What is the impact of globalisation on the environment?

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 Globalisation has indirectly helped accentuate big environmental damages
experienced today
 Globalisation has contributed towards global warming resulting in the
temperature increasing, industry mass consumption and increased the
demand of energy due to a growing population which has led to pollution,
resource depletion and species extinction
 It is argued that globalisation is partly responsible for environmental damage
as it somewhat correlated with rising international trade which has resulted in
a rapid production of goods and services, trade and consumption of material
goods in large quantities which has had a negative impact on carbon footprint
of human activities.
 Globalisation has increased GHG emissions such as carbon dioxide which has
contributed to climate change which stems mostly from greenhouse effect.
 Main sources of carbon dioxide emissions are industrial production,
transportation and indirectly from deforestation whereby the development of
these factors is somewhat linked to the acceleration of globalisation
 Globalisation promotes carbon dioxide emissions from transport due to
greater international trade and transportation of goods and services which
has contributed towards emissions from cars and lorries and domestic traffic.

 Globalisation indirectly promotes CO2 emissions linked to industrial activity

and consumption. The growth in cross border trade and investment has led to
an increase in industrial activity which is a major source of GHG emissions
 The acceleration of globalisation added to the greenhouse effect and in turn
global warming
 Rapid development of emerging countries due to globalisation has led to
these countries becoming large emitters of GHG emissions due to
industrialisation of Asian giants such as China at the expense of the
environment. China frequently opens new coal fired power plants as it is the
cheapest and more abundant fossil fuel yet is one of the most polluting
 Globalisation encourages deforestation which is an indirect but significant
cause of the greenhouse effect. Deforestation due to burning, clearing and
logging has meant that the volume of carbon dioxide and other GHG
emissions in the atmosphere has increased adding to the greenhouse effect.

 Deforestation is mainly due to the conversion of forests into agricultural land,

especially in developing countries.

 global warming may well be one of the causes of the increase in the number
of natural disasters such as hurricanes, storms and floods in recent years.
 Biodiversity has decreased as the number of species that have become
extinct in recent years has increased significantly. There is an indirect link
between the extinction of some species and globalisation. This is due to
globalisation multiplying the number of distribution channels, creating new
needs and demand for products used around the world which has contributed
towards industrialisation and the exploitation of new lands, subsoil and
resource which has weakened many ecosystems and led to a loss of habitats.
An example is overfishing due to greater global demand and trade of fish has
resulted in the extinction of specific types of fishes.
 Globalisation can also help lessen and prevent environmental damage for
example international trade can help spread sophisticated environmental
solutions to a wide range of countries – particularly in the case of global
warming
  Globalisation of trade and research has led to the development of green
technologies. Industry, global capital movements, and globalised research
and innovation, can help promote sources of “green growth” and are
particularly effective instruments to fight pollution and climate change on a
global scale.
 Globalisation has meant investments in environmental technologies has
significantly increased whereby the search for environmental solutions fosters
new activities and new products, but also new production processes, which
globalisation’s trade and production network can help circulate quickly.

 Globalisation can make environmental conservation compatible with

development. The development of Kyoto protocol incentivises developing
countries to contribute towards reducing GHG emissions alongside growing
their economies

 NEs, which for a long time didn’t worry much about the environment, can also
be precious allies in combating global warming. As they are knowledgeable
about environmental standards and practices in developed countries, they are
important vectors for transferring green technology and good practice.
 Through advancement of technologies has led to lots of large companies
being equipped with the knowledge and processes required to adopt more
green practices in their day to day operations.

 Significant increase in pollution-related illnesses and ensuing public health

costs are also incentives for political action.

 Due to globalised information and knowledge, the public is considerably more

aware of ecological issues and this has generated greater mobilisation.
Theoretically, resources can be used more rationally because of increased
trade and investment.

 Globalisation’s negative environmental effects are more apparent for

example, increased pollution linked to transport.

