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Environmental Factors - Coggle Diagram
Environmental Factors
Waste Management - Waste is also a major issue for businesses. Waste impacts on many different areas of concern within the environment, from the excessive use of materials and resources, e.g. unnecessary packaging, to the production of pollutants as a by-product of the manufacture of goods and the safe disposal of waste generated.
Pressure on landfill space is at an all-time high and the identification of suitable alternative means of disposal presents some difficult problems
Businesses increasingly recognise this as an area which needs improvement. They should design ways of cutting out waste where possible e.g. through reduced packaging and identifying opportunities for reuse and recycle. This represents an opportunity for many businesses to drive down costs and even improve profitability.
The phrase 'reduce, reuse, recycle' summarises the core waste-reduction process. By addressing waste management in this order, managers can ensure that they are achieving the maximum reduction in creation of waste:
Reduce - elimination at source is far more effective than dealing with waste as a product. monitor what is coming in and where it goes.
Reuse - can waste be turned into a new resource? shredded paper can become packaging, broken items might be repaired, obsolete (out of date) items put to an alternative use
Recycle - businesses are starting to get much better at turning waste into new products. remaining waste (after reduction and reuse) should be separated into recyclable materials
Pros of Waste Management:
- waste management can help businesses to reduce their costs
- businesses may be able to offer products at lower prices to consumers, giving the firm a competitive edge (better - e.g. USP)
- by reducing certain types of waste, businesses might be able to reduce the tax they pay
- if a business has a well-developed waste management policy, designed to protect employees and the environment from hazardous waste, its image may be improved
- by spending money on research and development in waste management, businesses may be able to find ways of using their waste productively, such as developing a material from the waste that they can then sell.
Cons of Waste Management:
- it can be difficult to arrange for waste to be disposed of correctly. The disposal of nuclear waste in particular has caused international incidents in the past
- some aspects of waste management are very expensive and contribute to higher business costs, which can lead to a reduction in profit
- higher business costs may rise prices of products to consumers
- decisions to be made - with regard to the responsible disposal of waste or the costs incurred by doing it
- small businesses may be at a disadvantage as they will not have the resources to spend on waste management that larger companies have
- companies that spend large sums disposing of waste in an ethical manner can be at a competitive disadvantage compared with those that do not take their social responsibilities so seriously
- a firm must decide which is more important, its image with regard to the responsible disposal of waste or the costs incurred by doing it
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The Negative Externalities (environmental costs) of business activity used to be largely ignored by nearly all stakeholders; those stakeholders that did care were not listed to. Today, things are very different:
- The government and pressure groups (whether local or global) have a strong influence on business activity and, to some extent, they are able to limit its wider environmental impact.
The Role of Government
The UK Government has signed up to a range of EU limits and controls designed to restrict the negative impact of business activity. A range of green taxes has been designed, not so much to punish businesses, but to encourage them to improve environmental practices. These are often referred to as green taxes.
Examples of such taxes include:
- The Climate Change Levy - This is a tax on energy use by non-domestic users. The tax is designed to provide an incentive to reduce energy consumption
- The Landfill Tax - This was the UK's first environmental tax (1996) and this is a charge on waste going to landfills. Landfill sites in the UK are almost full. Trying to open new ones would be met with fierce opposition.
Protecting the environment is now a mainstream business issue. Businesses can no longer afford to ignore their own impact on the environment, or the implications of a changing environment for their operations.
Businesses contribute in many ways to the creation of environmental damage:
- the emission of gas through production processes
- pollution caused by transporting raw materials and products, particularly using road vehicles which emit noxious gases and create congestion and noise
- the pollution of the sea by businesses using it as a 'free' dumping ground
- destruction of the natural environment as a result of activities such as logging
As well as these external influences, many businesses now undertake the control of their environmental impact without the need for external pressure. Some produce and publish their own environmental audits, which measure their impact on the environment and set out plans for improvement.
The Environment Agency - the environment agency is the government body that monitors and controls pollution. It was set up in 1995 (Environment Act) and is has had a significant role in helping to reduce emissions into the air, cleaning up our rivers and generally ensuring that UK businesses comply with the numerous pieces of legislation (law) introduced by the EU and UK Government.
Benefits of Environmental Awareness: Environmental awareness can bring a number of advantages other than reduced business costs and avoiding legal penalties, this include:
- improved business and brand reputation - environmental friendliness can be a highly effective marketing tool
- recruitment of employees who commit themselves to ethical company objectives.
- greater customer loyalty from growing number of ethical consumers