Banda Aceh, October 6, 2008
BUSINESS ETHICS
James Fieser
BUSINESS AND THE ENVIRONMENT
The greatest damage done to the environment is inflicted by business and industry, and not from domestic activities. Businesses extract the greatest tolls in terms of energy consumption, toxic waste, air and water pollution, and deforestation. Increasing amounts of industrial toxic waste contaminates ground water, which in turn becomes harmful for human consumption. Oil spills from petroleum industries destroy shorelines and kill millions of sea animals. The burning of fossil fuels such as oil, gas and coal produces excess carbon dioxide, which adds to global warming through a greenhouse effect. Fluorocarbon gasses used in making domestic products such as refrigerators and styrofoam depletes the earth’s ozone layer, which shields the earth from the sun’s life-destroying ultraviolet rays. Some of these problems are expensive nuisances, such as oil spills and toxic waste. Others, though, threaten the survival of life on our planet, such as carbon dioxide production and the release of fluorocarbon gasses. In this chapter we will look at some of the causes of environmental irresponsibility in businesses, and some theories about why businesses should be more responsible.
Businesses’ Resistance to Environmental Responsibility. Although businesses don’t consciously set out to harm the environment, several factors create an unfortunate situation, which in many cases is worse than it needs to be. First, large businesses and industries are inherently imposing on nature. They take pieces of nature and reshape them into things that didn’t exist before, such as automobiles, skyscrapers, television sets and shopping malls. Not only are the end products artificial, and in that sense unnatural, but the means of producing these things are taxing on natural resources. Second, it is easy to disregard natural resources that are held in common and seem abundant, such as air and water. It doesn’t seem wrong to pollute the air if, technically, no one owns the air and the particular damage that I do isn’t too noticeable. Environmentalists sometimes refer to this phenomenon as a tragedy of the commons, that is, a disaster that happens to things that are held in common. Given the size and complexity of businesses in industrial countries, such as the US, it is not surprising that they contribute heavily to this tragedy.
Third, businesses are driven by the motive to make a profit. Stockholders demand a return on their investment, and this mandate transfers down through the management hierarchy. Part of making a profit is to reduce costs, and environmental responsibility is highly costly, with few immediate financial rewards. Finally, government environmental watchdog agencies, such as the Environmental Protection Agency, are limited in what they can do in imposing restrictions on businesses. To protect their financial interests, businesses lobby for support at all levels of government, and agencies such as the EPA must be politically compromising. Agencies such as the EPA say that they know that they do their jobs correctly when everyone is angry with them. That is, businesses feel that the EPA restricts them too much, and environmental advocates such as the Sierra Club will feel that the EPA does too little to protect the environment.
On a global level, many of the environmental offenders are businesses in third world countries. Underdeveloped countries are trying to catch up to the economic level of industrialized countries, and certainly have a right to do so. However, they cannot play catch up in a way that is both economically feasible and environmentally responsible. Maintaining a balance between economic development and energy conservation is far more difficult for poorer countries than it is for wealthier ones. For example, developed countries can shift to energy sources that give off less pollution, but developing countries cannot do so easily. Environmental problems are intensified in third world countries because of growth in population, which doubles about every 70 years. Increased population places increased demand on the utilization of land, which, in turn, leads to deforestation. It is not effective to simply encourage developing countries to do better. Recommendations from world organizations, such as the United Nations, have only limited leverage. Sometimes developed countries, such as the United States, try to assist developing countries by offering them free technology. But this is only partially effective.
Since the 1960’s, our society has become increasingly more environmentally conscious, and now we simply take it for granted that we all are responsible for maintaining the integrity of the environment. However, conservative businesses people commonly feel that their responsibility to the environment is limited. Typically, they give two distinct arguments for their views. First, they argue that businesses do not have an obligation to protect the environment above what the law requires. Although laws are strict concerning environmental regulation, they are not perfect and they allow for many kinds of environment judgement calls. If businesses showed special concern for the environment beyond what the law requires, then this would interfere with their ability to compete. Ultimately, they argue, environmental responsibility rests with consumers. If consumers are not interested in favoring businesses that have environmentally friendly policies, then it is not up to businesses to champion environmental policies on their own. The problem with this view is that environmental responsibility cannot be left to what consumers are willing to tolerate. Most consumers will be attracted to the least expensive consumer products, irrespective of moral considerations surrounding the manufacturing of those products. Even if I knew that a pair of tennis shoes was manufactured in a third world sweatshop, my purchase decision might still be motivated only by the price tag. This is so too with my motivation to purchase products that are manufactured by environmentally unfriendly companies. In a sense, businesses need to save consumers from succumbing to their most thrifty inclinations.