Modelling sustainability performance to achieve absolute reductions in

socio-ecological systems:

 Globalisation has led to an increase in the consumption of goods and services

worldwide which puts pressure on markets resulting in the loss biodiversity,
insufficient energy supply and pollution of natural resources.
 World Commission on Environment and Development defines sustainable
development as “Humanity has the ability to make development sustainable
to ensure that it meets the needs of the present without compromising the
ability of future generations to meet their own needs”

 “The satisfaction of human needs and aspirations is the major objective of

development. The essential needs of vast numbers of people in developing
countries for food, clothing, shelter, jobs - are not being met, and beyond their
basic needs these people have legitimate aspirations for an improved quality
of life. A world in which poverty and inequity are endemic will always be prone
to ecological and other crises. Sustainable development requires meeting the
basic needs of all and extending to all the opportunity to satisfy their
aspirations for a better life.”
  Sustainability performance can be measured using triple bottom line
indicators such as economic, social and environmental factors

 Current version of the system fitness model has limitations such as:

o The system is considered to have economic power to grow baskets

whenever resources are available but in reality, consumption growth is
not easy to spur even with abundant resources

o Model implements decisions effectively and quickly whereas in reality

real decision makers may face delays and other issues with
implementation thus won’t be as easy as suggested

o The availability and visibility of critical information for decision makers

is not always present.

o Difficulties and accuracy in measuring essentiality of the goods and

services can be challenging.

Issues in Globalisation: Environmental Impacts and Sustainability:

 Globalisation

Globalisation may actually be better for the environment:

 Argued that globalisation leads to an increase in global demand
resulting in an increase in production which indirectly contributes to
the exploitation of the environment and depletion of natural resources
 Increased gains from globalisation is achieved at the expense of the
environment as more open economies adopt looser environmental
standards
 Globalisation can create global competition which may result in a
boost in economic activities that depletes the environment and its
natural resources

 Increased economic activity leads to greater emissions of industrial

pollutants and more environmental degradation.

 The pressure on international firms to remain competitive forces them

to adopt cost-saving production techniques that can be
environmentally harmful.

 However, deglobalisation may in fact make emissions worse as

opposed to reducing them
 A benefit of globalisation is that it can trigger environmentally friendly
technological innovations that can be transferred from countries with
strict environmental regulations to pollution havens.
 Globalisation can move manufactured goods, intermediate goods,
capital goods and technology whereby multinationals with clean
technologies can transfer their green know-how to countries with low
environmental standards
  Argued that multinational firms use cleaner types of energy than local
firms, and therefore have more energy-efficient production processes
whereby deglobalisation could mean these environmentally friendly
technologies aren’t passed on to countries that are trying to go green.

 Globalisation allows countries to specialise in sectors in which they

have a comparative advantage in which in turn creates an efficient
allocation of resources which leads to the saving of scarce economic
and natural resources
 Globalisation has created public awareness about labour and
environmental standards through the platforms of international
activities such as fair trade and eco labels which has resulted in
customer preferences evolving which has meant producers are able to
build their customer based by producing eco-friendly products.
 Globalisation has facilitated international trade which provides
consumers with a range of choices enabling consumers to purchase
both foreign and domestic goods that may have been produced under
lax environmental standards
 Globalisation achieved via multilateral negotiations has spurred
enthusiasm within its member countries to engaged in sustainable and
environmentally friendly trade policies
 WTO and RTA agreements has promoted environmentally sustainable
policies and embrace environmental cooperation agreements

Book:
 Sustainability defined as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs
 Sustainability is also related to the triple bottom line which suggests
that in order to develop a sustainable strategy three factors namely
economic, environmental and social must be considered
 Reverse logistics – based in the idea that unwanted products or bi
products flowing in the reverse direction to those initially delivered
namely recycling
 Businesses more incentivised to invest into green practices as this will
minimise the loss of market share and maximise their reputation

Sustainable Operations Strategy – Reading

A Natural-Resource-Based View of the Firm: Fifteen Years After:

