16. unit 4 chapter 16 environmental issues in ib
TRANSCRIPT
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
1/32
Dayalbagh EducationalInstitute
Unit 4 Lecture 16Environmental Issues &International Business
(Deemed University)
BBM 602
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
2/32
1. Why Environmental issues have become oneof the key issues in International Marketing ?
2. What kind of legal and regulatory framework
exist ?3. What are the key environmental issues that
are impacting the world
4. What is CDM and how it is intended to act ascheck on global warming ?
Learnings at the end of
Chapter
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
3/32
Explain key environmental issues thatare impacting the international businessand their current status .
What is Kyoto protocol and CDM and itsimpact on India ( positive and Negative )
Questions
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
4/32
Context
Some of current developed countries exploited the useused technology that resulted in making money whilelosing nature.
They damaged nature while making money and
became developed countries. 23% of natural land of forests and greenery reduced
between 1950 and 1980.
Now developing countries are going thru same cycle .
As size and impact is large , one finds that it is havingimpact on environment , which is impacting them dueglobal climate change .
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
5/32
Hence : Need for study in IB
This makes it necessary some regulatory mechanismsare in place
The regulatory agreement is considered as a cost ofrunning business, the regulatory landscape of climate
change is intricate and emerging on various levels. To structure strategic position of business according to
the environmental change regulation, mangers shouldimplement multi-pronged approach.
They should have the awareness of policy standards in
regional, national and international level. They should beready to face the standards whenever they appear
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
6/32
Business and Environment is gettinglinked
The important points to be considered bythe business peoples are warning signs of future market shifts
where Safety , heath and environment arebasic premise of sustainable development .
Identify the business opportunities whilekeeping environment issues
Develop methods to integrate businessstrategy and climate change in order tocontribute to the bottom line and save itselffrom implications due to ignoring
environmental impact.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
7/32
Environment :Impact
The physical risks due to theenvironmental change are visible . Theinsurance industry concerned about $46
billion in losses due to natural disaster inthe year 2004 and business interruptionlosses in industry is $83 billion in the year2005.
These kind of physical risks highly affectsthe industry like fisheries, real estate,forestry, agriculture, tourism and health
care
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
8/32
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
9/32
Trans boundary pollution
Transmission of pollution thru water , air , and soil fromone country to next country knowingly ( Hazardouswaste ) or unknowingly ( accident in Nuclear power plant) .
Chernobyl accident released 50 tons of radio activepoison impacting many nearby countries.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
10/32
Environmental degradation ?
Environmental degradation is defined as a processwherein the natural environment of the planet isdegenerated to such an extent, that the biodiversity andthe general health of the planet is subjected to drastic
reduction. In other words, this phenomenon can be defined as
deterioration of the Earth's natural surroundings as aresult of excessive exploitation of the available resources
due to human activities. These resources include water,air, flora, fauna, soil etc. Basically, the life on the planetis interwoven to such an extent that a decrease in aparticular attribute triggers a domino effect on all theother attributes dependent on it.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
11/32
What Causes Environmental Degradation?
Environmental degradation can be attributed tovarious human activities.
Exploitation of the fossil fuels is the best
example of this phenomenon. Large scaleexploitation has depleted the fossil fuel reservesacross the world, thus leaving us with no optionbut to find an alternate source of energy.
Other human activities which have beencontributing to environmental degradationinclude urbanization,
overpopulation, deforestation, pollution, hunting,
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
12/32
Key Environmental issues
We entered the 21st century with these key environmental issues whichaffect international business:
1. The Climate Change
2. The Water Crisis
3. The Energy Crises
4. The Ocean and Fisheries
5. Global warming
We are dealing specifically with the Climate Change crisis and globalwarming, since these affect international business in a verysignificant way. Moreover, the solutions entitled to solve this crisiswill indirectly help in resolving the others.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
13/32
1. Climate Change
The Climate Change crisis has topped the list of the environmentalchallenges that have emerged in the last few decades. It hasbecome the most threatening and alarming one the humanity hasever faced. Most scientists agree that the environmental crises ingeneral and the Climate Change in specific are caused primarily by
the human activities stemmed from the Industrial Revolution thathad been empowered under the carbon-based economic systems.
The Environmental Crises impacts are becoming more apparent in
our daily life, because of which the sustainable management ofresources and stewardship of the natural environment have become
urging issues that aim at giving the natural world a stronger voice inthe human affairs. Under this scope the Environmentalism hadsignificantly surfaced the social movements in the last century.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
14/32
The Climate Change Science
Figure 1 below is to illustrate how the Natural Warming process has turned into anAmplified Warming process, the main ecological reason causing the Climate Change,because of the increasing CO2 concentrations in the atmosphere resulted fromburning the fossil fuels for energy .
