BUS 250 wk 4 Disc. 1 replies (DO NOT CHANGE THE PRICE) IF YOU DO I WILL NOT SEND A HANDSHAKE.

6 The Corporation as Steward Hxdyl/iStock/Thinkstock Learning Objectives After reading this chapter, you should be able to:1. Compare and contr ast the responsibilities of fiduciaries and corporate stewards.

2. Assess the impact on the envir onment and how a life cycle assessment can identify a product’s, process’s, or service’s true cost t o society.

3. Describe gov ernment regulatory agencies in the United States, the European Union, and the global en vironmental movement.

2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.1 Corporate Fiduciary Stewardship Pretest Questions 1. A fiduciary is another term for owner. T/F 2. Unit pr ocess data only considers the economic cost of production. T/F 3.

Y ellowstone National Park was created during the Industrial Revolution. T/F Answers can be found at the end of the chapter. Introduction In this chapter, we examine the notion of financial and nonfinancial stewardship and examine how the corporation can be a steward of people, profits, and the environment while managing and even repairing environmental impact and damage. Firms interact with (and sometimes extract from and pollute) the natural environment in multiple ways. Buildings use wood and metal from forests and mines; companies require electricity (from coal, wind, solar, nuclear, or other sources of energy); and computers use components from mines and fabrication plants. Firm employees who drive to work use energy and likely create pollution in the pro- cess. Manufacturing companies use natural and human-made inputs to create new products for sale.

This chapter examines the relationship between the natural environment and the corpora- tion. It addresses the environmental issues introduced in Chapter 5 and explores the true social, environmental, and financial cost of certain corporate activities. Part of addressing how companies relate to the environment includes discussing how they comply with legal regulations, best practices prescribed by nongovernmental agencies, and international orga- nizations (such as the United Nations). This chapter describes analytical tools that allow peo- ple to identify risks, rewards, and impacts related to creating, using, and disposing products and services. These tools also provide data for companies that want to create less damag- ing or more restorative products. The discussion then turns to communitarianism, the green movement, and the formation of environmental regulatory agencies in the United States and European Union. It closes with a short discussion of how strategic concerns about risk man- agement and human welfare issues related to water rights and water supplies may dominate corporate conversations going forward. 6.1 Corporate Fiduciary Stewardship Building on the environmental issues described in Chapter 5, this chapter examines the role and responsibilities of a corporate leader. Central to this discussion is a pressing dilemma of conflicting incentives that leaders in most publicly held corporations face. By definition, a publicly held corporation has multiple partial owners who likely invested to gain a maxi- mum return on their investment. Return on investment (ROI) is a tangible, objective measure of an investment’s quality. ROI measures the amount of return relative to cost. To calculate ROI, divide the return or benefit of an investment by its cost. The result is a ratio that allows investors to compare different types of opportunities so they can evaluate the efficiency and \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.1 Corporate Fiduciary Stewardship effectiveness of each choice and select the most profitable (or otherwise ideal) option. Most publicly held corporations are expected to deliver a high ROI; otherwise, investors will take their money elsewhere. By law, corporate leaders in public firms have a legal responsibility to provide a return on investment in both the short and long term. This means corporate leaders are required to manage trade-offs. Specifically, leaders of public firms manage the trade-off between protecting and restoring the environment (which can have costs that reduce ROI in the short term) and using the environment with less care in order to improve ROI for owners in the near term.

A fiduciary refers to a person who holds a legal relationship of trust with one or more par- ties (such as shareholders). Typically, a corporate fiduciary prudently takes care of money or other assets. Corporate leaders by default become fiduciaries, or people with a special duty to owners/shareholders to protect and keep assets safe but also efficiently and effectively use assets. By law, a corporate leader cannot profit at the expense of corporate shareholders; he or she can also be fired for not managing funds to maximize profits. In other words, leaders are morally and legally bound to seek profit on behalf of owners (Inc. , n.d.). Thus, fiducia- ries are stewards, or caretakers, of the financial side of business. However, seeking profit for shareholders is not the only aspect of the complex notion of stewardship.

Peter Block is a thought leader in the world of business who spent the past 40 years advocat- ing for an expanded notion of corporate stewardship; one that goes beyond fiduciary con- cerns. Rather than just representing the interests of shareholders, Block (2013) advocates that corporations should adopt a stewardship model of management whereby they treat people and natural resources as assets to be cared for, nurtured, preserved, and respected.

Stewardship commonly refers to the responsible care and management of an asset over time that allows for sustainability and growth. Some argue that stewards are caretakers who bal - ance all interests in the hopes of sustaining the life and value of an asset (Inc. , n.d.). For Block, stewardship is a mind-set that changes the fundamental way corporate managers and leaders behave. Block suggests that not only are managers and leaders stewards of what happens within the corporation, they are also stewards of the corporation’s social and environmental impacts.

Block (2013) says that corporate leaders are responsible for ethical communication and for providing a quality good or service. He challenges corporate leaders to tend to environmen- tal issues while simultaneously being fiduciaries of the financial bottom line. Block makes a compelling argument that most corporations act in immediate self-interest and do not have the capacity to balance long-term environmental needs with demands for short-term profit.

Stewardship involves listening and weighing multiple interests, including long-term financial, social, and environmental interests, in addition to short-term financial ones.

Religious, social, and environmental movements have long advocated the notion of steward- ship over resources, which suggests that human and natural resources have intrinsic and long-term value and thus should be viewed with a long-term mind-set. But Block’s version of environmental stewardship suggests going one step further—to restore environments. Such restorative behaviors include removing trash, planting trees, leaving nature as you found it, and actively caring for people and places. Stewards have a wide range of choices in how to act and may often feel squeezed between the short-term wants of people and the longer term needs of future generations and place or the environment. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.1 Corporate Fiduciary Stewardship According to Block (2013), good stewardship often means choosing service over self-interest and creating long-term value over short-term gain. He suggests that stewardship can protect the earth from harm by making people accountable for the outcomes of an act or institution, without forcing, controlling, or taking unwanted charge of others.

In other words, good corporate stewards commit to the long-term well-being of their region, society, and environment. They also recognize the interdependencies between four spheres:

E conomy 2.

Li vable community 3.

Social inclusion 4. Go vernance Regarding economy, a good steward attempts to take into account financial factors previously discussed, such as shareholder investments, expectations, and profits. But these interests can best be sustained within a livable community, one that is capable of providing well-trained and empowered employees who are able to lead healthy and productive lives. This means that good stewards attempt to practice inclusion by involving all stakeholders in communication, and they practice, submit to, and attempt to exemplify appropriate governance.

In order to embody this view, good stewards consider and work across boundaries of juris - diction, sector, and discipline to connect these four spheres and create opportunity for the region.

