Environmental issues are commanding considerable attention internationally. Climate change, water availability, pollution, and waste generation and disposal are among the leading challenges in this regard. As a major user of raw materials and energy and a major source of pollutants and waste, industry is an important player. Progress in dealing more systematically with issues has been made on several fronts during the past several decades, with industry taking a more active role in addressing current and emerging issues. During the late 1980s and 1990s, institutions for addressing environmental matters were developed, international co‐operation and public awareness increased, and private‐sector actions became more common (UNEP 1997). At the same time, legal frameworks and economic instruments were introduced, while technological advances helped to boost cleaner production. Finally, governments became more circumspect in pursuing developmental objectives with mandated environmental impact assessments becoming more common worldwide (IGEL 2012; Western Governors’ Association 2004).
Despite the progress that has been made in developing institutions, methods, and techniques, environmental degradation remains an important issue. In its recent analysis of the global environment, the United Nations points out that full‐scale emergencies exist in a number of areas, with environmental stewardship lagging behind economic and social development (UNEP 1999). Air pollution, for example, is at a crisis point in many major cities. Moreover, increased greenhouse gas emissions are seen as making it impossible to prevent global warming, despite the efforts undertaken in the Kyoto Protocol and Paris Agreement (see Figure ). There are also important issues to be addressed concerning resource use. Natural capital is declining in a number of key areas, with the implication that efficiency in the use of resources will have to increase, or substitutes will have to be developed in order to meet future consumer demands (Hohen 2000).
Industry Role and Trends
The positive role that industry can play in meeting environmental and interrelated social and economic challenges has been recognized for some time. It was highlighted in Agenda 21, the global plan for sustainable development adopted at the United Nations Conference on Environment and Development (1992). More efficient production processes, preventive strategies, cleaner technologies, and procedures throughout the product life cycle, for example, can be important mechanisms for reducing impacts on resource use and the environment. In practical terms, this means, in the first instance, identifying and promoting sustainable practices. This, in fact, is already being done increasingly in industry, reflecting changes in government policies and heightened industry involvement in identifying and addressing environmental challenges. As discussed at the Forum, industry is moving from an “end‐of‐pipe” reactive strategy that focused on capturing and disposing of pollutants generated during manufacturing to a more holistic approach that integrates environmental considerations more effectively over a broader range of firm functions – including product design and procurement practices, as well as production processes.
The UN, in its Global Environmental Outook‐2000 report, points out that industry has responded in several areas with impressive results (UNEP 1999). The voluntary actions taken to reduce resource use and waste were viewed as a positive step that boded well for the environment. Industry was encouraged to pursue these initiatives, paying particular attention to ways in which these efforts could be expanded to include a broader range of small and medium‐sized enterprises.
Pursuing environmental initiatives, however, does not occur in a vacuum. Such efforts can compete and conflict with other objectives – notably those concerned with financial performance. Some, in fact, have gone so far as to question the viability of “corporate sustainability” given the nature and scope of the potential conflicts (Box 10.1). If financial performance takes precedence, objectives in the environmental and social fields are likely to be compromised or, at the very least, be subject to important constraints. As discussed at the Forum, the trade‐offs become most explicit when performance in different domains is evaluated discretely, using a triple‐bottom‐line (i.e. financial, environmental, and social) approach.
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