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
15/32
The Climate Change ScienceFigure 2 is to illustrate the correlation between the changes in carbon dioxide
concentrations (in blue) & changes in temperature (in red).
Both Figures 1 and 2 are images courtesy of the Marian Koshland Science Museum of the National Academy of
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
16/32
2. . The Water Crisis The industrial sector currently consumes approximately a quarter of the worlds
available water resources, although the volumes of industrial water withdrawal varydepending on the type of industry, the different kinds of production, and thetechnology used in the industrial process.
Even in high tech industries, where mistakenly perceived as being clean industry, thesector is one of the most water-dependent and water-damaging sectors.
Each 300 millimeter (mm)silicon wafer (computer) chip produced requires 8,622 litersof de-ionized freshwater12. In Santa Clara, California, the electronics industry usedabout 24% ofcitys water between 1994 and 199513.
Water also plays an increasing role as a supplier of energy. In the second half of the20th century about 40,000 large dams were built throughout the world.
About one-fifth of the worlds electricity requirement is now covered by hydropower. In
countries like Brazil and Norway, up to 90% of the electricity is supplied byhydropower.
Considering how vital water is to many of the key economic activities, the risks ofwater scarcity can take on strategic importance to businesses and their financialbackers around the world.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
17/32
3. Energy crisis
World resource depletion, particularly the depletion of fossil fuel energy withits potentially disastrous impact on world food production.
Depletion of finite resources such as oil, gas, useable water, or minerals islikely to impact on world GDP
Historically, global economic growth has never occurred without asimultaneous increase in the use of fossil fuel energy; GDP growth andworld oil production growth have tracked each other for decades.
It seems that while the IEA expects a steady increase in available oil,recent, more believable, evaluations of the decline in oil from the majorgiant oil fields that are already in the phase of depletion (e.g., Cantarell in
Mexico and the North Sea province) suggests that Peak Oil arrived in 2008and that by 2030 the production from fields currently on stream could havedecreased by over 50 per cent (Hook 2009). The probable effect will be highprices flowing on into every walk of life, especially the cost of food with itshuge embedded fossil fuel energy costs. This will inevitably increasefinancial instability and produce more recessions.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
18/32
4. Ocean and Fisheries
The scope of human dependence on marine life issignificant, both in terms of the nutritional value providedby fish and other seafood to populations (especially inthe developing world) and in terms of the level of
economic security the fishing industry provides forcoastal communities
Marine biodiversity, in itself, also offers tangible benefitsto society, via revenues earned from tourism as well as
by providing useful ecosystem services, such as themaintenance of water quality [Stokstad, 2006].
Currently, however, about 25% of world fish stocks areoverexploited or fully depleted and overcapacity infishing fleets is the norm rather than the exception [FAO,2007:29].
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
19/32
Ocean and Fisheries
Tourism is an important source of income in some countries, where thevibrant aquatic life (around coral reefs, for example) attracts divers, sportsfisherman and other visitors. Income generated by tourism could be lost iffisheries are depleted and marine biodiversity is lost.
More substantial, however, is the importance of fish exports for developingeconomies. Indeed, there is a direct link between overfishing and poverty.Approximately half of the total export value of the world trade in fish andfisheries products (US$71.5 billion in 2004) comes from developingcountries. Poverty among coastal communities in developing countries isoften high (especially in Asia and Africa), and fishing industries helpalleviate this, employing 150 million people and 3
Providing a last resort livelihood for the poor. The collapse of fisheries canthus have devastating economic impacts for developing countries, as wellas for countries whose trade in fishery products makes up a largepercentage of their total merchandise exports (Greenland and Iceland, forexample) [World Bank, 2005:4-5 and 7].
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
20/32
5. Global Warming
Global warming is the increase in the average temperature of Earth's near-surface airand oceans since the mid-20th century and its projected continuation. Global surfacetemperature increased 0.74 0.18 C (1.33 0.32 F) between the start and the endof the 20th century.
The effects of global warming in the 21st century and beyond are expected to bedisastrous, according to the summary of a scientific report issued on April 6, 2007 by
the worlds leading panel of climate change scientists. And many of those changesare already under way.
Environmentalists , in their campaign against globalwarming , strongly call for the replacement of power plants that run onfossil fuels like coal , oil and natural gas with renewable power sources (Kahihla ,2007) .This , on the one hand , offers business opportunities to existing windproducers and new investors in ventures on wind turbines to generateenergy efficiently while emitting zero carbon dioxide , and , at the same time , earnsufficient profits .
On the other hand , however , these business opportunities on wind turbines denoteloss in some industries ,particularly , the power plants relying on fossil fuels .
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
21/32
What Industries Would Global WarmingHave Negative Effects On?
