Bernardo M. Villegas
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Addressing Environmental Sustainability for Business (Part 2)

           The modes of response described here will not be set out in terms of good and bad but rather in terms of the environmental engagement of senior management.  The purpose is not to criticize specific types of behavior or to moralize but to look at the various options in the hope of gaining insight for the future.

          A first level of response by some firms is refusal to accept that a problem exists, because to do so would be to call into question the basic idea of what a company, or even an industry is all about.  In the Philippines, this has happened in some cases in the mining industry, power plants and chemical firms.  We can call this reaction “denial.”  An example cited by Professor Rosenberg was the famous case of DDT which was used as a pesticide to fight malaria and improve crop yields. The undoubtedly great good that DDT had conferred on human development might have contributed to the difficulty that people in the industry and even in government to consider that these compounds could cause long-term harm to the ecosystem or people.  Many members of senior management were also chemical engineers who had experienced firsthand the advancements that chemical technology had brought to the world in the 1940s and 1950s and, for them, the precautionary principle was simply not science.  For these people denial was the most logical reaction.

          A second possible response is when an organization, or specific people in that organization, are aware of environmental externalities but take deliberate action not to inform the general public or other stakeholders and even deliberately attempt to confuse the issue.  The term “cover up” is used for this type of response, despite its negative connotations, and could be further broken down into additional categories exploring levels of ethical conduct and possible malfeasance.  I have to point out that in any ethical system, covering up is tantamount to lying, which is always morally reprehensible. As an extenuating circumstance, it is worth considering that even when the collateral effects of air or water pollution are horrific, it is unlikely that those effects were caused on purpose. What is more likely is that these kinds of impacts were initially not understood or were unexpected.   The decision to cover up might be taken because there are considerable costs associated with full disclosure, which might include financial expense, the loss of jobs and reputation, and possibly even criminal prosecution.  Avoiding these costs can be seen as a benefit.  One can only advise those who are tempted to follow this route that the “a good end (reducing costs, preserving jobs, etc.) never justifies immoral means (lying).

          A third response may be called “crisis management.”    This occurs when a firm is faced with catastrophic environment impact.    In this case, a higher level of preparation and awareness of environmental issues may make it easier for an organization to weather the storm. Top management using this response acknowledge the need to develop a corporate culture that is resilient enough to survive a crisis—as it seems increasingly likely that they will happen sooner or later—and the urgent need to prepare the senior management team for their role when the times comes. A dramatic example given by Professor Rosenberg is that of Captain C.B. “Sully” Sullenberg.  After calmly ditching his Airbus A320 in the Hudson River in January 2009 and safely evacuating 155 passengers and crew, Captain Sullenberg claimed that it was his deep training and regular simulator experience that guided him on how to react.  The question is how much training and simulator time are CEOs, board members, and other key executives spending on crisis management?  Is there a collective understanding about systemic threats to the business and what to do if the unlikely or unexpected does occur.    This is especially applicable to the top management and board of directors of companies that operate nuclear plants as well as large mining firms that are constantly at the mercy of natural disasters such as earthquakes and super typhoons like Yolanda or of accidents in underground mining.

          The term environmental PR describes the activities of those firms that have made an effort to put the best positive spin on their activities to reduce or control the ecological impact of their operations; although perhaps not truly engaging in substantial reflection or re-design of their products, services, or operations.   Over the last 60 years there has been an unprecedented increase in awareness and transparency of the environmental footprint of businesses in many parts of the industrialized and developing world.  Some of the new openness is due to regulatory requirements and some due to voluntary reporting such as the triple bottom line, which encourages firms to publish their environmental impact on an annual basis in addition to their financial results.  According to the Global Reporting Initiative (GRI), which develops guidelines for producing such reports, there were 2,500 companies in their database at the end of 2012 and publishing a sustainability report “is now standard practice for the majority of the largest companies in the world.”  (To be continued).