Second, if businesses agree that they have an environmental responsibility beyond what the law requires, they often take a “good ethics is good business” approach and emphasize areas of environmental responsibility that will generate a profit. For example, they might push recycling, which they can indicate on their packaging and thereby attract environmentally conscious consumers. They might also update older energy-hungry heating or production units if the investment has the right payoff. However, as noted above, what is best for the environment is not always financially best for business. When cases of conflict arise between the environment and profit motive, the “good ethics is good business” approach quickly appears deceptive and shallow.
Examples of Environmentally unsound Business Practices. Although most companies are guilty of varying degrees of environmental irresponsibility, some extreme cases vividly illustrate irresponsibility at its worst. A first case involves resistance to air pollution control measures. In the early 1950s, Union Carbide built a series of metal and chemical plants in the Ohio valley, between Ohio and West Virginia. Mountains on both sides of the valley trap in soot, ash, and other air pollutants, which resulted in increased incidents of respiratory disease among local residents. During the 1960s, Union Carbide refuse to participate public discussions about the problem and ignored a governmental request for an on site inspection. The company soon became a symbol of corporate resistance to pollution control. Part of their resistance owes to the fact that the environment was not an issue in the 1950s and new pollution control measures were both expensive and untested. Also, Union Carbide was less susceptible to consumer boycotts since only 20% of its products were direct consumer goods that we might purchase in a department store, such as antifreeze. In 1970s they became the target of the investigation by the newly formed Environmental Protection Agency, which instructed Union Carbide on several pollution control measures. Union Carbide responded by shutting down a boiler plant and laying off workers, claiming that was the only way they could comply with the required pollution reduction. Critics charged that Union Carbide’s tactics amounted to environmental blackmail, threatening to cut jobs if they had to be environmentally responsible. Ultimately, Union Carbide restructured their company and adhered to pollution control standards.
A second case of environmental irresponsibility involves nuclear power accidents. There are currently around 400 nuclear power plants world wide, providing about 15% of the world’s electricity. For the past few decades, the nuclear power industry has been under attack by environmentalists and few new plants have been started. Ironically, the original intent of nuclear power was to provide a safe, clean, and cheap alternative to coal and oil, which are notoriously damaging to the environment. Nuclear power produces no smoke or carbon dioxide, and only harmless steam. It also doesn’t require environmentally intrusive mining or drilling efforts. Two major disasters contributed to the now tarnished image of the nuclear power industry, both the result of safety violations and human error. First occurred at the Three Mile Island nuclear power plant in Harrisburg, Pennsylvania. In 1979, a series of mechanical and human failures contributed to a partial core meltdown to one of its reactors. Radiation was released into the local community, and, although connections with health problems were difficult to prove, a family of a Down’s Syndrome child received 1 million dollars in compensation. A much more serious nuclear power disaster occurred in 1986 in the Ukrainian city of Chernobyl, then part of the Soviet Union. Partly from negligence and partly from design problems, a steam explosion and fires threw tons of radioactive material into the environment. 31 people were killed and 1,000 injured from direct exposure to radioactive material by means of inhaling radioactive gasses and dust, and ingesting contaminated food or water. 135,000 people were evacuated from the surrounding area, hundreds of square miles of land was contaminated, and the long term health effects of the accident are still being assessed. Financial losses reached $3 billion, and countries throughout Europe claimed losses into the hundreds of millions of dollars.