Effect on Water Industry
Natural Resources
Effect on Tourism
Effect on Insurance Industry
Effect on Construction Industry
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
22/32
International legalframeworks United Nations Environment Programme (UNEP) is among
the earliest attempts towards cooperation between nationstates on environmental issues and dates s far back as 1972.
1992, The UN Conference on Environment and Development
at Rio Summit, which adopted the concept of sustainabledevelopment.
The Convention on Climate Change- beginning of aninternational framework and process to tackle the issue ofclimate change.
1992, Convention on the Trans boundary Effects of IndustrialAccidents adopted by the UN
1994, Convention on Nuclear Safety adopted by the UN
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
23/32
What is Kyoto protocol and CDM and itsimpact on India ( positive and Negative )
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
24/32
The KYOTO PROTOCOL
The Kyoto Protocol is an international agreement linkedto the United Nations Framework Convention on ClimateChange. The major feature of the Kyoto Protocol is that itsets binding targets for 37 industrialized countries andthe European community for reducing greenhouse gas(GHG) emissions .These amount to an average of fiveper cent against 1990 levels over the five-year period2008-2012.
The major distinction between the Protocol and the
Convention is that while the Convention encouragedindustrialized countries to stabilize GHG emissions, theProtocol commits them to do so.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
25/32
Recognizing that developed countries are principallyresponsible for the current high levels of GHG emissionsin the atmosphere as a result of more than 150 years ofindustrial activity, the Protocol places a heavier burden
on developed nations under the principle of common butdifferentiated responsibilities.
The Kyoto Protocol was adopted in Kyoto, Japan, on 11December 1997 and entered into force on 16 February
2005. The detailed rules for the implementation of theProtocol were adopted at COP 7 in Marrakesh in 2001,and are called the Marrakesh Accords.
The KYOTO PROTOCOL
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
26/32
The Kyoto mechanisms
Under the Treaty, countries must meet their targets primarily throughnational measures. However, the Kyoto Protocol offers them anadditional means of meeting their targets by way of three market-based mechanisms:
The Kyoto mechanisms are:
Clean Development Mechanism (CDM)
Emissions Trading known as the carbon market"
Joint Implementation (JI).
The mechanisms help stimulate green investment and help Partiesmeet their emission targets in a cost-effective way.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
27/32
Global warming potential of six gases, theKyoto Protocol deals with
Source: IPCC Third Assessment Report, 2001 Climate Change: The ScientificBasis. Intergovernmental Panel on Climate Change.
Carbon dioxide 1
Methane 21
Nitrous Oxide 310
Hydroflourocarbons 140-11,700
Perflourocarbons 7,000-9,200
Sulphur Hexaflouride 23,900
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
28/32
Clean Development Mechanism(CDM) The Clean Development Mechanism (CDM), defined in Article 12 of
the Protocol, allows a country with an emission-reduction oremission-limitation commitment under the Kyoto Protocol(Annex B Party) to implement an emission-reduction project indeveloping countries. Such projects can earn saleable certified
emission reduction(CER) credits, each equivalent to one tonne ofCO2, which can be counted towards meeting Kyoto targets.
It is the first global, environmental investment and credit scheme ofits kind, providing a standardized emissions offset instrument,CERs.
A CDM project activity might involve, for example, a ruralelectrification project using solar panels or the installation of moreenergy-efficient boilers.
The mechanism stimulates sustainable development and emissionreductions, while giving industrialized countries some flexibility in
how they meet their emission reduction or limitation targets.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
29/32
Emissions Trading: the carbonmarket"Greenhouse gas emissions
a new commodity
Parties with commitments under the Kyoto Protocol (Annex BParties) have accepted targets for limiting or reducing emissions.These targets are expressed as levels of allowed emissions, orassigned amounts, over the 2008-2012 commitment period. The
allowed emissions are divided into assigned amount units(AAUs). Emissions trading, as set out in Article 17 of the Kyoto Protocol,
allows countries that have emission units to spare - emissionspermitted them but not "used" - to sell this excess capacity tocountries that are over their targets.
Thus, a new commodity was created in the form of emissionreductions or removals. Since carbon dioxide is the principalgreenhouse gas, people speak simply of trading in carbon. Carbonis now tracked and traded like any other commodity. This is knownas the "carbon market."
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
30/32
Joint Implementation (JI).
Joint Implementation is like CDM but with projects inother Annexure countries instead of developingcountries.
Eastern European countries in Annexure such asBulgaria and Romania are likely to benefit from theseprojects and have already signed MOUs for their
projects.
These projects are competition for CDM and areexpected to give CDM projects in developing countries aserious run for their money beginning 2008.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
31/32
Shortcomings of the Protocol
Exclusion of Developing Countries
Costs and Economic Implications
Result: Too Little, Too Late.
-
7/31/2019 16. Unit 4 Chapter 16 Environmental Issues in IB
32/32
THANK YOU!