It should be noted that people who are not necessarily corporate leaders are also considered stewards. For example, educators and students exercise important stewardship over society, the environment, and future generations when they study the world’s various interconnec- tions. Society also entrusts politicians and civil servants to be stewards of regions, resources, and people’s well-being. Citizens can remove these privileges (by vote or impeachment) if government leaders do not practice stewardship. Owners can also remove corporate stew - ards (managers) if they are not acting in the corporation’s best interests.

In some way, we all have stewardship roles. To be sure, corporate leaders have macro stew - ardship responsibilities, but employees at all levels are accountable for many of the same issues. People who work for firms come face-to-face with stewardship issues if they waste resources, are asked to dispose of toxic waste inappropriately, take safety shortcuts, or lie on a financial report. Stewardship is a shared responsibility. To better understand our own stew - ardship responsibilities, it is critical to discuss the concepts of ownership and responsibility.

Types of Ownership and Responsibility There are many different conceptualizations of ownership, and different kinds of owners feel different levels of stewardship vis-à-vis the organization. The concept of private and transfer - able ownership lies at the core of most functioning capitalist societies. People in functioning capitalist societies typically understand that a person or entity who owns something can transfer that property to another person through a sale or through inheritance. A person who owns a piece of property (or a company) also has a stewardship over that property or firm; \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.1 Corporate Fiduciary Stewardship such stewardship can be formally trans- ferred to another person. Essentially, own- ership carries with it the opportunity to be a steward.

In a totalitarian state, ownership of private property is disallowed or carefully con- trolled—this makes it harder to be an effec- tive steward because owners usually have more power than other stakeholders. In Communist states, such as the former Soviet Union and contemporary North Korea, the concept of ownership is totalitarian, and the state owns most businesses and other factors of production. In contrast, the United States and European democracies conceive of ownership as a state in which assets can be held privately or by different government entities, including on national, state, and local levels. For example, governments may own transporta- tion systems, such as Amtrak in the United States or British Rail in the United Kingdom. Many of the older European airlines, such as Air France, KLM, and Swissair, began as government- owned businesses. They have since been privatized or are semiprivate, which means they are jointly owned by government entities and private companies.

Partial ownership creates stewardship and legal challenges; it is difficult to determine who is responsible for performance when both shareholders and elected governments own part of a corporation. This state of affairs is further complicated when an owner needs to be held responsible by a court of law. When legal entities hold someone responsible for environmen- tal damage, for example, it is difficult to prosecute or defend owners when the owner is the same government that manages the regulatory agency.

Extending Ownership and Responsibility When a corporate stakeholder sees a poorly calculated decision or one that has a negative environmental impact, it may not be easy for him or her to signal concern; nor are such warn- ings necessarily welcomed. It is clearly documented, for example, that engineers from the Morton Thiokol corporation foresaw the failure of the space shuttle Challenger and tried unsuccessfully to block its launch (Atkinson, 2012). When the Challenger exploded on Janu- ary 28, 1986, all seven astronauts on board were killed.

The first person to convincingly sound the alarm about social and environmental concerns (also known as a whistle-blower) serves as an early warning system for the larger commu- nity. While many people think of themselves in the role of steward, many others believe they are powerless to change systems and organizations. However, this is not necessarily true, as many important voices have pointed out. Among them is former Czech Republic president Vaclav Havel, who was a political organizer during the Soviet occupation of his country dur- ing the 1980s. In 1985 he wrote a compelling essay about the powers of the seemingly weak.

In it, Havel (1985) argues that even those in the most oppressive situations have power and responsibility to change the system for the better. Similarly, Margaret Wheatley (1996, 2003), Frank Duenzl/picture-alliance/dpa/AP Images Amtrak is an example of state ownership.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship a thought leader in the world of business and an expert on complexity theory and leadership, believes that stewardship resides in everyone, regardless of the social and leadership envi- ronment in which they live.

This stance illustrates how some people, such as Wheatley, consider individual workers and actors to be quite powerful. Such a mind-set suggests that one need not wait to have a leader- ship position or be deeply experienced and highly credible to guide an organization to sus- tainability. Everyone has the capacity to be a good steward and advance the interests of the organization and the greater good.

How can stewards at all levels of an organization take appropriate stances on critical con- cerns? By respecting, encouraging, and considering multiple voices.

Extending the ideas of Havel and Wheatley, Max De Pree, the longtime leader of the Her - man Miller corporation (manufacturers of office furniture), publicly fostered the idea of an inclusive corporation , or one in which all voices are heard and given credence. He wanted to create a caring organization that was also financially successful. Because of that belief, he opposed business ideas that only benefited senior management. He suggested that good lead- ers and stewards are open to communication. But most of all, he was known for talking and listening to anyone and considering and enacting ideas from all levels of the company (De Pree, 1987). Unlike Wheatley and Block, who are consultants and idea leaders, De Pree was a manager and corporate actor. His ideas focused less on what a steward is and more on what he or she does. 6.2 The Cost of Failed Stewardship Up to this point, stewardship has been described as both a mind-set and a set of behaviors that can be distributed or enacted from inside or outside an organization. Equally important to cover are stewardship failures; indeed, examining failures creates another way to motivate action. Most instances of failed corporate stewardship go far beyond harming financial stake- holders. Such failures impact the social community, the environment, employees, the legal system, and the banking system (Clarke, 2004). For example, the potential failure of the U.S.

auto industry in the 2008 recession triggered Congress to offer massive financial aid to top manufacturing companies. The subsequent financial “bailout” was justified for a variety of reasons, including to preserve jobs and national security. However, the same bailout cost tax - payers; cost the firms in reputational capital; and cost citizens and investors stress, in terms of uncertainty and fear.

What are the additional costs when stewardship fails? These can be seen in the blunder by Atlas Minerals, a now closed industrial site near the entrance of the Arches National Park in Moab, Utah. Driven by a demanding client and a perceived threat, members of management did not consider the longer term environmental impacts when they decided how to mine and store uranium. Atlas Minerals was not considering sustainability, which involves meeting the needs of the current generation without compromising the needs of future ones.

Arches National Park is a tourist destination for visitors from all over the world; they come to see beautiful red rocks that have been hollowed by wind erosion. But in contrast to these \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship natural wonders sits Atlas Minerals. When Atlas operated between 1960 and 1990, it stored large piles of tailings, or leftovers from the extraction process from the region’s uranium mines, at the edge of the Colorado River. The Atlas Minerals mine and industrial site primar - ily provided fuel for the nation’s nuclear reactors and helped create fuel for nuclear weapons used to defend the United States. As the need for uranium dwindled, however, scientists and the general public learned more about the toxicity of the uranium tailings. Not only was the dust from the tailings contaminating the population near Moab, but water seeping through the tailings was also flowing into the Colorado River, Lake Powell, and the Grand Canyon.

What was once thought of as an acceptable risk and normal by-product of manufacturing was finally seen as an environmental disaster. With such discoveries and related changes, Atlas Minerals entered Chapter 11 bankruptcy, and in so doing dodged liability for undertaking a massive cleanup that cost many times more than the company was worth. Since then, the DOE has taken over the site (Grand County Utah, 2016) and is now tasked with cleaning up all such sites that contributed to pollution related to the creation of nuclear weapons (Yahoo!

Finance, 2016).

After the DOE assumed ownership of the land, it set up a trust to fund the site’s cleanup.

As of 2016, only 50% of the tailings had been removed. Trainloads of radioactive tailings are continuously removed from the site—about 5,000 tons each week. The tailings are taken approximately 40 miles away to a location considered less environmentally sensitive because it is not at the edge of the Colorado River (Yahoo! Finance, 2016). The project will cost taxpay - ers many times the amount that Atlas Minerals made in profit during its years in production.

In fairness, corporate leaders who in the 1950s endorsed the plan to build a uranium mill and store tailings near the Colorado River did so with the approval of, and even encouragement from, government agencies. They operated using the best science of the time, although there were environmental engineers, local workers, and others who could see the folly of putting a radioactive tailings pile so close to the Colorado River. However, their concerns were dis - missed, ignored, or discounted.

For the sake of short-term cost savings and expediency, and due to a narrow definition of impact, a river was polluted, the life expectancy of nearby humans and animals was reduced, and the cost of conducting a massive cleanup was passed on to taxpayers. In contrast, cor - porate leaders of today and the future, especially those who take a stewardship mind-set, research the impacts of location, sourcing, and product ingredients on current and future generations before making decisions.

If we agree with Havel, Wheatley, and De Pree, then most (but not all) of the blame goes to those who own the corporation. The bad planning, failed science, poor execution, and bank - ruptcy are not just the failure of corporate leaders, but also of regulatory agencies, govern - ment, and even local citizens and employees. We all share in the blame for poor stewardship if we are connected to a community. But as problems get larger and involve more stakeholders, it becomes increasingly difficult to reach agreement and take collective action.

In addition, it may seem difficult to foresee the impacts of large-scale corporate activities on future generations. However, several tools can help assess the environmental impact of a product, process, plant, or any other activity in which an organization may engage. One is the life cycle assessment (LCA), which provides a way to measure a corporation’s environ- mental impact and includes energy costs and material usage information. An LCA describes the process of evaluating the social and environmental implications associated with creating, \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship consuming, and disposing of a product, process, or activity (American Center for Life Cycle Assessment, 2016).

The LCA allows corporations to examine waste, reduce costs, and innovate products and ser - vices. In other words, it can lead to both short-term and long-term fiscal and environmental benefits if firms utilize its data to innovate.

It is often assumed that LCA projections are approximate and should be adjusted when more exact information becomes available. However, leaders should not avoid LCAs or leave them half finished due to lack of perfect information—instead, leaders should make solid assump- tions, state what these are, and continue with the LCA process.

LCAs can be extensive, comprehensive, and therefore costly, depending on their level of detail and accuracy. But they can also be enlightening, even in their simpler and less expensive forms.

Whether extensive or simplistic, such analyses evaluate energy inputs, environmental emis - sions, and the social implications of business operations. In contrast, the cost of not doing an LCA can also be extensive, as seen in the Atlas Minerals case; it can result in firms mistreating stakeholders, wasting resources, incurring internal expenses, or receiving bad publicity. Run- ning an LCA would help managers identify and address weak spots and risky areas.

When managers do not assess impacts, they may fail to see risks as well as opportunities to evolve products to mitigate environmental and social impacts. For example, after performing an LCA, Levi Strauss & Company implemented changes to mitigate the environmental impact of its jeans. CSR and Sustainability in Action: Levi Strauss & Company An LCA done by Levi Strauss & Company in 2016 showed that approximately 1,003 gallons of water are used to make a single pair of jeans. Producing the material accounts for 680 gallons, and the washing and cleaning of machines and manufacturing facilities account for the rest. Almost 70 pounds of carbon dioxide are produced to create each pair of jeans, mostly during fabric production. The LCA, which follows the product from birth to end of use, also found that Americans wash jeans, on average, after wearing them 2 times. Europeans wear them 2.5 times, while Chinese wear them 4 times before washing. The LCA suggested that if consumers wear their jeans 10 times before washing them, they could reduce the environmental impact of jeans by 77%. Using cold water and air-drying them would further reduce jeans’ environmental footprint (Levi Strauss & Co., 2016).

Using these findings, Levi Strauss implemented the Project WET Foundation to train employees to save water and educate others on ways to conserve water. The company also used the LCA results to partner with Goodwill and implement a special tag on Levi’s products encouraging consumers to consider the planet before washing the item.

The tag also suggested which washing settings to use to reduce environmental impact and encouraged those who buy jeans to donate clothes rather than throwing them out.

Because of the LCA findings, Levi Strauss found innovative ways to reduce its product’s environmental impact and to encourage others to become stewards of the environment.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship The LCA Process While there are several different approaches to undertaking an LCA, the cradle-to-grave assessment (the approach used by Levi Strauss) offers comprehensive data and is most accu- rate, because it looks at the complete process of making a product. Cradle-to-grave is a term that refers to the time from initial manufacture or “birth” of a product or service to its dis - posal or “death.” The cradle period for a car, for example, involves the extraction of metals, chemicals, and minerals for car parts and electronic components, and the extraction of petro- leum for plastics and the gasoline or electricity that will power the car. Performing an LCA for a car also means considering its end-of-life destination, which for many cars is either a junkyard, a landfill, or a recycling facility, where some or all of the parts are extracted and reused. As another example, consider the cradle-to-grave LCA of a newspaper. Harvesting and grounding trees into pulp is an energy-intensive process. Paper is produced from the pulp; the paper is shipped to suppliers and then sent on to printing facilities that print ink on it. The same facilities fold and prepare the paper to ship to vendors. The paper is then delivered to homes and offices in cars and trucks that produce pollution and are powered by fossil fuels. At this point, the paper has left the cradle stage and is now moving through the life stage, where it is consumed (read). It is then disposed of and heads toward the grave stage. Newspapers (those that still exist in this digital age) can be burned, used as wrapping or protective cover, be recycled, or thrown away to decompose in landfills. The impacts of each grave can also be analyzed. If papers are recycled, one possible outcome is to create cellulose insulation, which can be installed in homes and offices. It is also possible to calculate the fossil fuel savings from the insulation, along with the effects of most other steps in the life cycle. Conversely, if the papers are burned, then the release of carbon can also be measured and assigned to the product LCA measurement tally.

When recycling costs and benefits enter the picture, some people suggest that the LCA becomes a cradle-to-cradle analysis. Cradle-to-cradle was discussed in Chapter 5.3; the term was coined by design advocate Bill McDonough, who suggested that when the output of one cycle can be the input for another cycle, then materials need never enter landfill or junkyard “graves.” When the process of making and using a newspaper ends with landfill expenses and impacts, then the analysis is a cradle-to-grave analysis. If, however, the analysis includes data on recycling and finding alternative uses for the product, then it begins to resemble a cradle- to-cradle analysis (McDonough & Braungart, 1998).

Note that there is an entire industry of firms and practitioners interested in conducting LCAs.

As these needs have increased, so has the need to standardize and develop processes that enable comparisons and ensure accuracy. There are widely accepted standards in place that are managed by the International Organization for Standardization (ISO). Specifically, stan- dards such as ISO 14040 and 14044 explain how to conduct LCAs. Both sets of standards recommend that the process include four distinct phases (as illustrated in Figure 6.1). These phases, or steps, are interdependent, which adds to the complexity of the analysis. Further complicating matters is the back-and-forth nature of this process, where, for example, changes in goal and scope impact inventory analysis, and changes in inventory analysis impact goal and scope. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship Figure 6.1: Major components of a life cycle assessment f06_01 Interpretation Inventory Analysis Goal and Scope Defnition Impact Assessment Phase 1: Goal and Scope An LCA begins with the statement of scope and a goal for the study. The statement establishes the context for the study and explains what added value to expect from the project—it gives the project a framework, purpose, and context. Some managers might want to do an LCA to understand carbon-related issues, while others might want to understand labor, landfill, or water-use concerns. Thus, all parties need to agree on the scope and purpose of the LCA at the outset. The goal is both general and specific. It is general because it lays out the study’s boundaries. It is also specific because it includes the technical details that guide the subse- quent work. The goal and scope statement describes the functional units being studied, the system boundaries, the study’s system limitations, and the impact categories that have been chosen. System boundaries comprise the limitations of the study, and the boundaries differ- ent managers choose can vary from company to company or product to product. For instance, in the Levi Strauss example, the company defined the “system” by looking only at production of the 501 model of jeans, thus limiting the study to one style. That study’s impact categories are also clear. Analysts looked at water usage and carbon footprint but did not look at other impacts such as hazardous waste.

Phase 2: Inventory The next phase of an LCA involves creating an inventory of all relevant inputs, processes, and outputs related to a good or service. For example, an LCA can apply to a cup of coffee, a sweater, or a consulting assignment. Inputs may include energy, water, materials, and labor.

They might also include required plants, factories, and equipment, including land. This part \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship of the study examines all of the things that go into making a product (or providing a service or creating a process). The inventory also includes outputs, and analyzing these involves answer - ing questions such as, “What specific products or services are provided?” “What waste is cre- ated?” “What pollution is created?” “What secondary benefits—such as recycled newspapers becoming insulation—are created?” “What is the value added when this product comes into existence?” All of these data are needed to create an illustrative flowchart of the entire pro- duction process and the relevant supply chain.

If done correctly, inventory analysis yields a complete list of all activities within the system boundary, including the supply chain, the inputs, and the outputs. The inventory analysis also provides a complete map of all the activities in the production system boundary, giving a clear picture of what data can be presented to analyze the production and distribution system. The LCA shows how inventory flows into the system, how it is changed, how it leaves the produc- tion system, and what value is added (or destroyed) along the way.

Phase 3: Impact Studies An impact study searches out data to quantify the expense and impact of each step in the LCA.

This phase of the LCA is designed to evaluate the significance of social and environmental impacts based on the system flow (how a product or service moves through its life cycle). If you are going to complete an LCA, begin with the following questions:

• What are the impact categories (water usage, carbon footprint, landfill space and cost, mining activities, human toll of mining, fossil fuel use, and so on)?

• What model will you use to measure impact (cradle-to-cradle or cradle-to-grave)?

• How will you classify each stage of production? Where and how are the inventory parameters sorted and assigned to specific impact categories?

• What is the impact measurement? Will it be in dollars, carbon output or usage, or some other unit of measure?

• What is the overall impact category total? What assumptions are included in that number?

Data validity is an ongoing concern for LCAs because processes change regularly, as does the environment. Data must be accurate and current. Common metrics must be used so that data between systems is fair, accurate, and comparable. There are two types of LCA data. The first is unit process data, which is determined from direct surveys of companies or plants that produce the product of interest, and is carried out at a unit process level and defined by the study’s system boundaries. Unit process data is the actual cost of producing a single unit—not just its monetary cost, but its cost in gallons of water or carbon consumption, for example.

The second type of data is environmental input–output data, which is based on national eco- nomic input–output data rather than data directly from company sources and instruments.

Sometimes an analyst will need to use mixed sources; if this is the case, it must be stated in the report. Of course, it is ideal to gather all data from the same type of source; however, at times it is better to use mixed-source data than to ignore or omit data.

Phase 4: Interpretation The interpretation stage of the LCA is important and represents the most subjective stage.

In this stage, the analyst, or team of analysts, assess and decide whether some impacts are \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship “good” or “bad,” value adding or wasteful, and then determine how to compare such results to baseline or competitive data. In this step, analysts return to the study’s goals and consider the intended users of the results. They then make reporting and summary decisions accordingly.

As with the entire process, the best way to protect the integrity of the process and its results is to state assumptions in footnotes or the body of the report. Consumers of the report can decide for themselves whether they want to rerun the report (or parts of it) based on differ- ent assumptions, or whether the assumptions hold as more data become available.

The Value of the LCA With sustainability and social responsibility as goals, stakeholders are looking for ways to understand how our collective activity impacts the course of humans and nature. The reports and assessments relate to CSR because they represent concrete ways to analyze the actual resource-level impacts of a company or a product. LCAs offer those interested in CSR a tool to analyze, compare, investigate, and measure corporate behaviors. LCA reports conducted over time and based on raw data also allow those interested in CSR the opportunity to analyze long-term improvement or decline in a more objective manner than is offered by assessments based on public opinion. An LCA is an excellent conceptual tool that is used both nationally and internationally to study the impact human systems have on natural systems—in this way, an LCA is both an environmental and social CSR tool. An LCA offers a narrow view of how one set of activities impacts one part of nature. Organizations such as the American Center for Life Cycle Assessment have created larger databases that offer a more complete picture of the life cycle costs of various processes. As people continue to conduct LCAs and contribute to data - bases, the impact, trade-offs, and valid (or invalid) assumptions will grow increasingly clear and useful for CSR and sustainability practitioners.

The value of pursuing an LCA lies in the fact that considering linkages and impacts enables managers to see connections and possible risks in time to take action. An LCA provides stake- holders with data on how some aspects of the company impact the environment. It also pro- vides government and regulatory agencies with data they can use to create or avoid legisla - tion. An LCA can reveal where firms can expect problems and reveal places to focus on in terms of innovation, resiliency, or alternatives. For instance, in the Levi Strauss example, the manufacturer recommends washing jeans less often to reduce water usage and thus mini- mize the product’s carbon footprint. As another example, consider an LCA that Procter & Gamble (P&G) scientists performed on Tide laundry detergent. In so doing, they learned that the greatest impact on the environment was not from the manufacturing process or the product’s chemicals. It was also not from shipping and disposing heavy plastic bottles and paper boxes around the country. Rather, the heaviest environmental impact came from customers using hot water to use the product.

Depending on the cost of fuel and energy, the environmental impact of using electricity or natural gas to heat water can be quite high. P&G could have given up on the goal of steward- ship and sustainability by pointing out that the greatest impact of laundry soap came from user behaviors, which is not under the company’s control. Instead, however, P&G chose a more innovative path. The company reformulated the detergent to be effective in cold water and found that doing so increased market share and profits while decreasing the product’s environmental impact (Procter & Gamble, 2008).

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.2 The Cost of Failed Stewardship The example of P&G working with LCA data to create a better and less damaging prod - uct reflects how LCA relates to resiliency and social responsibility. Resiliency The concept of resiliency is typically treated as an individual quality. It is often regarded as a personal and psychological characteris - tic of a strong person who can “bounce back” after setbacks and difficulties. But resiliency is also an important characteristic of strong communities and of sustainable systems.

In nature, resiliency describes an ecosys- tem’s capacity to absorb a disturbance and still maintain its basic structure and viability. The system theory makes resiliency more dif - ficult to attain because it suggests that in an open system we cannot control nor see all of the aspects that impact an area of stewardship. That said, resiliency remains a valuable charac- teristic in an open system because a more resilient (open) system is more able to adapt to change without catastrophic impact. For example, in 1988 a wildfire burned 36% of the trees in the Yellowstone National Park ecosystem. U.S. Forest Service policy demanded that workers quickly put out the fires, and news coverage suggested that Yellowstone might be destroyed.

However, fire is part of any forest’s life cycle, and thus wildfires are part of its longer term and resiliency story. The resilient forest sprouted millions of new trees in the next season (trees that could only sprout under intense heat), and 25 years later those trees form the habitat for many resurging species of birds and small animals (Schullery & Despain, 1989).

Just as maintaining a forest requires accepting natural periods of stress (wildfires) that result in a stronger and more resilient ecosystem, humans and organizations can also build resil- iency. In building a sustainable organization that has a strong relationship with social, gov - ernmental, and environmental partners, resiliency is the desired characteristic. One of the most extensive discussions of resiliency in the history of mankind pertains to global warming.

The notion of sustainability combined with the idea of resilience forces a discussion about how much our human systems, including corporations, governments, militaries, and agri- cultural practices, can impact planetary ecological systems. The threat from global warm- ing raises many questions, including, “How much of an assault on resources can our planet take?” “What is the impact of human activity on global water and air temperatures, and thus on climate, water levels, weather patterns and long-term survival?” “How much do human- constructed systems impact natural ecosystems?” “How can policy makers, government, and international organizations impact human behavior in order to reduce the footprint on the natural environment?” The answers to these questions are still under investigation, and exploring the available data is outside the scope of this text. In terms of social responsibility and sustainability, current and future leaders (and consumers) need to know that these questions matter at the highest lev - els of management. The search for answers continues, but as data emerges, the implications Danny Johnston/AP After performing an LCA, Procter & Gamble offered consumers cold-water laundry deter- gent to help reduce the environmental impact of heating water.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture vary for different industries. Thus, leaders must train themselves to ask the questions, request the data, and analyze it to enable action—whether that means innovating (like P&G), taking responsibility, ceasing or transferring activities (like Atlas Minerals) or cocreating solutions with communities and stakeholders (like Levi Strauss).

Being resilient can also drive business opportunities. The Honest Company, the ecofriendly consumer products manufacturer founded by actress and entrepreneur Jessica Alba, is val - ued at $1.7 billion (Howell, 2015a). Alba suffered asthma-related allergies that afflicted her in childhood, and she worried that her baby would suffer the same plight. She therefore launched the Honest Company to create products free of toxic chemicals and artificial ingre- dients. Alba has been on the cover of Vanity Fair as “Founder of the Year” and has been listed by Forbes as one of “America’s Richest Self-Made Women” (her estimated net worth is $200 million; Howell, 2015a). This success shows how the quest for sustainable business and resil- iency in both humans and corporations can be good for the environment, consumers, and the firm. It also underscores how understanding and cultivating resiliency for both economic and natural systems is one of the single most important questions—and sources of opportunity— for upcoming generations. Alba wanted children to be healthy (a form of resilience), and she wanted her firm to stand for health and sustainability. Apply Your Knowledge: Perform an LCA Draw a map that represents the LCA of a common product. Include all inputs, processes, and outputs. Consider the outcomes of the LCA. What are some suggestions you could make to reduce the product’s environmental impact? 6.3 The Cooperative Culture There is at least one philosophical school that attempts to explain the relationship between humans, their social systems, and nature—communitarianism . As the name implies, com- munitarianism describes a philosophy that emphasizes community, or the association and affiliation of entities at individual, social, and ecological levels. As a philosophy, communitari- anism forces us to look at our relationship with others. It requires knowing how individual behaviors affect others, including families, neighborhoods, communities, and countries.

Particularly when applied to corporations, a communitarian philosophy constitutes yet another element of sustainability. In order to become stewards of sustainability, we must see and understand our impact on others, the environment, and the government. One route to creating a more sustainable world is for corporate actors to adopt the mind-set of communi- tarianism. Communitarianism poses questions about how we relate to each other and makes us inquisitive about the relationship between the firm and other people, groups, cultures, and the environment. In the communitarian world, resiliency is achieved when individuals, corporations, and other entities can absorb a disturbance and still maintain basic structure and viability. In some ways, communitarian ideals sparked the green movement in the United States and internationally.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture The Green Movement in America The early environmental movement in the United States embodied many tenets from com- munitarian ethics. Literary figures from the 19th century such as Ralph Waldo Emerson and Henry David Thoreau often wrote about the value of wilderness, nature, and the environment in laudatory and venerating terms. They suggested that these natural creations were gifts; they were even a means by which humans could access the divine (Atkinson, 2000; Thoreau, 1995). These ideas were a form of practical communitarianism that emphasized resilience and sustainability. Many people were influenced by these ideals, and thus it became popular to believe that humans need nature for a variety of reasons. As these ideas took hold of the national consciousness in the 19th century, the eastern United States was being rapidly domi - nated by human consumption. The Industrial Revolution pushed nonagrarian businesses fur- ther west, eliminating the wilderness. As a result of these and other influences, the United States created the National Park Service to preserve and protect the natural environment.

For example, Yellowstone National Park was created in 1872 to preserve that unique ecosystem from the exploi - tation underway in other parts of the West. Later, other national parks, such as Yosemite, Grand Teton, and the Grand Canyon, were created. Visionary leaders like John Muir and Theodore Roosevelt were associated with this movement. These people gave voice to the wilderness, nature, trees, and the ecosystem. Treating nature and green space as valuable and worth preserving for future generations is a key hallmark of what is called the green movement. A key goal of this movement is to preserve parks, and other goals stem from that premise. The green movement has not been without controversy.

There are some political groups that claim environmen- talism is tied to a political party; others want to repudi- ate it because of this very association. However, environ- mentalism is an issue shared by multiple political parties and people of different races, genders, and socioeco- nomic status, and it has taken various forms over gen- erations (Whittaker, Segura, & Bowler, 2005).

Whether environmental issues are politicized or not, they affect many people at a deep and visceral level; when people care deeply about preserving nature and the environment, they often formally organize in favor of some kind of change (or against change, in some cases). The next sections of this chapter look at organizations and activism within communities at the local, national, and global levels.

Organizing in and for Local Communities Communities usually face environmental issues that are unique to an area’s geographical and ecological composition. While national and state governments seek to regulate corporations Thinkstock/Stockbyte/Thinkstock Establishing Yellowstone National Park to preserve nature is an example of the green movement’s work.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture and mitigate impact on the environment, local communities in which businesses operate often live with the consequences of those regulations (consider again the example of Atlas Minerals). For example, environmental regulations may inhibit local economic growth, such as when a protected species inhabits land that farmers traditionally cultivate or loggers desire to harvest. Irresponsible behavior by local corporations may also negatively affect the local population’s health, damage property values, and reduce the economic viability of a particu- lar area. The Atlas Minerals example describes a major environmental problem at the Grand Canyon, one of the most attractive tourist destinations in the United States. Local leaders initially denied the problem and then tried to blame it on the corporation; eventually, they were grateful that the federal government stepped in to mitigate the situation. However, such intervention is not always possible or viable. Certainly, some environmental problems have multiple causes and broader effects that require multisectoral (even international) commit- ment to address.

The International Council for Local Environmental Initiatives Many local governments have become frustrated by the inability of state and national gov - ernments to quickly and appropriately address local environmental issues. One way to cope with such frustration involves organizing and partnering with others in similar situations. In 1990 the International Council for Local Environmental Initiatives (ICLEI) was founded as an international organization of local governments committed to sustainable environmental practices, including sustainable community development. The membership focuses on edu- cation and advocacy to encourage corporations to implement sustainable practices into their corporate culture. Today more than 1,000 towns, cities, counties, and regions make up the ICLEI’s growing membership (ICLEI, 2016).

The ICLEI advocates that local governments work through international performance-based, results-oriented campaigns and programs, such as the LCA described earlier in this chapter.

Yet the ICLEI does not work directly with corporations. Instead, members network with and support local governments in solving environmental problems through consulting and edu- cation. In other words, the ICLEI encourages local governments to form collaborative rela - tionships with corporations to mitigate the economic effects of government environmental regulation while protecting the health of the environment and the population.

The ICLEI is an excellent example of how the environmental movement has promoted the idea of thinking globally but acting locally. The existence of such an organization underscores the importance of corporations having an environmentally themed dialogue with the commu- nities in which they operate. Corporations that operate manufacturing plants and factories leave the largest impact in the communities in which they operate. Ignoring these impacts and the resulting behavior is no longer acceptable, nor is it advocated by corporate leaders who are themselves often environmentalists (Heaps, 2010).

National Organizations and Activism Environmental problems are often difficult to see without scientific investigation and espe - cially difficult to address without support from industry, corporations, nonprofit advocacy groups, and citizens in partnership. Most nations have empowered a government agency to \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture oversee and enforce environmental regulations. While the strength of such agencies varies from sovereignty to sovereignty, it is clear that with each passing generation, environmental regulators are increasingly stronger advocates for environmental causes. In the United States one such advocate is the Environmental Protection Agency, or EPA.

Environmental Protection Agency The EPA was established in 1970 following a series of environmental problems in the United States and in response to the federal government’s inability to regulate environmental impacts. President Richard Nixon established the EPA as a regulatory body to enforce envi- ronmental policy. In a message sent to the U.S. House of Representatives and Senate, Nixon outlined that the EPA was established to develop and enforce environmental protection stan- dards consistent with national goals. In addition, the EPA was to conduct research that was both general and specific. For example, in the case of pollution, general research would inves - tigate the adverse effects of pollution, while specific research would investigate the impact of a specific polluter on a specific population in a specific city. Thus, the EPA is both an enforce- ment agency and a research agency (EPA, 2016c).

The EPA’s current strategic plan includes five goals:

• Goal 1: Address climate change and improve air quality • Goal 2: Protect America’s waters • Goal 3: Clean up communities and advance sustainable development • Goal 4: Ensure the safety of chemicals and preventing pollution • Goal 5: Protect human health and the environment by enforcing laws and assuring compliance (EPA, 2016c) Note the difference between the EPA’s approach, which involves regulation, and the ICLEI’s approach, which involves collaboration. The EPA has a long list of regulations for corpora- tions and operates on the premise that compliance with legal regulations requires oversight, fines, and sometimes enforced compliance. In contrast, the ICLEI approach is more in line with the communitarian philosophy of working together to build resilient communities.

Both the ICLEI and the EPA have been the focus of criticism about the value and appropriate limits of government regulation. Criticism has come from moderates and extremists, depend- ing on the issue. While some have described the ICLEI as a toothless tiger, unable to enforce anything, others have accused the EPA of mission creep and overreach. Criticism from the National Review and similar entities suggests the EPA has strayed from its original mission (Hildebrand, 1993). As one critic has put it: Over most of its 40-year history, the EPA has strengthened environmen- tal standards in a relatively incremental manner, allowing some measure of balance between environmental and economic needs. Using this strategy, the agency has effected much genuine environmental improvement. But for today’s EPA, no economic impact is too onerous. The agency is issuing edicts of unprecedented scope at breakneck speed, and with little justification and few identified benefits (White, 2010, para. 5).

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture An example of possible EPA overreach may be activities like the Partnership for Sustainable Communities. This is a collaboration between the U.S. Department of Housing and Urban Development, the U.S. Department of Transportation, and the EPA. The three agencies col- laborate with the goal of supporting environmental justice and equitable development in neighborhoods and regions. Some critics fear that three government agencies collaborating will curtail private sector efforts to make a profit in the housing and real estate marketplace.