Although the Soviet government owned the Chernobyl plant — and not private industry — the disaster had a decisive impact on the entire nuclear power industry. In addition to the risks of catastrophic disasters such as Chernobyl, nuclear power plants create other environmental problems that involve nuclear waste disposal. Nuclear waste is deadly to animal life, and remains toxic for a very long time. After Three Mile Island and Chernobyl, critics called for a moratorium on the construction all future nuclear power plants, and a systematic closing of the ones currently in use. Defenders, though, argue that nuclear energy is necessary in view of the limitations of alternative energy sources, such as coal, oil, and solar technology. They also argue that nuclear waste sites need to confine wastes for only a few thousand years since after 1,000 years the ingestion toxicity is comparable to that of the original uranium from which the wastes were derived. Finally, defenders say that we can reasonably expect a decrease in nuclear accidents even if we increase nuclear power use, similar to how airline travel has increased while their accident rate has decreased. Defenders recommend that clustered reactors provide better operational support, security, and handling of wastes.
A third and final case of environmental disaster involves large-scale oil spills. In 1989, an Exxon oil tanker called the Valdez struck a reef in Alaska’s Prince William Sound and created the largest crude oil spill in US waters. The captain of the ship, 42 year old Joseph Hazelwood, was with Exxon for 20 years. He had a reputation as a drinker, which some departments at Exxon knew about, and at the time of the disaster his blood alcohol level was .06. The tanker trip was part of a routine convoy from Alaska to Long Beach California that was successfully made by other tankers over 8,000 times. Hazelwood assigned the piloting of the vessel to a less experienced officer and then retired to his quarters. Icebergs were in the path of the ship, which an ineffective radar system failed to detect earlier. The ship was so large that it took a full minute to respond to steering changes. Attempting to navigate around an iceberg, the piloting officer miscalculated and ran the ship into a reef. Oil poured from the ship and, when the weather changed, it sloshed onto the beaches for hundreds of miles. Initially viewing it as only a public relations problem, Exxon was slow to respond with cleanup efforts, which made the situation worse. The spill had a terrible impact on plant and animal life in the area, which the news media vividly captured in pictures and on television. The cleanup was also expensive; the average cost of rehabilitating a seal was $80,000. Hazelwood was ultimately fired for not being on the bridge at the time of the disaster and was convicted of negligent discharge of oil, with a punishment of 1000 hours of community service in the cleanup. Exxon paid in excess of 2 billion dollars in the cleanup efforts and, just as significantly, suffered an almost irreplaceable loss of reputation because of the disaster. 40,000 Exxon credit card holders destroyed their cards.
Three Philosophical Theories of Environmental Responsibility. As noted earlier, some businesses argue that their environmental responsibility is confined to what the law requires and what will yield a profit. However, ethicists typically argue that businesses need to look beyond profit motive and legal regulations to find more persuasive reasons for environmental responsibility. We will consider three of these theories, each of which yields substantially different conclusions about the environmental responsibility of businesses.
The first of these theories is anthropocentric, or human centered. Environmental anthropocentrism is the view that all environmental responsibility is derived from human interests alone. The assumption here is that only human beings are morally significant persons and have a direct moral standing. Since the environment is crucial to human well-being and human survival, then we have an indirect duty towards the environment, that is, a duty that is derived from human interests. This involves the duty to assure that the earth remains environmentally hospitable for supporting human life, and that its beauty and resources are preserved so human life on earth continues to be pleasant. Some have argued that our indirect environmental duties derive both from the immediate benefit which living people receive from the environment, and the benefit that future generations of people will receive. But, critics have maintained that since future generations of people do not yet exist, then, strictly speaking, they cannot have rights any more than a dead person can have rights. Nevertheless, both parties to this dispute acknowledge that environmental concern derives solely from human interests.
A second general approach to environmental responsibility is to base it on the moral consideration that we owe to animals, a position that we will call the animal rights view. On this view, higher animals qualify as morally significant creatures, such as dogs, cats, cows, horses, pigs, dolphins, and chimpanzees. Animal right as advocate Peter Singer goes a step further and argues that even lower animals, such as chickens, deserve equal moral consideration insofar as they are capable of experiencing physical pleasure and pain, just as humans are. For Singer, the mistreatment of animals is analogous to racism and slavery since it gives unequal treatment to beings with equal interests. Singer describes this inequity toward animals as speciesism. Our responsibility toward the environment, then, hinges on the environmental interests of animals, either higher or lower, as well as the environmental interests of humans. Thus, environmental responsibility derives from the interest of all morally significant persons, which includes both humans and at least some animals.