 Harts developed a natural resource-based view of the firm
 Work on this model since has focused solely on uncovering the links between
pollution prevention and firm profitability
 This theory has benefitted from the emergence of dynamic capabilities
research and can extend and enhance understanding of how dynamic
capabilities emerge in the first place
 Key element of the resource-based theory is that it focuses on internal factors
that lead to sustained competitive advantage and places greater emphasis on
the firm’s own decisions and competencies rather than its environment
  Resource based theory emphasises the role of resources and capabilities in
forming the basis of competitive advantage

 The RBT emphasizes that in order to provide an opportunity for sustained

competitive advantage, a resource must be valuable, rare, inimitable, and
supported by tacit skills or socially complex organizational processes
 Hart argued that the existing resource-based theory failed to consider the
interaction between the organisation and its natural environment which lead
to the development of a natural resource-based view of the firm
 The natural environment could arguably create a serious constraint on firms
attempts to create a sustainable advantage
 Natural resource base view argues there are three key strategic capabilities
namely pollution prevention, product stewardship and sustainable
development whereby each of these factors have different environmental
driving forces, builds upon different key resources and has a different source
of competitive advantage

 Pollution prevention, which seeks to prevent waste and emissions rather than
cleaning them up “at the end of the pipe,” is associated with lower costs.
 Sustainable development strategy is based on producing in a way that can be
maintained indefinitely into the future and also involves focusing on
economic, environmental and social concerns

 Most of the application of the NRBV has been focused on pollution prevention,
with much less attention to empirical research on product stewardship or
sustainable development strategies.

 NRBV perspective allowed for a more systematic examination of the

relationship between environmental and financial performance by specifying
the link between resources and capabilities and strategic outcomes
 Research shows that organisational capabilities and managerial cognition or
framing are two factors that affects the firm’s ability to gain financial benefits
from a pollution prevention strategy
 NBRV theory suggests that managerial attention and framing if
environmental issues is important in developing a sustainable development
strategy

 NRBV can improve understanding of how the physical and social

environments affect the development of dynamic capabilities.

Creating sustainable value:

 Global sustainability is defined as the ability to meet the needs of the present
without compromising the ability of future generations to meet their needs

 Sustainable development "is a process of achieving human development... in

an inclusive, connected, equitable, prudent, and secure manner.

 A sustainable enterprise, therefore, is one that con- tributes to sustainable

development by delivering simultaneously economic, social, and
environmental benefits – triple bottom line.
 Managers motivations behind engaging in sustainable practices differs such
that for some managers it is a moral mandate, for other it is a legal
requirement.
 However, for some managers sustainability is perceived as cost of doing
business to main their legitimacy and their rights to operate

 Increasing number of firms have begun to frame sustainability a s a business

opportunity, offering avenues for lowering cost a n d risk, or even growing
revenues and market share through innovation
 The number of strategic business opportunities associated with sustainability
has increased significantly due to managers increasingly directly linking
enterprise sustainability to the creation of shareholder value

 The global challenges associated with sustain-

ability, viewed through the appropriate set of
business lenses, can help to identify strategies
and practices that contribute to a more
sustainable world and, simultaneously, drive
shareholder value this is the creation of
sustainable value for the firm.

 Shareholder value is a multidimensional

model whereby the vertical axis is based on a
firms need to manage today’s business while
also creating tomorrows technology and
markets whereas the horizontal axis reflects
the firm's need to grow and protect internal
organizational skills and capabilities while simultaneously infusing the firm
with new perspectives and knowledge from the outside.

 Shows the four distinct dimensions of performance crucial to generating

shareholder value

 The lower-left quadrant focuses on those aspects of performance that are

primarily internal and near-term in nature namely cost and risk reduction

 The lower-right quadrant also focuses on performance dimensions that are

near-term in nature but extends to include salient stakeholders external to
the firm—suppliers and customers in the immediate value chain, as well as
regulators, communities, NGOs, and the media.

 The upper-left quadrant of the model indicates the firm must not only perform
efficiently in today's businesses but should also be constantly mindful of
generating the products and services of the future.