While the goals of such an effort might be noble, the application of policy and regulation toward those goals might indeed be overly economically limiting to communities and corpo - rations (EPA, 2016c).

While different stakeholders may disagree about the appropriate scope and reach of such agencies, the fact remains that the agency’s mandates must be taken into account when man- agers consider environmental and other CSR issues.

European Union Environmental Policy Following the formation of the EPA in 1970, the European Economic Community began hold- ing summit meetings in Paris that resulted in a declaration on environmental and consumer protection. At the time, European nations were independent in terms of currency, regula - tions, and lawmaking; as such, most were notorious for not working together despite the relatively small size and close proximity of European nations. However, European countries were also experiencing rapid expanse of industry and growing concern over the impact of environmental pollution. Among the various countries of Europe, there were vastly different standards for vehicle emissions, the lead content of gasoline, and the use of pesticides. In addition, political movements such as the Green Party in Germany pointed out that pollution does not stay within human-made borders, and some activists threatened political action if one country’s pollution spread to another country without reparations or other compensa- tory action (Johnson & Corcelle, 1989).

As a result, the EU inherited significant environmental regulation and enforcement abilities from the constituent countries that had strong regulations when they were independent. The EU is considered to have some of the most extensive environmental laws of any government.

For some, this fact indicates positive progress for CSR goals; for others, it makes the EU a less appealing place to establish new businesses. The EU’s environmental policies are intertwined with the international and national environmental policies in its member nations and have had significant effects on its member states. The EU’s environmental legislation addresses core issues that include acid rain, the ozone layer, air quality, noise pollution, waste, and water pollution. The Institute for European Environmental Policy estimates the body of EU environmental law amounts to well over 500 directives, regulations, and decisions (Jordan & Adelle, 2012).

For example, the EU has taken dramatic steps to reduce waste in all member countries. This includes regulating recycling, prohibiting the discharge of wastewater, and regulating pro- duction processes so they do not produce waste. The Waste Framework Directive (WFD) is a regulation passed by the EU in June 2008 that hopes to turn the EU into a recycling soci - ety. One of the unique and compelling features of the WFD is the European Waste Hierarchy, which classifies the waste production and disposal system as follows:

Step 2.

R euse and preparation for reuse—giving the products a second life before they become waste.

Step 3.

R ecycle—any recovery operation by which waste materials are reprocessed into products, materials or substances whether for the original or other purposes. It includes composting and it does not include incineration.

Step 4.

R ecovery—some waste incineration (burning) ; ideally in a situation that works to eliminate or replace less inefficient incinerators.

Step 5.

Disposal—pr ocesses to dispose of waste including landfilling, incineration, pyrolysis, gasification and other finalist solutions. (European Commission, 2016) The European Waste Hierarchy suggests that prevention is the most important step because it prevents waste in the first place. Therefore, this step investigates and helps determine the market need for a product in order to ascertain whether it should be made and which resources should be used in the process. The hierarchy then suggests that if the product is made, the manufacturing processes should be lean and result in as little waste as possible.

The hierarchy further suggests that waste, once generated, should be reused or prepared for reuse. If that is not obtainable, it should be recycled. However, some waste cannot be recycled or reused, and so it is incinerated. This is defined as recovery. The least desirable step is the fifth step in the hierarchy, which is to dispose of waste in a landfill (Johnson & Corcelle, 1989). International Organizations and Nongovernmental Organizations The previous sections described the creation of government regulatory bodies that enforce environmental regulations. Before the creation of the ICLEI, the EPA, and the European envi- ronmental regulations, the Sierra Club—formed in 1882—represented one of the first col- lectives created explicitly to advocate for environmental preservation. The Sierra Club is an example of a nongovernmental organization (NGO) , which is an organization that is not part of a government nor funded by governments, foundations, schools, or businesses. Since the formation of the Sierra Club, other NGOs with similar focuses have emerged, and each organization differs in the level of political and social extremism it espouses. Organizations such as Earth First!, Greenpeace, the Audubon Society, and many others exert differential lev - els of local and international influence.

Green Party The world’s first political parties to adopt environmental platforms were the Tasmania Group in Tasmania, Australia (1972), and the Values Party of New Zealand (1972). The Popular Movement for the Environment, founded by the Green Party in Europe in 1972, has captured voter attention since its inception (Bevan, 2001). The first national green party in Europe was founded in Britain and called the Ecology Party, which later became formally known as the Green Party. In India the Chipko movement, formed by Mohandas Gandhi, featured the act of hugging trees to protest deforestation (which led to the term tree huggers). Peaceful methods of protest and the slogan “ecology is permanent economy” were very influential in India and elsewhere thereafter (Dann, 2011). \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 6.3 The Cooperative Culture This list of organizations indicates the wide geographic range of environmental issues and emphasizes their long-standing historical and political roots. Contemporary leaders and con- sumers can use this knowledge to jump-start conversations around the environment. As a result, business leaders can become better informed about the contexts in which they make decisions as they work for a more sustainable future.

Environmentalism and CSR In 2015 a haze settled over the western part of the United States. It came from wildfires in Asia, specifically Indonesia (Plait, 2015). Indeed, the United States routinely absorbs pollu - tion from China; it has also experienced moderate increases in radioactivity following nuclear weapons testing or nuclear reactor accidents, such as the one that followed a 2011 earth- quake in Japan and a 1986 reactor meltdown in the former Soviet Union (Plait, 2015). Global warming, the ozone layer, air pollution, and other large-scale environmental issues may cause international social and military conflict in the future, as people come to realize that we are all part of one global community. Such reports illustrate how pollution does not stop at national borders.

However, it is most likely that future environmental conflict will not be centered on these issues, but rather on the problem of water. The Organisation for Economic Co-operation and Development (OECD) reports that at least 30 nations will be water scarce by 2025, up from 20 in 1990 (OECD, 2008). Eighteen of the 30 are in the Middle East and North Africa, including Egypt, Israel, Somalia, Libya, and Yemen (OECD, 2008).

As an example of how and why water issues relate to food security and national security, con- sider the fact that some political analysts see the conflict between Palestinians and Israelis as partially a fight over water and water resources, as well as a cultural or religious war. Adel Darwish, journalist and coauthor of Water Wars: Coming Conflicts in the Middle East, sug- gests that modern history has already seen such wars. “I have [former Israeli prime minister] Ariel Sharon speaking on record saying the reason for going to war [against Arab armies] in 1967 was for water” (Bulloch & Darwish, 1993). The OECD (2008) further supports the idea that water shortages enhance the impact of climate change and other kinds of pollution.

“Fundamentally, these are issues of poverty and inequality, man-made problems” (Arsenault, 2012, para 8).

