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The document discusses sustainable practices in global business, focusing on integrating ESG principles and addressing market failures related to negative externalities, particularly CO2 emissions from fossil fuel production. It explores pollution charge mechanisms, such as gasoline, Btu, and carbon taxes, and highlights tradeable permit systems as a means for nations to meet emissions targets. Additionally, it covers water quality legislation in the U.S. and India, emphasizing the importance of regulating water pollutants and the interdependence of water resources.

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6 views

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The document discusses sustainable practices in global business, focusing on integrating ESG principles and addressing market failures related to negative externalities, particularly CO2 emissions from fossil fuel production. It explores pollution charge mechanisms, such as gasoline, Btu, and carbon taxes, and highlights tradeable permit systems as a means for nations to meet emissions targets. Additionally, it covers water quality legislation in the U.S. and India, emphasizing the importance of regulating water pollutants and the interdependence of water resources.

Uploaded by

vaibhav kowe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Sustainable Practices in Global

Business: Integrating ESG Principles


Lecture 10

Tamali Chakraborty
Market Failure Analysis
Negative Externality

• Production of electricity using fossil fuels is associated with


release of CO2 emissions -- a negative externality

• Utilities using fossil fuels do not consider the external costs


of CO2 emissions and allocate too many resources to
production, and too few are allocated to alternative fuels

• Solution depends on government intervention through policy


2
Market Approach: Pollution Charges
• A pollution charge is a fee that varies with the amount of
pollutants released

• Three types commonly proposed for climate change issues are:


• Gasoline tax – a per unit tax levied on each gallon of gasoline
consumed

• Btu tax – a per unit charge based on the energy content of


fuel, measured in British thermal units (Btu)

• Carbon tax – a per unit charge based on the carbon content of


fuel

3
Analyzing Pollution Charges
• Drawbacks of a gasoline tax

• Targets only polluting sources using gasoline, which are relatively


minor CO2 emitters

• Imposes a disproportionate burden on some, such as rural


communities lacking good public transportation and industries like
interstate trucking

• So the broader based carbon tax or Btu tax is often proposed


as a better alternative
• Carbon tax becoming more prevalent worldwide

4
Tradeable Permit Systems
• Primary means by which developed nations are to
achieve their respective emissions targets under the
Kyoto Protocol

• European Union (EU) established its own trading


program: EU Emissions Trading Scheme (EU ETS)

• Trading can lead to cost-effectiveness


• Nations best able to reduce emissions do so and sell
permits; those that could not would buy permits
5
Quiz

3. Acidic deposition arises when


A. VOCs mix with carbon dioxide in the atmosphere and fall to
earth as rain or snow
B. carbon monoxide and sulfur dioxide combine to form acidic
deposits
C. sulfur and nitrogen oxides mix with other particles and fall to
earth as rain, snow, or fog
D. carbon dioxide and nitrogen oxides combine and reach the
earth in precipitation
04-02-2025 6
Quiz

4. Primary sources of SO2 emissions are

A. fossil-fuel burning power plants and refineries


B. heavy-duty trucks and buses
C. light-duty trucks and automobiles
D. commercial aircraft

04-02-2025 7
Quiz

5. Which of the following are among the effects of


exposure to SO2 and NOX?

A. visibility impairment
B. Acidification of surface waters
C. forest damage
D. all of the above

04-02-2025 8
The Case of Water

Defining Water Quality: Standard Setting


Process
Water Resources and Their Interdependence

• Surface water
• Bodies of water open to earth’s atmosphere as well as springs,
wells, or other collectors directly influenced by surface water
• Ground water
• Fresh water beneath the earth’s surface, generally in aquifers
• Linked together by the hydrologic cycle
• Natural movement of water from the atmosphere to the surface,
underground, and back to the atmosphere
• Explains the interdependence of water resources
10
Hydrologic Cycle

Source: NOAA, National Weather Service (June 9, 2010).

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11
Polluting Sources
• Point Source
• Any single identifiable source from which pollutants are
released, such as a factory smokestack, a pipe, or a ship

• Nonpoint Source
• A source that cannot be identified accurately and degrades the
environment in a diffuse, indirect way over a relatively broad
area

12
Overview of US Legislation
• Similar to U.S. air quality laws, there was no federal legislation dealing
with water pollution until 1948

• In the 1970s, landmark legislation was passed, the Federal Water


Pollution Control Act of 1972
• Guides much of today’s policy
• Main responsibility for water quality shifted to the federal level
• Specific goals for water quality were established
• New technology-based effluent limitations were set

• Clean Water Act (CWA) of 1977 extended compliance deadlines and


strengthened the law on toxic pollutants

13
Current U.S. Legislation
• Water Quality Act of 1987 governs policy today
• Required states to set up programs for nonpoint sources

• Other Water Quality Legislation (examples)


• 1988 Ocean Dumping Ban Act
• 1990 Oil Pollution Act of 1990
• 2000 Beaches Environmental Assessment and Coastal Health
(BEACH)
• 2002 Great Lakes Legacy Act

14
Water Act of India
• The Water (Prevention and Control of Pollution) Act was
enacted in 1974 to provide for the prevention and control of
water pollution.

• The Act was amended in 1988

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Federal Policy Goals of US
(from FWPCA of 1972)

• Zero discharge goal


• Eliminate release of all effluents by 1985
• Fishable-swimmable goal
• Interim goal to achieve swimmable-fishable quality, allow for
recreational use by 1983
• No toxics in toxic amounts
• Prohibit release of toxic pollutants in toxic amounts

16
Water Pollutants Under the Law

• Toxic pollutants
• upon exposure will cause death, disease, abnormalities, etc.

• Conventional pollutants
• identified and well understood by scientists , e.g. organic waste, sediment, oil,
heat, etc.

• Non-conventional pollutants
• default category
17
Debate: India’s commitment to net zero emission by 2070:
Highlights of Union budget 2025’.

04-02-2025 18
Thank You

04-02-2025 19

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