Ecological factors affecting business

Ecological factors influencing business are connected to actions and processes necessary to protect natural environment and in the same time maintain or increase efficiency of the corporation. Ecology often take form of so-called corporate environmentalism, i.e. all actions promoting sustainability, gaining consumer appreciation of eco-friendly products and services, creating image of responsible corporation. There are several ecological factors influencing management decision, business and environment goals. Proper identification of natural environment and its influences during strategic analysis (STEEP analysis, SWOT analysis, TOWS analysis) could lead to better strategic alignment of company to ecosystem and state regulations.

Ecological laws and regulations

• Government policy and policymaker engagement in environmental protection can greatly influence a business's ability to operate sustainably.
• Fees and fines for using natural environment can act as a deterrent for businesses to engage in activities that harm the environment.
• Regulations of waste disposal, recycling and storing can ensure that businesses are properly disposing of their waste in a way that minimizes harm to the environment.
• Regulations of carbon CO2 and toxic fumes emission can help to reduce the overall impact of a business on the environment.
• The relative "value of nature" in political campaigns can affect public opinion on businesses and their environmental impact.
• Increasingly stringent environmental regulations on regional, state and international levels can make it more difficult for businesses to operate without causing harm to the environment.
• The cost of non-compliance with ecological regulations can be significant for businesses, both in terms of fines and damage to their reputation.
• Incentives for businesses and customers for using clean products and services can encourage more sustainable practices.
• Activities of government agencies tracking business activities, giving permits setting minimal standards for any air emissions, procedures for handling waste and hazardous materials can make sure that business is following the regulations and guidelines.
• Requirements for implementing environmental standards e.g. ISO 14000 can help ensure that a business is operating in an environmentally responsible manner.

Social pressure towards clean business

• Environmental groups and their activities can put pressure on businesses to operate in a more sustainable manner.
• Attitudes towards eco-friendly products and services (consumer preferences and demand for such products) can greatly influence a business's decision to invest in more sustainable practices.
• Attitudes toward tourism in intact wetlands, forests, lakes and seas can affect a business's ability to operate in these areas.
• Increased scrutiny of ecological impacts by stakeholders and customers can lead to increased pressure on businesses to operate in a more sustainable manner.
• Human well-being in relation to ecosystem can affect the public's perception of a business and its impact on the environment.
• Values and morality, influence of religious beliefs on managers and consumers can affect a business's decision to invest in more sustainable practices.
• Costs of protective and proactive environmental measures can affect a business's decision to invest in more sustainable practices.
• Transparency of corporate activity due to global IT network can increase pressure on businesses to operate in a more sustainable manner.
• Influence of non-government organizations (mobilization of people through social networks) can increase pressure on businesses to operate in a more sustainable manner.
• Increase of risk of extremism and terrorist attack using environmental factors (contamination, nuclear waste, etc.) can affect a business's ability to operate in certain areas.
• Biases, passion and emotions in environmental decision-making can affect a business's decision to invest in more sustainable practices.

Technological advancements

• The carbon footprint of used technology can impact a company's reputation and contribute to climate change.
• Energy requirements for technological processes can impact a company's operating costs and also affect emissions of greenhouse gases.
• Availability of technologies for emission reduction, such as chemical-filled smoke, ash, and particles, can impact a company's compliance with environmental regulations and also affect the health of employees and surrounding communities.
• Possibility of recycling of waste and components can impact a company's operating costs, efficiency and also its environmental impact.
• Technology used for mining and acquiring of other natural resources can impact the efficiency and environmental impact of these processes.
• Competitive advantage of new clean technologies can provide opportunity to differentiate a company from its competitors and also increase its reputation among stakeholders.
• Capital requirements for eco-friendly technologies can be a barrier for some companies, particularly for small and medium-sized enterprises.
• Scientific research in the area of ecosystems and clean technologies can provide companies with new opportunities for innovation and can also help to mitigate the negative impacts of business activities on the environment.
• Equipment for handling and moving waste products and hazardous materials can impact the safety and health of employees and also the environmental impact of a company's operations.
• Environmental risk assessment and prevention in production processes can help a company to identify and mitigate potential environmental impacts, which can reduce the risk of accidents and also improve the reputation of a company.

Natural environment influences

• Water and air pollution can affect production processes in high-tech companies and food production by causing damage to equipment and potentially contaminating products.
• The quality of water used for consumption or production can impact the taste and safety of products, and can also affect the efficiency of production processes.
• Health problems caused by pollution can lead to employee attrition and can also affect employee productivity and morale.
• The availability of renewable and non-renewable resources can impact the cost and sustainability of production processes.
• Biodiversity of ecosystems and its protection can affect the availability of resources for business and can also impact the reputation of a company.
• Minerals, oil, gas, and other natural resources deposits can be important for some industries, but their extraction can also have negative impacts on the environment.
• Degradation, deforestation, and depletion of fisheries and other natural resources can impact the availability of resources for business and can also have negative impacts on the environment.
• Flooding, storms, and other natural disasters caused by human influences on ecosystems (such as global warming) can disrupt production and supply chains and can also result in damage to infrastructure and equipment.
• Climate change, drought, and food scarcity can lead to social unrest and international conflicts, which can impact businesses through disruptions to trade and supply chains.
• Ecosystem services, such as pollination and water purification, can be used in business processes, but their degradation can also negatively impact production and supply chains.

Check also other:

• Social and cultural factors affecting business
• Technological factors affecting business
• Economic factors affecting business
• Political factors affecting business
• Legal factors affecting business
• Ethical factors affecting business

Ecological factors affecting business — recommended articles

Environmental factors affecting business — Examples of threats — Opportunities and threats — Green innovation — Sustainable innovation — Tourism and hospitality — Ethical factors affecting business — Sustainable tourism development — Examples of opportunities

References

• Aragón-Correa, J. A. (1998). Strategic proactivity and firm approach to the natural environment. Academy of management Journal, 41(5), 556-567.
• Christmann, P. (2004). Multinational companies and the natural environment: Determinants of global environmental policy. Academy of Management Journal, 47(5), 747-760.
• Etzion, D. (2007). Research on organizations and the natural environment, 1992-present: A review. Journal of Management, 33(4), 637-664.
• Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management: Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.

Author: Krzysztof Wozniak