These findings suggest that environmental issues are critical strategic concerns for consum- ers, citizens, governments, communities, and corporations. Achieving a balance between cor - porate activity and environmental impact poses an ongoing question for all communities and generations. The “right policy” may never exist or achieve perfect balance; yet failing to con- sider or create policy certainly offers a nonviable path. Leaders interested in sustainability and CSR can address environmental concerns by actively creating and inviting others to par- ticipate in ongoing conversations and strategy sessions. Doing so can have positive outcomes on the present, lay the foundation for longer term impacts, and in many cases contribute to a strong personal legacy.

For example, consider how at the mouth of a granite canyon in Yosemite National Park, one can find a bust of Steven Mather, the founder of the National Park Service. The monument depicts a simple likeness of his face, with his name and life span, and memorable words about \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary the impact of his work, which involved protecting unique natural wonders found in the United States. Under the statue it simply says, “The good he has done will never die.” With strategic intent and active policies that unite or at least include constituents from many sectors, the same can be said for responsible corporate leaders who avoid taking environmental short- cuts. Indeed, history will remember those who carefully examine processes, products, waste, and other factors required to create a sustainable organization in the context of a sustainable environment. Chapter Summary This chapter examined the role of a corporate fiduciary and contrasted the role with that of a steward who accepts responsibility for sustainability (financial and otherwise). Stewardship involves listening and weighing multiple interests beyond short-term financial ones. The case of Atlas Minerals was discussed to highlight how ultimate organizational failure on steward- ship results in government bailouts and irreversible damage to the environment and human health. Leaders can use several tools to combat negative outcomes, including the cradle-to- grave, cradle-to-cradle, and LCA approaches. When individuals and firms use analysis tools to widen the conversation about sustainability and social responsibility, they can achieve goals that are more closely aligned with those of the green movement. Creating a cooperative cul - ture can help address environmental concerns, provide resources, and preserve nature for future generations.

Posttest 1. A lif e cycle assessment provides an end product that is .

unit pr ocess data b.

r equired by the EPA c.

a w aste-reduction plan d.

a cost-r eduction plan 2.

R esilience is a corporate characteristic that .

decr eases with a corporation’s age b.

incr eases with a corporation’s age c.

includes the ability t o absorb disturbance d.

includes the ability t o resist change 3.

A fiduciary is not an o wner, but is someone who .

has all the leg al rights of owners b.

has no leg al rights or obligations c.

has a leg al obligation to protect the owners’ property d.

is a la wyer for the corporation \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary 4. St ewards are different from a fiduciary in all of the following ways EXCEPT .

the y take a longer term view b.

the y see a wider range of accountabilities c.

the y balance financial gains with environmental costs d.

the y are responsible for the effective use of shareholder assets 5.

Which of the f ollowing organizations have no formal authority to regulate but use only research and consulting?

En vironmental Protection Agency b.

Int ernational Council for Local Environmental Initiatives c.

U .S. Department of Energy d.

National P ark Service 6.

Henry Da vid Thoreau and Ralph Waldo Emerson are said to be the philosophical founders of .

the gr een movement b.

the Industrial R evolution c.

the Gr een Party d.

the national par ks Answers: 1(a); 2(c); 3(c); 4(d); 5(b); 6(a) Critical-Thinking Questions 1. Ho w does the idea of stewardship change or challenge your ideas about leadership in contemporary corporations? Where have you seen good examples of stewardship?

Is it possible t o have environmental regulations that enhance economic opportunity, rather than limit it? Provide examples that support your response.

What ar e some of the environmental impacts you might find if you did an LCA of:

The oil used in y our car engine b.

A plastic soda bottle c. A print ed newspaper 4.

The U .S. Environmental Protection Agency was formed to regulate and control pollu- tion and prevent environmental harm. What are some of the challenges the EPA faces when it works within states? What about within the global environment? What strate- gies might you suggest to address these challenges?

Consider y our personal behaviors and list some that you might change to positively impact the environment. What are some challenges you might face in changing these behaviors? How would you encourage others to adopt similar behaviors?

Consider curr ent events and discuss how local and global water issues relate to CSR and/or security concerns.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary Additional Resources LCA of industrial packaging for chemicals: ht tp://w w w.dantes.info/Publications/Publication-doc/Packaging-public.pdf LCA of wood-based ethanol-diesel blends (e-diesel): ht tp://w w w.dantes.info/Publications/Publication-doc/LCA%20of %20E-Diesel-public.pdf For information on national and international NGOs, including controversy that surrounds some of them, see the following: ht tp://w w w.yaleclimateconnections.org/2009/08/ngos-media-moles-or-moguls/ ht tp://w w w.eco-usa.net/orgs/ For more information on the Green Party and the green movement, see this site: ht tp://broom02.revolv y.com/main/index.php?s=Green%20Parties%20 worldwide&item_t ype=topic Answers and Rejoinders to Chapter Pretest 1. F alse. A fiduciary is any person who holds a legal relationship of trust with another person or entity.

F alse. Unit process data takes into account all costs, including both the economic and natural resources that go into creating every aspect of a product.

T rue. Yellowstone National Park was created in 1872 to preserve that unique ecosys- tem from the industrialization that was taking place elsewhere in the country. Rejoinders to Posttest 1. A lif e cycle assessment of a product takes into account the entire production process and supply chain as well as the impact on the environment and community, which results in unit process data.

S ystems that absorb and leverage disturbance are resilient.

A fiduciary is someone w ho has a special duty to owners or shareholders to take care of money or other assets and to use these effectively and efficiently.

Both fiduciaries and st ewards have a duty to use shareholder assets effectively, but only stewards have the added responsibilities of taking a longer view and balancing environmental costs.

The Int ernational Council for Local Environmental Initiatives is an organization of international governments committed to sustainable practices, but it does not have the power to regulate or legislate.

W riting about the value and the beauty of the wilderness in the 19th century, lit- erary figures such as Thoreau and Emerson inspired the green movement in the United States. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary Key Terms communitarianism A philosophical school of thought that emphasizes the creation of community in harmony with a natural environment.

cradle-to-grave A process that allows a product’s birth, life, and end of use to be examined.

fiduciary A person who agrees to accept temporary legal responsibility and control of an asset owned by someone else and who has a duty to maintain and expand the asset’s value.

inclusive corporation The type of corpora- tion advocated by Max De Pree that advo- cates flat, open communication that sup- ports stewardship for all. life cycle assessment (LCA) A formal process that allows a corporation to examine the environmental impact of any process or product.

nongovernmental organization (NGO) An entity that is neither a part of a govern- ment nor funded by governments, founda- tions, schools, businesses, or private citizens.

stewardship Refers to the management and care of an asset in such a way that it maintains and even increases in value over time.

Waste Framework Directive (WFD) A regulation passed in June 2008 by the Euro- pean Union regarding waste prevention, waste disposal, and recycling. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution.