Exploring the Balance Between Business and the Environment

by Diana Drake

We’ve been doing some environmental eavesdropping. The Wharton Global Youth Program’s collective ear has been pressed to the virtual Wharton School and University of Pennsylvania walls in recent months, listening for messages and insights that might empower future business leaders with the latest language around sustainability and planet-conscious strategizing. So, we’re kicking off our April Business and the Environment content theme with a few key concepts. Have you heard them before?

🌊 The Blue Economy. While most environment-inspired models come in shades of green, this one is in a color all its own. The blue economy refers to the sustainable use of ocean resources to help the economy grow through thriving ocean-based commerce and jobs. The ocean is a vast business hub that supports all kinds of economic activities, from the transport of international goods to fishing and fisheries, and tourism. According to the World Bank, healthy oceans provide jobs and food, sustain economic growth, regulate the climate, and support the well-being of coastal communities. The Organization for Economic Co-operation and Development says that oceans contribute $1.5 trillion annually to the overall economy. And yet human activities like overfishing and pollution threaten ocean health. Leaders focused on the blue economy are working toward creative solutions – like those discussed in this Knowledge@Wharton article — to support this economy and preserve the ecosystem.

💰 Carbon Tax. Climate change experts suggest that emissions of carbon dioxide and other greenhouse gases are affecting the climate. A carbon tax puts an actual tax on the carbon content of goods and services, encouraging businesses to produce fewer carbon emissions. Alexander Quinn, a University of Pennsylvania undergraduate studying economics who is interested in sustainability, has studied the issue. “The consensus among today’s economists is that a carbon tax is one of the most effective tools for reducing carbon emissions,” he writes. In a recent paper, he proposes ways to successfully redefine and broaden the appeal of a carbon tax in the U.S.

“The most direct ways in which to decrease the emissions from land use and supply chain are to use less land to grow crops and bring food production closer to the people purchasing the food.” — Ryan Lam, U Penn Student

🌎 Conscious Capitalism. You’ve heard this described in other ways, too, but at its heart is corporate social responsibility. Conscious capitalism suggests that businesses should operate ethically while they pursue profits, keeping all stakeholders in mind, including employees, people in broader communities, and the environment. They should not just operate to please their finance-focused board of directors and shareholders. For most companies, this requires an entirely new operational approach and mindset. The Wharton Social Impact Initiative recently spoke with two businessmen who illustrate conscious capitalism from both a business and investment perspective. Karl Khoury, co-founder of Arborville Capital, an environmental impact investment fund, said, “We believe that fundamentally there is a theme, a macro theme, towards consumers, businesses, governments, and institutions spending their dollars differently in a way that is promoting resource efficiency and sustainability.”

🏭 Environmental Justice. While this term has been around for decades, it has taken on new meaning in the past year amidst the movement combating systemic anti-Black racism in the U.S. Environmental justice, explains Wharton’s Brian Berkey, means that “no one should be subjected to significantly greater risks from environmentally harmful activity, especially business activity, just because they’re, for example, poor or African-American.” Think of urban factories emitting pollutants that potentially harm local residents.

Lexie Shah, a University of Pennsylvania student who is interested in environmental policy, provides context around the racial justice conversation in her recent paper, Racial Justice Without Environmental Justice Is No Justice At All. In it, she discusses the impact of environmental racism: “The term defines decades of discrimination that have fomented an unequal distribution of environmental risks across races, with Black and brown communities hit the hardest. A history of deliberate segregation played a pivotal role in constructing these disparities, and its legacy continues to target Black communities today.” Lexie calls for the environmental and racial healing of this nation.

🚜 Urban Agriculture. Growing stuff in the city may not seem directly related to business and the environment, but it actually is. Global food production accounts for nearly a quarter of total global greenhouse gas emissions. The emissions are coming from land usage, crop production of food, livestock farms and the packaging and distribution of food through the supply chain. Ryan Lam, a University of Pennsylvania junior, has been studying how to engineer improved systems for clean water, clean air and waste management. One solution to reducing emissions, he says, is the expansion and promotion of urban agriculture. In his paper Scaling Up Urban Agriculture for Emissions Reduction and Community Health, he writes, “The most direct ways in which to decrease the emissions from land use and supply chain are to use less land to grow crops and bring food production closer to the people purchasing the food. Moving more farms within urban centers accomplishes these two goals simultaneously.” Be sure to check out Ryan’s ideas for increasing urban agriculture in a sustainable way.

Related Links

Conversation Starters

Which of these concepts do you find most interesting and why?

Choose one concept to research more deeply by clicking on the provided links. Discover 5 additional facts or insights about the concept and share them with your classmates.

Why is maintaining a healthy balance between business and the environment so critical? What happens if the scale tips too far in one direction?

7 comments on “Exploring the Balance Between Business and the Environment

  1. I find the blue economy concept extremely interesting. This topic is very wide spoken. Despite this, many people don’t change their bad habits that are harming our oceans. This made me think of texting while driving.

    Texting while driving is another extremely popular topic. Schools spend tons of money to teach students about the risks. People don’t realize how dangerous and harmful it is. Not only can you hurt yourself, other people are also at risk.

    People need to realize that the ocean is a critical part of our economy. The ocean is used for not only the transportation of international goods but also for fishing and tourism. Polluting the oceans will harm both humans and specimens in the ocean.

    Reflecting on my own personal story, I can relate my experience of preparing for my 8th grade tests with this article. We are often told by our teachers, peers, and parents to prepare for a test early. They tell us not to procrastinate as this often leads to either bad grades or lack of sleep. However, I remember my friend asking me to play videogames with him. I knew that I should study for my test yet I still played video games with him. I ended up not studying for my test. This resulted in a grade that I was definitely not happy with. I remember telling myself I would do better on the next test. However, it was already too late.
    Why did I have to do badly on a test before I decided that I had to study?
    This relates back to the article as people don’t change their habits until it is way too late. Something so simple like don’t procrastinate. I didn’t realize that I needed to change until I was directly affected by it. If people continue to overfish, it may directly affect them as the price for fish will increase.

    Don’t wait till it’s too late. Change early and help protect our oceans.

  2. I find the blue economy concept fascinating. This is a very popular topic and is often referenced. Despite this, many people do not change their bad habits that are harming our oceans. This made me think of texting while driving.

    Another extremely popular topic is texting while driving . Schools spend tons of money to teach students about the risks. People do not realize how dangerous and harmful it is. Not only can you hurt yourself, but other people are also at risk.

    People need to realize that the ocean is a critical part of our economy. We use the ocean noto only for transportation of international goods but also fishing and tourism. Polluting the oceans will harm both humans and specimens in the ocean.

    Reflecting on my personal story, I can relate my experience of preparing for my 8th-grade tests with this article. I have often been told by my teachers, peers, and parents to prepare for a test early. They tell me not to procrastinate as this often leads to either bad grades or lack of sleep. However, I remember my friend asking me to play video games with him. I knew that I should study for my test, yet I still played video games with him. I ended up not studying for my test. This action resulted in a grade that I was definitely not happy about. I remember telling myself I would do better on the next test. However, it was already too late.
    Why did I have to do badly on a test before I decided that I had to study?
    This mistake of mine relates to the article as people do not change their habits until it is way too late. Something so simple like not procrastinating. I did not realize that I needed to change until I was directly affected by it. If people continue to overfish, it may directly affect them as the price for fish will increase.

    Do not wait till it’s too late. Change early and help protect our oceans.

  3. The lack of ethicality in major corporations is a significant problem globally, especially from an environmental standpoint. Corporate giants like Coca-Cola, Nestlé, Mars, and Danone have repeatedly shown that they have little regard for the environment and prioritize profits over sustainability. Due to the lower costs of using environmentally harmful materials, these corporations continue to be the largest producers of plastic waste worldwide, with these four companies producing more than 6 million tons of plastic waste each year. Considering how profit-driven these companies are, just advocating for companies to become more eco-friendly is not enough. Instead, financial incentives, such as the carbon tax mentioned in this article, should be the main motivation used to instigate these corporate changes.
    The carbon tax is brilliant in that it gives corporations a rationale for change. Public condemnation doesn’t do much to incite change – giants like the aforementioned four are almost impossible to boycott due to the popularity of their products and how globalized the companies are, and any form of protesting is likely to be met with a virtue-signaling statement or two. These companies are fully aware of the integral role they play in billions of peoples’ lives and are not likely to change due to public condemnation of their wasteful tendencies. On the other hand, a financial incentive, like a carbon tax, targets what many corporations value greatly – their profits – and is therefore much more likely to cause a corporation to change its ways. I agree with Alexander Quinn’s statement that “a carbon tax is one of the most effective tools for reducing carbon emissions” because a financial incentive is very appealing to companies, and therefore very functional.
    I believe that our government should pass more legislation like the carbon tax – further financial incentives, like tax credits for eco-friendly manufacturers, will serve to further pressure corporations into becoming more sustainable. In this way, we can lower the impact businesses have on our planet and thereby create a better balance between business and the environment.

  4. It is wonderful to see the business world becoming more conscious of sustainability and preserving the environment when carrying out plans and projects. This planet cannot sustain solely in the interest of shareholders. As we have seen in the past, without regulation, nothing will stop big businesses from exploiting the workers without public protests and rallies to send the message and push policymakers to pass laws. The same holds true now with the relationship between businesses and their affected communities and environments. In the past, we have seen the establishment of the Environmental Protection Agency (EPA) and the passage of regulations like the National Environmental Protection Act (NEPA). However, those legislations established over 50 years ago are failing to avert the effects of climate change.

    Although the idea of conscious capitalism brings a good initiative, it is naive to think that companies will voluntarily give up portions of their profits for the environment. Businesses operate based on making a profit. Preserving the environment isn’t one of their MO’s unless they benefit from doing so through public relations. Rather, we need to push political leaders and policymakers to pass incentivizing, impactful laws. One of the first ones that come to mind is a carbon tax. As the article describes, a carbon tax sets a price that emitters must pay for each ton of greenhouse gas emissions they emit. Business plans current companies are operating under may become more costly, and this will force companies to reconsider other eco-friendly options. Besides, the collected carbon tax can then be invested back into protecting the environment. Obviously, this would never happen without voters going out and advocating for change. So go out and make your voice heard!

    Implementing a carbon tax will go beyond affecting companies. The people will also be responsible for what they emit through gas-powered vehicles. Similarly, an indirect increase in price per gallon may let car buyers rethink whether or not they want a conventional gas-powered car that emits greenhouse gases, or an electric vehicle (EV) or hybrid. Furthermore, governments can subsidize EVs and hybrid car manufacturers, making those vehicles even more affordable than before. Many European countries like Germany, France, and Norway are already doing this. Lastly, legislators can pass laws that require large businesses to recollect their waste products for recycling. For example, instead of a Coca-Cola bottle being $1, they can charge it for $2 and then give $1.05 for returning the glass bottle itself. However, this may disincentivize consumers after seeing a higher price tag, but it’s worth a try at a local scale.

    All of these are great ways to incentivize the protection and conservation of our environment. But many of these are to be done on a large scale. Yes, we can push our political and business leaders to implement many of these changes, but there are many impactful things that each of us can also do. I am glad the article also touches on things every day people can do to become more sustainable outside of Congress and courtrooms. Urban agriculture presents itself as one of the possible projects individuals and small communities can take up to make a change, but I immediately thought of an even bigger impact: the Covid-19 lockdown.

    We can easily see the collective impact of the lockdown on the environment, causing improved air quality and a reduction in water pollution in different parts of the world. Most importantly, the world saw a 6.4% decrease in CO2 emissions. This decline was a result of most of the world staying home and in the U.S. burned an average of 50 million fewer gallons of gas a day according to the Federal Highway Administration. This just goes to show how big of an impact we can make if we choose to take action. So why wait when we can start making impactful changes immediately?

    • I would like to point out a little thing I thought of while reading this comment, specifically in the part where it talks about cars. While the use of EVs and Hybrids are indeed better than what we currently have now, they still aren’t exactly the best option. EVs and Hybrids require batteries to work. Those batteries are made of lithium, and lithium mining operations tend to poison the water sources nearby. Chile, one of the biggest places in lithium mining, has 65% of its local water sources consumed or contaminated by the mining operation, leaving the locals to have to search for new sources of water. And it doesn’t stop there. After all, you need somewhere to dispose of these batteries when they stop working. And when lithium batteries are left in a landfill, their fluids can leak out and seep into the earth, where they can contaminate more life. This is very obviously not a solution to environmental problems, we are just trading one problem for another.

      So, what can be done? If we stop using electric cars, CO2 emissions will go back up, but if we use electric cars, then lithium mining contamination will speed up. Well, if we had a railroad system, we could just take cars out of the equation entirely. With a large railroad system connecting the country, people could just take the train to where they want to go. Japan has already somewhat implemented this with the Shinkansen. Theoretically, countries across the world may be able to replicate this success. There will, very obviously, be unforeseen complications, such as how to connect to remote areas, but I believe that the end result would be worth it.

    • Hi Richard!

      Hope you are having a lovely day! Wanted to drop by and engage with your comment because I think you make quite a few thought-provoking points!

      First, I agree with your argument that public participation is crucial in both holding companies accountable and reducing our personal carbon footprints. Especially since we are in the age of technology and “cancel culture,” citizens can easily call out businesses for being unethical and irresponsible. With that being said, you do acknowledge that conscious capitalism is simply not realistic since businesses prioritize making a profit. After all, big oil and manufacturing companies in particular will lose more by becoming environmentally conscious, if that is even possible.

      However, here is where I disagree. In both your comment and the Knowledge @ Wharton article, the following two points appear:
      1. the business world is beginning to preserve the environment
      2. the carbon tax is a good idea

      I think it is important to start by defining what environmental consciousness is. According to Lauren Grimshaw, an environmentally-conscious company is one “that is aware of the impact it has on its surrounding environment.” However, an environmentally-conscious company does not necessarily mean it is sustainable or socially responsible. A majority of businesses do not have corporate social responsibility (CSR), which is an attitude that enables them to make positive changes that not only benefit their stakeholders but also their local communities. Since many corporations lack CSR, they are not actively preserving the environment and changing their business models to more sustainable ones. Now, that is not to say that there are zero companies that are changing. However, a majority, particularly small Gen Z businesses, fall into what I call the “supply chain trap.”

      With the explosion of TikTok, many small business owners are using social media platforms to market and promote their sales, and as a result, many of them have opened for both national and international shipping. Even though their products may use 100% sustainable and/or biodegradable materials, these business owners neglect the climate impacts that come from transportation. Because these products are being shipped off to foreign countries, both airplanes and automobiles have become a part of the supply chain. Consumers have become complacent and ignore other factors that may contribute more to climate change. Transportation, especially airplanes that burn thousands of gallons of fuel per flight, contributes the most in terms of carbon emissions throughout the entire process. In order for businesses to become truly environmentally just, they should have a holistic analysis that considers all aspects of their supply chains.

      Another connection to consider is the development of cryptocurrency. Cryptocurrency has become the latest fad for many consumers, particularly those who identify as millennials. In a report conducted by Bank of America (BofA) Global Research, Bitcoin–a specific type of cryptocurrency–and its carbon emissions have grown by over 40 million tons within just the past two years. Two years! And its emissions are still exponentially growing! It is difficult to predict how much of a presence cryptocurrency will have in the far future, but it may continue to gain momentum and popularity within the next 5-7 years. As a result, more people will invest and use different kinds of cryptocurrency, and BofA even states that we can expect Bitcoin alone to contribute more to global warming than major airlines such as American Airlines.

      Moving onto the carbon tax in the context of the US, I am not sold on this idea simply because I do not think it is a thorough, inclusive solution in and of itself. Echoing the third concept introduced in the Knowledge @ Wharton article, environmental justice requires an intersectional understanding and approach. Black and brown folks are disproportionately affected by climate injustice, and we see these negative impacts very clearly in large metropolitan cities.

      Two years ago, my classmates and I were required to visit a local garden in Oakland, California to learn more about the city and its geographic diversity. Oakland is known for its constant struggle with housing, but I never noticed the disparity in land development until the day of our trip. Located by a concrete bridge that arches over a muddy river, the garden was up on the side of a hill that had a perfect view of what laid beyond that bridge. On our side of the city, streets were lined with unkempt weeds and houses that had chipped paint and splintering wood planks. However, tall buildings and employees walking with sparkling watches and ironed ties decorated the other side of the bridge. The socioeconomic gap was jarring to witness.

