond/tank lake, river etc. to the original condition (at least to the extent feasible; replenishing water bodies with aquatic life subject to population shrinkage and doing same sort of things for birds, animals, flora etc. Projects for conservation of wild life may also be considered under this. Some paper manufacturing companies are replanting to make good for the wood they use. 11.6 Summary The development and consumption patterns we have been following have caused severe damages to the environment. The technologies we use for agriculture, industrial development, transportation, business efficiency, household and personal comforts etc. have done huge damages to the ecology. The ecology is in danger of further degradation unless effective measures are taken to arrest this trend and restore what can be restored. The move towards environmental protection will require concerted efforts to combat the adverse ecological degradation and to develop eco-friendly production and consumption culture. Of prime importance is the development of eco-friendly technology, i.e., technology which reduces or is free from different types of pollution or technology that uses less power or other inputs, substitutes biologically degradable materials for non-degradables, non-conventional energy etc. CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 353 As environmental protection has become inevitable, substantial efforts need to be made to develop technology to abate pollution. The concern for environment has given rise to a big and growing business of environmental service business. The environmental industry consists of activities which produce goods and services to measure, prevent, limit and minimise or correct environmental damage to water, air and soil, as well as problems related to waste, noise, and ecosystems. This sector deals with waste management, air pollution, water and waste, along with environmental services and equipment. A comprehensive and long-term approach to ecological protection is sustainable development. Sustainable development is a process of development in which the exploitation of resources, the direction of investments, the orientation of technological development; and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations. There are three important dimensions of sustainable development, viz., economic dimension, ecological or physical dimension and social dimension. Environment friendly, technology, production processes and consumption culture are a must for sustainable development. The 4Rs (reduce, reuse, recycle and regenerate) are important components of sustainable development. 11.7 Key Words/Abbreviations 1. Green Marketing: Green marketing is the marketing of products that are presumed to be environmentally safe. 2. Sustainable Development: Sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. 3. 4Rs: Reduce, Reuse, Recycle and Regenerate. 4. Ecosystem: An ecosystem is a community of living organisms in conjunction with the nonliving components of their environment, interacting as a system. 5. Sustainable Marketing: Sustainability marketing is a way to build relationships with consumers while letting them know that they are important and so are future generations. CU IDOL SELF LEARNING MATERIAL (SLM)

354 Business Environment and Regulatory Framework 6. Green Washing: refers to misleading marketing about the environmental benefits of a product. 11.8 Learning Activity 1. Analyse a few cases dealt with by the National Green Tribunal. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 2. Collect the details of some products claimed as green products and examine to what extent they are green. ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 11.9 Unit End Questions (MCQs and Descriptive) A. Descriptive Type Questions (i) Long Answer Questions 1. Explain green marketing, conditions necessary for its success and strategies for establishing credibility green marketing. 2. What are environmental technologies? What are the important reasons for the growth of environment service business? 3. Discuss the ecological implications of technology. 4. Explain the meaning, dimensions and elements of sustainable development strategy. 5. Discuss the relevance of sustainable development to ecological protection. (ii) Short Answer Questions 1. Explain 4Rs with reference to sustainable development. 2. What is green washing? How can it be countered? 3. Write a note on green technology. CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 355 4. Describe the beneficial and harmful effects of chemical fertilizers, pesticides, insecticides etc. used in agriculture. 5. Explain the term green technology. B. Multiple Choice/Objective Type Questions 1. Which of the following is not a component of the 4Rs in sustainable development? (a) Reduce (b) Renovate (c) Recycle (d) Reuse 2. Green product means: (a) All agricultural products (b) Fresh product (c) Environment friendly product (d) Fresh vegetables and fruits 3. Green washing refers to: (a) Misrepresenting a product as green product (b) Publicity for green products (c) Removing environmentally harmful elements in a product (d) Marketing farm fresh products. 4. Which one of the following is not a part of triple bottom line (TBL)? (a) Profit (b) People (c) Planet (d) Profit and loss 5. The Sustainable Development Goals 2015-2030 was proclaimed by: (a) United Nations (b) Government of India (c) Planning Commission of India (d) Niti Aayog Answers: 1. (b), 2. (c), 3. (a), 4. (d), 5. (a). CU IDOL SELF LEARNING MATERIAL (SLM)

356 Business Environment and Regulatory Framework 11.10 References Text References 1. Shrum, L.J., Tina M.L. and McCarty, J.A. (1994), “Recycling as a Marketing Problem: A Framework for Strategy Development”, Psychology and Marketing, July-August, Vol. 11, pp. 393-416. 2. Linden, A., Moisander, J., Thelander, A. and Uusitalo, L. (2000), ‘Environment Values, Attitudes and Behaviour’, Perspectives on Consumption as a Social Project. 3. Susan Ward, “Green Marketing – Keys to Green Marketing Campaigns”, About.com Guide. 4. TerraChoice, “The Seven Sins of Green Washing (2009)”, www.sinsofgreenwashing.org. 5. Jacquelyn A. Ottman, Edwin R. Stafford and Cathy L. Hartman, “Avoiding Green Marketing Myopia: Ways to Improve on Consumer Appeal for Environment on Mentally Preferable Products” , Environment, Vol. 48, No. 5, June 2006. 6. S. Armstrong Jayakumar, Victor Anandkumar and Carolin Thomas, “Green Marketing or Green Wash Marketing – A Reality Check”, International Marketing, edited by Franmcis Cherunilam, Himalaya Publishing House, Mumbai (2010). Suggested Readings 1. Government of India, National Environment Policy. 2. International Federation of Red Cross and Red Crescent Societies, World Disaster Report (Annual). 3. United Nations, The 2030 Agenda for Sustainable Development. 4. World Business Council for Sustainable Development, Vision 2050. 5. Niti Aayog/ United Nations, Localising SDGs: Early Lessons from India, 2019. CU IDOL SELF LEARNING MATERIAL (SLM)

Natural Environment - II 357 Web Resources  1. https://www.wbcsd.org/ 2. https://www.worldbank.org/en/publication/wdr 3. https://sustainabledevelopment.un.org/ CU IDOL SELF LEARNING MATERIAL (SLM)