Why it is in a Company\'s Best Interest to Reduce Environmental Waste
 

A company's goal is to maximize profit (or shareholder wealth), not to reduce environmental waste. Therefore the government must provide them with an incentive (a large fine for non-compliance) in order to make it in their economic interest to do so.

Rather than discuss the unintended negative consequences of such a policy (however, others can feel free to do so [img]/images/graemlins/smile.gif[/img], I'd like to talk about why it is generally in a company's best interest to be environmentally friendly, even absent government regulation.

Financial performance and environmental performance are not mutually exclusive. In fact, they often go hand-in-hand.

-In 1998 UPS redesigned its service packaging, making it lighter and reusable. This change not only saved UPS $1.6 million annually, but also "conserved enough energy to light 20,000 light bulbs for a year, eliminated 550 tons of solid waste, and saved more than 2,200 tons of trees."

Furthermore researchers found that "when companies are mentioned in the media for positive environmental events, their stock price is stronger than the broader market" (Klassen and McLaughlin, 1996). For companies whose environmental policies are criticized in the media, the opposite is true.

In addition, some companies not only hold themselves environmentally responsible, but also do so for their business partners.

For example, Disney "maintains a "Code of Conduct for Manufacturers" that dictates business practices, social performance, and environmental performance requirements that all Disney suppliers must follow."

In order to maximize profits, companies desire to eliminate all waste, be it related to inventory, product defects, or the environment.

There is however one "company" that doesn't have a profit-based incentive to operate efficiently and reduce waste. Also, this company has sovereign immunity, and thus cannot be sued for environmental infractions. I'll let you guess who this company might be.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

Is it that dastardly Bill Gates 51% of the world company? I hate those guys!

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

Iplayboard,

Your post gives a whopping one example of a company which simultaneously helped the environment (slightly) while eeking out some extra profit. It then pointed to a study which showed that companies would only be environmentally friendly given external pressure to do so. Sure, this can come in the form of market forces. However, in order to generate the market forces necesssary (in this particular case, public opinion) you generally need to spend some money doing studies and ad campaigns. I'll leave it as an excercise to see where that money comes from.

The best part of your post however is: [ QUOTE ]

In order to maximize profits, companies desire to eliminate all waste, be it related to inventory, product defects, or the environment.


[/ QUOTE ]

Way to use the word "waste" in two different ways and imply otherwise.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

[ QUOTE ]
[ QUOTE ]

In order to maximize profits, companies desire to eliminate all waste, be it related to inventory, product defects, or the environment.


[/ QUOTE ]

Way to use the word "waste" in two different ways and imply otherwise.

[/ QUOTE ]

He's not. Efficient technology is clean technology.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

[ QUOTE ]

He's not. Efficient technology is clean technology.

[/ QUOTE ]

You should look into making millions of dollars explaining this to CEOs world wide. Think of the monies. Ah free market, what can't you fix?

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

Not to mention that it's just absurdly wrong. Say a company produces waste because it's simply not technologically feasible not to. The company can either pay a lot of $ to dispose of it cleanly, or pay less $ and dump it.

Now as a math major, I've learnt that a lot of $ > less $, but clearly I am misguided.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

[ QUOTE ]
Not to mention that it's just absurdly wrong. Say a company produces waste because it's simply not technologically feasible not to. The company can either pay a lot of $ to dispose of it cleanly, or pay less $ and dump it.

Now as a math major, I've learnt that a lot of $ > less $, but clearly I am misguided.

[/ QUOTE ]

They would desire to make it technologically feasible. That's what I'm (and I presume whoever I'm defending) talking about, improving processes and technology over time, not the obvious dump vs not-dump today cost difference.

He is talking about "efficiency and waste" which go hand-in-hand. Think coal locomotive vs diesel locomotive.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Waste
 

Sure, sometimes it is profitable to come up with an environomentally friendly innovation. Most of the time it is not; and obviously on day to day activities it's cheaper to not clean, dump it off, etc.

The shortsightedness of companies is a re-occuring problem in the market (Not at all surprising when CEOs are changing companies every couple of years-their ability to get another job will be based on how well they did in those two years, not the long term); even without the problem of fast management turnover, companies often won't invest on projects that are two risky or take too long to turn a profit, even if the potential for long, large term gains in human well-being exist.

[ QUOTE ]
There is however one "company" that doesn't have a profit-based incentive to operate efficiently and reduce waste. Also, this company has sovereign immunity, and thus cannot be sued for environmental infractions. I'll let you guess who this company might be.

[/ QUOTE ] Could it be the one that operates on democratic accountability in a country in which the vast majority of citizens are concerned about environmental waste?

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

You just have to look at the environmental record of companies where there is no government (hint: Africa, SE Asia, Brazil) to see how strongly the free market seeks to be environmentally friendly. http://img39.imageshack.us/img39/9929/rollin9xl.gif

The actual data, as opposed to a handful of flimsy examples (2200 tons of wood - lol), shows that profits and the environment rarely go hand in hand, especially for those likely to do the most polluting.

It's worrying when someone is prepared to sacrifice the truth to make a political point.

Re: Why it is in a Company\'s Best Interest to Reduce Environmental Was
 

[ QUOTE ]
Not to mention that it's just absurdly wrong. Say a company produces waste because it's simply not technologically feasible not to. The company can either pay a lot of $ to dispose of it cleanly, or pay less $ and dump it.

[/ QUOTE ]

Where do you think they are dumping this stuff?