Ecological factors affecting business
From CEOpedia | Management online
| Ecological factors affecting business |
|---|
| See also |
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
- carbon footprint of used technology,
- energy requirements for technological processes,
- availability of technologies for emission reduction (chemical-filled smoke, ash and particles),
- possibility of recycling of waste and components,
- technology used for mining and acquiring of other natural resources,
- competitive advantage of new clean technologies (opportunity do differentiate from competitors),
- capital requirements for eco-friendly technologies,
- scientific research in area of ecosystems and clean technologies,
- equipment for handling and moving the waste products and hazardous materials,
- environmental risk assessment and prevention in production processes,
Natural environment influences
- water and air pollution (influencing production processes in high-tech companies and food production),
- quality of water used for consumption or production
- health problems (employee attrition) in polluted places, healthy environments improve mental and physical health and reduce absenteeism,
- quantity of renewable and non-renewable resources available,
- biodiveristy of ecosystems and its protection,
- minerals, oil, gas and other natural resources deposits,
- degradation, deforestation and depletion of fisheries and other natural resources,
- flooding, storms, and other natural disasters caused by human influences on ecosystems (global warming, etc.),
- climate change, drought and food scarcity could lead to social unrest and international conflicts,
- ecosystem services used in business processes,
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
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
