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Should Businesses Go Green

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    Recently, environmental issues have converted into a major concern on a global scope leading to economic instabilities; these issues range from preservation and energy use, to deforestation and water shortage. (Videen, 2011) As a result, a phenomenon that has appeared over 20 years, “Green Movement”, has become a center of the discussion. (Fok, 2012) The term “Green” became popular in the context of describing the environmental conscious company, which is concerned primarily with pursuing business practices that would help to ensure long-term sustainability.

    The concept of sustainable development has been formalized and stabilized over decades; United Nations defined it as “development which meets the needs of the present without compromising the ability of future generation to meet their own needs”. (UN DESA, 1987) Constant social and political attention to these matters encourages firms to sustain awareness about externalities their operating activities have on the environment, and whether their resource management decisions are viable in the long-run. Social permission theory also challenges to prove the moral foundations for business stakeholders.

    It implies that a business is not autonomous entity. The behavior of the businesses is legitimized by the social norms of their founder-society; thereby, society has ultimate control over the businesses’ moral obligations and responsibilities. (Hussain, 1999) Therefore, the purpose of this paper is to argue that businesses do have a moral responsibility to the society, which, in fact, forces them to go green. Moreover, in today’s rapidly growing economy, businesses are expected to fully understand that the resources available for future generation are greatly affected by their actions.

    First of all, I would like to start with two questions that are important in further arguments. Do people, as individuals, at first place, have a commitment to the nature? And if yes, what makes it moral? The fact is that we, human beings, share with other species, be it a plant or an animal, a mutual relationship to the Earth. Our evolutionary process is similar to the one of other species, and in the relation to the natural eco-system we represent one of the species among other species. Taylor, 1981) From this follows that despite the overall difference between other species and ourselves, we still should consider ourselves as one population of species with them, rather than an isolated population from them. In adopting the attitude of respect for species and nature, in general, as an ultimate attitude, we make a commitment to live by certain normative principles. (Taylor, 1981) These principles are proxy for standard rules that govern our conduct towards the natural world. This is similar to adopting the attitude of respect for other people.

    When considering the fulfillment of their basic interests, we make a commitment to live in accordance to standard rules that are binding on all people. Therefore, the attitude of respect for nature sets a framework for our obligations and responsibilities toward the natural world. The morality of the obligation could be explained from the perspective of a life-centered theory, presented by Taylor in his publication “The Ethics of Respect for Nature”. This theory says that we owe moral duties to plants and animals as members of the Earth’s biotic community.

    In other words, keeping everything else equal, we are morally bound to protect or stimulate their well-being for their sake. (Taylor, 1981) The well-being of other species, the same as our well-being, is an end in itself, and in order to help them to achieve their well-being; we should sustain their healthy existence in the natural state. This type of obligation is due to recognition of their inherent value. Therefore, we, as individuals, do have a commitment to the natural world, which is moral.

    However, to say that this individual moral commitment to the nature is the same for corporation is slightly misleading, though firms do have moral obligation to take care of the environment. Due to a high growth of business market, today businesses comprise an integral part of global society. Thereby, their impact on the environment is on a bigger scale. Members of the community believe that every stakeholder of the company, be it a shareholder or a community member, is affected by the actions a business takes regarding the environment.

    That is one of the reasons businesses started to feel pressured and are encouraged to operate in an ecological friendly manner. But do they have a moral obligation to do so? The answer is yes. The difference between individual moral commitments is slightly different for corporations, though covers the same basis. The moral obligation of businesses to the natural world is linked through their social responsibility, which also includes moral duty to future generations. For companies to be social responsible, they have to respond to the changes in alues and expectations of their stakeholders. Freeman defines “stakeholders” as a group of people without whom the business will cease to exist. Rhenman, on the other hand, extended the definition and says that “stakeholders designate the individuals which depend on the company for the realization of their personal gains and on whom the company is dependent”. (Hussain, 1999) In other words, firms have an ultimate commitment to the society they operate in and their expectations. Davis summarizes this position when saying:

    The fundamental assumption . . . is that society has entrusted to business large amounts of society’s resources to accomplish its mission, and business is expected to manage these resources as a wise trustee for a society. (Hussain, 1999) Realizing recent economic instabilities caused by environmental issues, the primary expectation of the society from the businesses has become sustainable development of a business. Its notion in business was firstly emerged by World Business Council for Sustainable Development (WBCSD).

    The perception of sustainable development in business was extended by defining eco-efficiency as being: “achieved by the delivery of competitively-priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle to a level at least in line with the earth’s carrying capacity”. (WBCSD, 2012) From this it follows that if a business is a trustee, it has an obligation to the society to integrate eco-efficient business practices and policies, thus the company has to go green.

    Milton Friedman will argue that there is only one social responsibility of a business and it is “to use its resources and engage in activities designed to increase its profits… without deception and fraud”. (Hussain, 1999) However, what Friedman misses is that the profitability is not an end of itself, but rather a mean to an end (sustainability). Profit is just the way to measure the success of the company in the world of business but not the sole purpose of a business. In other words, mere concentration on the profitability will not guarantee businesses a sustainable position in the market.

    Business sustainability depends simultaneously on the society and natural resources. With the continuous waste of natural resources, company will not be able either to succeed and achieve its sustainability. Moreover, since resources are shared, the waste of resources and environmental pollution directly and indirectly affects members of the society. As a result, society responds by less consumption of the product, which further hurts sustainability and success, in the context of profitability, of the company. Moreover, there is no a single business that functions in a “vacuum”. It constantly interacts with societal forces.

    Lacking positive support from members of the society, businesses will find it difficult to operate efficiently or reach sustainability. Thereby, any business that follows its ends at the expense of the society in which it operates will enjoy its success only shortly. One of the most famous examples is Shell Oil Company. In 1995, authorities approved their decision to sink an obsolete oil rig, Brent Spar, in the North Sea. This led to major protests on an international level. Greenpeace organized a high-profile media campaign and a boycott which aimed to negatively affect public opinion about the company. As the result, Shell’s image was hurt.

    In order to stay in business, it took them many years to recover the trust of their consumers. (Kirby, 1998) This example of Shell’s shows how company’s position in the market and its sustainability depends on the society, and how profit can not be perceived as an end in itself. Therefore, businesses should go green and strive for sustainability as an end in itself. Business sustainability is commonly defined as the successful management of a process by which firms manage their financial, social and environmental risks, obligations and opportunities: these three impacts are sometimes referred to as profits, stakeholders, and environment. Gray, 2011) An ability to sustain their business in accordance with sustainable development will ensure the company that their “license to operate” is protected, reputation is boosted, and global brands secured. Therefore, going green should be imposed as an obligation for all businesses. One way to explain the morality of businesses’ obligation to go green is also to use life-centered theory described above. However, the most arguable is to refer to the moral obligation we have towards our future generation. The argument always arises when we start saying that there is a moral duty to future generation, which is not born yet.

    But do we have a moral duty to limit our use of resources for the sake of future generations? The answer could be based on the fact that we have a moral obligation to our ancestors, who do not exist either. Although, we cannot directly affect them, but we still can affect their interests. In order to prove the argument, we can refer to the utilitarian principle, described by Jeurissen and Keijzers. According to Macklin, moral duties to future generations are based on the utilitarian norm that summarizes the idea that we should be engaged in the actions with the best consequences on the whole. Jeurissen, 2004) For instance, today we cannot cut the trees, if we expect it will have a negative undesirable impact on future generations. Goodin bases his utilitarian argument on the fact that we have to help the vulnerable. He says that “as long as there remains something we can do to protect the interests of vulnerable generations, we should do it”. (Jeurissen, 2004). According to him, since future generation does not exist yet, they are said to be vulnerable to the actions we take in the present, including the actions affecting natural resources available for them.

    Therefore, we should act in accordance with their interests. From this it follows, that utilitarian principle requires existing generations seek interest for all generations together, which makes us morally responsible for our actions. Moreover, it would be legitimate to claim that since we are the ones producing future generations, it is wrong to bring them into the world of damaged environment, where they won’t have same opportunities we have today.

    As long as we are aware of damages done to the environment that will have an essential impact on life of future generations, it is our moral duty to take necessary steps to repair these damages. We have to abstain from wasting natural resources, on the ground that they belong to us as much as they belong to future generations. Some business advocates, on the other hand, will argue that going green should not be imposed as an obligation, but rather should be a choice of a firm.

    According to neoclassical advocates, there is only one obligation a company has and it is an obligation to follow its mission statement and maximize its shareholders value by providing goods and services to the consumers. It is proven, that going green is expensive. The costs of going green include direct costs and indirect costs, such as time. Business market is comprised of businesses of different sizes. If businesses with large profit margins would be able to afford to go green, small businesses will experience losses and would not be able to succeed in the market.

    Moreover, under neoclassical prescription for maximizing social welfare, price mechanism should determine the resource allocation rather than the obligatory forces. (Hussain, 1999) Plus, companies have no obligations to the society. Therefore, they would claim that businesses should not be forced to go green but it rather should be a voluntary choice of a firm. However, as mentioned before, neoclassical advocates overestimate the autonomy of a business. Social permission theory provides enough evidence to prove that a business is not autonomous entity by exhibiting ethical foundations for stakeholders.

    The behavior of the businesses is legitimized by the social norms of their founder-society; thereby, society has ultimate control over the businesses’ moral obligations and responsibilities. (Hussain, 1999) In addition, to achieve the purpose of sustainability, businesses should not consider costs as a barrier. From this it follows then that companies are indeed obliged to go green. In conclusion, we see that for a business to operate in the society, it has to follow social responsibilities which assure sustainability in the long run.

    People, involved in the business have individual moral commitments to the natural world which they can follow in their daily work processes. The business, on the other hand, as an entity, has a moral obligation to the society to use resources in ecological manner; i. e. integrate eco-efficient practices in operating processes and policies. Moreover, companies as well as individuals have moral duties to future generations to sustain the environment such that they can enjoy it the same way we do. After all, it is proved that being a “good neighbor” never hurts.

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