The third theory is that of egocentrism, which is that we have direct responsibilities to environmental collections, such as animal species and rain forests, just as we have direct responsibilities to humans. Even if there is no direct human consequence of destroying environmental collections, we still have a moral responsibility to those collections anyway. Egocentrisms use various terms to express this direct responsibility to the environment. They suggest that the environment has direct rights, that it qualifies for moral personhood, which it is deserving of a direct duty, and that it has inherent worth. Common to all of these claims, though, is the position that the environment by itself is on a moral par with humans. Aldo Leopold first articulated egocentrism in his highly influential essay “The Land Ethic” (1949). Leopold explains that morality evolved over the millennia. The earliest notions of morality regulated conduct between individuals, as reflected in the Ten Commandments. Later notions regulated conduct between an individual and society, as reflected in the Golden Rule. Leopold argues that we are on the brink of a new advance in morality that regulates conduct between humans and the environment. He calls this final phase the land ethic. For all three of these phases in the evolution of ethics, the main premise of morality is that the individual is a member of a community of interdependent parts. For Leopold, “The land ethic simply enlarges the boundaries of the community to include soils, waters, plants, and animals, or collectively: the land.” This involves a radical shift in how humans perceive themselves in relation to the environment. Originally we saw ourselves as conquerors of the land. Now we need to see ourselves as members of a community that also includes the land.
Implications for Businesses. Each of the above theories has different implications on business’s responsibility to the environment. From the anthropocentric perspective, businesses have an obligation not to damage the environment in ways that negatively impact on human life. From the animal rights perspective, businesses have an obligation to avoid harming animals either directly or indirectly. They need to avoid harming animals directly, such as they might do through animal testing, or inhumane food production techniques. They need to avoid harming animals indirectly, such as they might do by destroying animal environments. For example, we should not control pests through poisoning, since this causes animals to suffer; instead we should prefer a sterility chemical. This is especially pertinent given that the environment is the immediate habitat of animals, and damage to the environment harms animals more than it harms humans. Finally, from the ecocentrist perspective, businesses have a direct obligation to protect the environment since it is wrong to harm members of the moral community, and the environment is a member of the moral community.
In many cases the anthropocentric, animal rights, and exocentric interests overlap. For example, toxic waste, air and water pollution, excess carbon dioxide, and release of fluorocarbons equally affect humans, animals, and environmental collections. In many cases, though, the interests of the three do not overlap. For example, sometimes when businesses are found legally responsible for polluting a stream, several corrective options may be open to them. First, they may restore the stream, which costs a lot of money, or they may pay off a community in compensation for living with the polluted stream, which might cost them less money. Although the anthropocentrism will be satisfied with paying off the community, this would not touch the concerns of the animal rights and exocentric. To use another example, suppose that a business considered building a factory on a site that, if constructed, would destroy a breeding ground for birds. Typically, from the anthropocentrism position, the business would only need to take into account the recreational value that the bird breeding ground would have to human bird watchers. For the animal rights advocate and egocentric, though, this reasoning ignores the needs of animals and the integrity of the ecosystem itself.
In view of these various theories of environmental obligation, what should businesses do? First, businesses will automatically be bound by the environmental regulations that are required by law. Although this covers much ground, it doesn’t cover everything. Second, businesses should at least be sensitive to environmental concerns from both the anthropocentric and animal rights perspectives. Animal rights and environmental lobby groups today are becoming increasingly more influential, and, as a matter of good public relations and even survival, companies need to take this into account. Many environmental problems lend themselves to graphic portrayal by the media — such as sea animals covered in oil — which intensifies negative public opinion towards a company. If companies don’t respond properly, they appear arrogant and uncaring, which greatly harms their reputation.