      Here is why this socioeconomic gap matters and is generally applicable: the carbon tax increases the prices of certain resources, such as gas, electricity, etc., meaning poor populations will have to spend increasingly more on basic amenities. It is important to understand that a majority of poor populations are comprised of black and brown communities, and they will carry the increasing burden of having to support themselves without having a basic education, healthcare, and more. The carbon tax is a class- and race-blind solution, making it INSUFFICIENT for effective change.

      A better way to approach the implementation of the carbon tax is by coupling this policy with the reinforcement or creation of federal programs that are geared towards addressing poverty and supporting low-income communities. By expanding programs such as food stamps, income assistance, and social security concurrently with the passing of the tax policy, not only can we gradually help those in poverty get by despite increasing prices, but we can also begin to break the inherent connection between climate change and poverty. It also would not hurt to revise the carbon tax so that policymakers are aware of its racial and elitist implications. While we are making slow but steady progress, we should not remain complacent and should always be on the lookout for better, more inclusive alternatives that allow us to get one step closer to protecting our planet.

      Let me know if you have any questions or ideas of your own, Richard! It was fun having this conversation with you!

      Sources:
      https://ecoconsciouslauren.com/blog/green-terminology-for-small-business
      https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-planet-heres-how-bad/
      https://www.thebalance.com/carbon-tax-definition-how-it-works-4158043
      https://www.usatoday.com/story/money/economy/2018/10/01/fighting-poverty-america-slowing-despite-recent-economic-recovery/1445296002/

  5. Both concepts of Blue Economy and ocean-based business from the Knowledge@Wharton article are valuable. They increase profitability for businesses and create jobs in international trade. However, they are not free from risks.

    In this age of plastics, destructive pollutants such as microplastics threaten ocean health. Last month, during my beach cleaning volunteer work on Lido Beach, Hong Kong, I observed tiny objects on the surface of the beach. Unlike the common notion put forth by many scientists, microplastics were visible to the naked human eye due to their size and countless numbers. It was so severe that one could see the wave marks as they were dispersed throughout the beach. Yet, it was impossible to pick them up – they get absorbed into living organisms such as oysters and tropical fishes. This was rather concerning because humans end up consuming organisms that have ingested microplastics. Predictions based on current trends suggest that plastic waste will reach 26 billion metric tons by 2050, with approximately 236 thousand metric tons of microplastic floating on the ocean.

    As one research/business potential for a post-Covid 19 era, one can consider increasing research and development of galleria mellonella (caterpillars). They eliminate microplastics by consuming them by using their digestive system that has special enzymes in the intestines. Caterpillars dissolve and break down the microplastics in the intestine. However, it is realistically impossible to raise galleria mellonella near the beach as it is not known if they survive in the water. Furthermore, they can negatively affect bee colonies and put crops at risk. Instead, we could try to come up with alternative ways of using galleria caterpillars for further advanced methods. We could consider making artificial organs that suit the size of top predators such as killer whales or great white sharks. This could be a quick achievable way to decompose the plastic in the ocean. To realize such hitherto unprecedented technology, there is much to be done. Scientists should research the mechanism of how galleria’s intestine dissolves the plastic, create an artificial organ (intestine) of its mechanism, and then study how said organs can be safely transplanted into killer whales and great white sharks.

    It might be worthwhile to use 3D printing technology for this. Following the emergence of Covid-19, 3D printing technology has resurfaced as one of the main means of assisting medical institutions in overcoming the scarcity of protective gear and replacement parts. Likewise, it can be utilized to generate anatomical structures in cell cultures to mimic the formation of human organs. It will save numerous lives by enabling speedier transplants that are compatible and do not require lifelong anti-rejection therapy.

    As we head to 2022, we’re keeping an eye on a lingering worldwide pandemic and the growing urgency of plastic waste. There are many concerns behind the brittleness of 3D printing and the unknown mechanism of the caterpillar’s lung, but this unprecedented technology may be well adapted to preserve ocean-ecosystemic health and to support the blue economy. It may, after all, create a self-sustaining ocean and reduce microplastic waste.

Leave a Reply

Your email address will not be published. Required fields are marked *