 The upper-right quadrant focuses on the external dimensions associated with

future performance.

 The creation of shareholder value thus depends upon the firm's ability to
creatively destroy its current capabilities in favour of the innovations of
tomorrow.

 To maximise shareholder value over time firms must perform ell

simultaneously in all of the four quadrants of the model on a continuous basis
 Global drivers of sustainability consist of four sets of drivers whereby the first
set of drivers relates to increasing industrialisation and its associated material
consumption, pollution and waste generation

 Industrial activity has a significant impact on climate, biodiversity and

ecosystem function and lead to pollution burdens and continues to consume
virgin materials, resources and fossil fuels at an increasing rate thus resource
efficiency and pollution prevention is crucial in sustainable development

 Second set of drivers relates to the proliferation and interconnection of civil

society stakeholders.

 Sustainable development thus challenges firms to operate in a transparent,

responsive manner due to a very well-informed, active stakeholder base.

 Third set of drivers relates to emerging technologies that may provide potent,
disruptive solutions that could render the basis of today’s energy.

 Innovation and technological change are key in the pursuit of sustainable

development

 Fourth set of drivers relates to the increases in population, poverty, and

inequity associated with globalization.
 Thus creating sustainable value requires that firms address each of the four
broad sets of drivers.
o First, firms can create value by reducing the level of material
consumption and pollution associated with rapid industrialization.
o Second, firms can create value by operating at greater levels of
transparency and responsiveness, as driven by civil society.
o Third, firms can create value through
the development of new, disruptive
technologies that hold the potential to
greatly shrink the size of the human
footprint on the planet.
o Fourth, firms can create value by
meeting the needs of those at the
bottom of the world income pyramid in
a way that facilitates inclusive wealth
creation and distribution.
 Problems with consumption, waste and
pollution provides firms with an opportunity
to lower their costs and risk through the
development of skills and capabilities in pollution prevention and eco-
efficiency
 Pollution prevention is focused on improving the environmental efficiency of
today's products and processes—that is, reducing waste and emissions from
current operations.
 Less waste means better utilization of inputs, resulting in lower costs for raw
materials and waste disposal. Effective pollution prevention requires
extensive employee involvement, along with well-developed capabilities in
continuous improvement and quality management.
 Pollution prevention can lead to lower costs and reduced risk.
 Evidence shows that with the appropriate set of skills and capabilities firms
pursuing pollution prevention and waste reduction strategies in fact reduce
costs and increase profits.
  rather than simply seeking to reduce the negative impacts of their operations,
firms strive to solve social and environmental problems through the internal
development or acquisition of new capabilities that address the sustainability
challenge directly.

Ethics in Global Operations- Link between competitive advantage and

corporate social responsibility

• CSR has become increasingly important for business managers

• Many companies have attempted to improve their social and
environmental consequences of their activities
• Four key reasons why businesses should engage in CSR practices namely
o Moral obligation- it is argued that companies have a duty to be goof
citizens and do the right thing
o Sustainability – encourages environmental and community
stewardship  rather than simply seeking to reduce the negative
impacts of their operations, firms strive to solve social and
environmental problems through the internal development or
acquisition of new capabilities that address the sustainability
challenge directly.
 Companies should operate on ways that secures long term
economic performance by avoiding short term behaviour
that is socially detrimental or environmentally wasteful
o License to operate – based on the idea that every company needs
tacit or explicit permission for governments, communities and other
stakeholders to do business
 Offers a solid way for a business to identify social issues that
matter to its stakeholders and make decisions about them.
o Reputation- improve a company’s image, strengthen its brand,
enliven morale and maybe raise the value of its stock
• Firms that do not engage in CSR are prone to face higher costs as the
company may be judged to have violated its social obligation
• All four reasons share the same weakness that they focus on the tension
between business and society rather than their interdependence – very
generic rationale and thus none of them are sufficient to help a company
identify, prioritise and address the social issues that matter most or can
have the biggest impact.

Understanding the basics of sustainable production: