S ustainability Australian business
principles and practice
Sustainability Australian business
First published 2013 by John Wiley & Sons Australia. Ltd 42 McDougall Street. Milton Qld 4064
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Sustain ability in Australian business: principles and practice/Gianna Moscardo ... let al.). 9780730300311 (pbk.) I neludes index. Social responsibility of business - Australia. Business - Environmental aspects - Australia. Environmental auditing - Australia. Industries - Environmental aspects - Australia. Moscardo. Gianna, 1962-658.4080994
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CHAPTER 1) Sustainability, economy and society by Professor Giamla Moscardo 1
CHAPTER 2) Sustainability, stakeholders and the nature of the firm by Dr Wayne Fallon 35
CHAPTER 3) Business ethics, corporate governance and corporate social responsibility by Professor Gianna Moscardo 67
CHAPTER 4) The economics of sustainable development by Dr Philip Lawn 99
CHAPTER 5) Sustainable business models by Dr Geoff Lamberton 133
CHAPTER 6) Carbon management by Dr Geoff Lamberton 161
CHAPTER 7) Strategy by Dr Don Clifton and Dr Geoff Wells 187
CHAPTER 8) Sustainability accounting and reporting by Dr Anna Rowe 219
CHAPTER 9) Finance by Dr Jacquelyn Humphrey 249
CHAPTER 10) Marketing and sustainability by Professor Gianna Moscardo 273
CHAPTER 11) Sustainable production by Will Kershaw and Marguerite Renou! 315
CHAPTER 12) Human resources and sustainability by Dr Retha Wiesner 343
CHAPTER 13) Global environment by Dr Brad Pettitt 367
CHAPTER 14) Global development by Professor Gianna Moscardo 397
CHAPTER 15) Social business by Dr Geoff Lamberton 427
Applications at a gJatlCe ix
Acknowledgements xi
CHAPTER 1) Sustainability, economy and society 1 Evil corporations, green celebrities and sustainability in popular culture 2 Introduction 2 Defining sustainability 3
Quality of life, consumption, sustainability and forms of capital 5
Weak versus strong approaches to sustain ability 8 Core principles of sustainability 8
A brief history of sustainability 9 S P 0 TlI G H T Cadbury Fairtrade chocolate 13 Current forces for business sustainability 14
Idea generators and opinion leaders 15 Rulemakers and watchdogs 15 Business partners and competitors 16 Investors and risk assessors 16 Consumers and community 17
SPOTlIGHT The MBA Oath 18 The environmental, economic and social pillars of
sustainability 19 Environmental dimensions 21 Economic dimensions 22 Social dimensions 23 Corporate governance: a fourth sustainability
dimension? 25 S P 0 TlI G H T McWillIams Wines 25 Why sustainability is good business 26 Overview of this book 27 Summary 29
Key terms 30 Review questions 30 Discussion questions 30 Case study 31 Notes 32
CHAPTER 2) Sustainability, stakeholders and the nature of the firm 3S
Sustainabmty and accountability at NBAD 36 Introduction 36 Stakeholder theory and practice 38
Stakeholders and sustainability 39 Stakeholder salience 41 Stakeholder management strategies 43
SPOTLIGHT Sustainability at Pacific Brands 45 Sustainability in internal and external business contexts 46
Factors influencing implementation of sustainability 46
Dynamic influences of government and civil society sectors 49
Business associations and industry groups 53 SPOTLIGHT Conservation Volunteers - 'connecting people with our environment' 54 Sustainability, sustainable development and paradigm
change 55 Sustainability through accountability 56
SPOTLIGHT Increasing energy costs for Australian business 58 Frameworks for supporting business sustainability 59
Government frameworks 59 Civil society frameworks 59 International frameworks 60
Sustainability business indexes 60 Summary 61 Key terms 62 Review questions 62 Discussion questions 62 Case study 62 Notes 64
CHAPTER 3) Business ethics, corporate governance and corporate social responsibility 67
The myth of the amazing Nepalese porter 68 Introduction 68 S POT L I G H T The corporation: bad apples, psychopaths or civic citizens? 70 Business ethics 71
Changing conceptions of business: from shareholders to stakeholders 71
Philosophical approaches to ethics 72 Ethical decisions 74 Building an ethical business culture 75 Ethics codes 76
SPOTLIGHT James Hardie: lessons in avoiding responsibility 77 Corporate governance 78
Principles of good corporate governance 79 The importance of partnerships 83 The importance of sound risk assessment and
management 84 SPOTLIGHT ISO 26000: guidelines for social responsibility for business 86 Corporate social responsibility (CSR) 87
Definitions and dimensions of CSR 88 Types of CSR actions 89
Summary 91 Key terms 91
Review questions 92 Discussion questions 92 Case study 92 Notes 94
CHAPTER 4) The economics of sustainable development 99
Sustainable development and climate change 100 Introduction 100 What is sustainable development? 101
The mainstream view of the economy: the economy as an isolated system 102
The economy as a subsystem of the natural environment 103
Ecological and economic limits to growth 105 The linear throughput model 105 Ecological sustainability: environmental rules of thumb 107 Optimal and maximum sustainable scale of the economy 108
Sustainable development indicators 109 What is gross domestic product? 110 An indicator of economic welfare: the genuine progress
indicator 112 An indicator of ecological sustainability: ecological footprint
versus biocapacity 115 SPOTLIGHT Sustainable development in China: myth or reality? 116
Sustainable development: policy goals and instruments 117 Three major policy goals to achieve sustainable
development 118 Three major policy instruments to achieve sustainable
development 120 Cap-auction-trade systems to facilitate sustainable
development 120 SPOTLIGHT Eco-taxes versus cap-auction-trade systems: which is best? 122 Sustainable development: potential business
implications 123 S POT L I G H T How a sustainable production philosophy can increase the profits of a business and benefit society 125 Summary 127 Key terms 128 Review questions 129 Discussion questions 129 Case study 129 Notes 131
CHAPTER 5) Sustainable business models 133 Ecostore 134 Introduction 134
Industrial ecology 136 Industrial ecosystems 136
SPOTLIGHT An industrial ecosystem in China 138 Barriers to forming industrial ecosystems 140 Biomimicry 141 Biomimetic design 141
Natural capitalism 143 Critique of natural capitalism 146
Cradle to cradle 147 SPOTLIGHT City Farm 149
The Natural Step 150 5 P 0 TL I G H T Rocky Mountain Flatbread Company 151
Model of a sustainable business organisation 153 The Natural Edge sustainability model 154 Summary 156 Key terms 157 Review questions 157 Discussion questions 157 Case study 157 Notes 159
CHAPTER 6) Carbon management 161 Turning waste into energy 162 Introduction 162 Carbon emissions in Australia 163 A systematic approach to carbon management 164
Carbon footprint analysis 165 SPOTLIGHT Australian small business carbon footprint 169
Climate risk and opportunities 170 Energy efficiency 171 Renewable energy 172
SPOTLIGHT AGL 173
SPOTLIGHT Sustainable Dance Club 175 Emissions trading 176 Carbon offsets 177
SPOTLIGHT Coopers Brewery 179
Sustainable climate management 179 Summary 182 Key terms 182 Review questions 182 Discussion questions 182 Case study 183 Notes 184
CHAPTER 7) Strategy 187 The Body Shop 188
Introduction 188 Defining strategy 189
contents.
~
A sustainable world and sustainable business 190 A sustainable world 190 Sustainable business 191
The four levels of strategy 194 Enterprise strategy 194 Corporate strategy 195
SPOTLIGHT Better Place and electric cars in Israel 19] Business strategy 198
SPOTLIGHT McDonald~ and waste 198
Functional strategy 199 SPOTLIGHT Marketing strategies: green wash, deep greenwash, and bluewash 200 The phases model 20 I
Compliance strategy 202 Efficiency strategy 207
SPOTLIGHT 3M and the Pollution Prevention Pays (3P) program 210
Strategic proactivity strategy 210
Sustaining corporation strategy 212 Summary 214 Key terms 215 Review questions 215 Discussiofl questions 215 Case study 216 Notes 217
CHAPTER 8) Sustainability accounting and reporting 219
Sustainability data wanted 220 Introduction 220 Financial accounting and reporting 221
Environmental accounting 222 Reasons to undertake environmental accounting 222 Environmental reporting 226
S POT L I G H T Corporate reporting breakthrough with initial results from Puma's environmental profit and loss account 229 Environmental management accounting 229
Physical information 230 SPOTLIGHT Wesfarmers sustainability scorecard 231
Monetary information 232 Linking physical and monetary information under
EMA 233 Sustainability accounting and the Global Reporting
Initiative 235 Linkage bern'cen sustainability accounting and
reporting 236 Global Reporting Initiative (GRI) 238
SPOTLIGHT BHP Bil/iton sustainability reporting 240 Summary 244 Key terms 244
Contents
Review questions 244 Discussion questions 245 Case study 245 Notes 246
CHAPTER 9) Finance 249 Oil spill damages BP's share price 250 Introduction 250 The development of the sustainable finance market
United Nations Principles for Responsible Investment Global Reporting Initiative 251 Carbon Disclosure Project 252 Equator Principles 252 Market exchanges and legislation 252
SPOTLIGHT Westpac 253
Measuring sustainability 253 Some providers of sustainability information 254
5 PO T II G H T Sustainable Investment Research Institute (SIRlS) 255
2SI 251
Sustainability factors in valuation and investment 256 A review of some relevant concepts 256 ImpJications for sllstainability 258 The relationship between sustainability. risk and
returns 259 Why bother with sustainability? 261
Socially responsible investment 261 How socially responsible investing works 262
SPOTLIGHT Socially responsible superannuation 264 The size of the socially responsible investment market 265 Returns to socially responsible investments 265 Accusations of 'greenwashing' 265
Summary 267 Key terms 267 Review questions 268 Discussion questio1lS 268 Case sllldy 268 Notes 269
CHAPTER 10) Marketing and sustainability 273 How many planets does it take to support your lifestyle? 274 Introduction 274 Marketing basics 276
The four As of sustainable consumer behaviour 277 SPOTL IGHT Sustainable tourism 2]9 Assessing market demand for sustainable goods and
services 279 Understanding consumer demand for sustainable
products and businesses 280
Barriers to sustainable consumption 282 Eco-Iabelling and greenwashing 285 Emerging and alternative markets for sustainability 286
SPOTliGHT Toyota Prius 290 Sustainable marketing strategy and practice 291
Sustainability challenges for traditional marketing 291 Core features of sustainability marketing strategy 292
SPOTLIGHT Sustainability marketing at Henkel 293 Elements of the sustainability marketing mix 294
SPOTLIGHT Ergon Energy's '10% less' campaign 298 Principles of effective social marketing 298
Understanding stakeholders 300 Effective persuasive communication 302 Solutions that cut costs and support convenience 305
Summary 307 Key terms 308 Review questions 308 Discussion questions 309 Case study 309 Notes 311
CHAPTER 11) Sustainable production 315 Changing responsibilities of producers 316 Introduction 316 Basic environmental responsibilities of producers 318
Compliance with environmental laws 319 Self-regnlation 321 Expectations of continual improvement 321 Environmental reporting 323
SPOTLIGHT Environmental management systems at Tyco Water 324 Eco-efficiency: doing more with less 325
The theory and application of eco-efficiency 325 Implementing eco-efficiency 326 Examples of eco-efficiency opportunities and
clean technology 330 SPOTLIGHT Eco-efficiency for the Australian dairy industry 332 Life cycle perspectives on production 333
Life cycle assessment 333 Extended producer responsibility 335 Eco-redesign 336
SPOTLIGHT Fuji Xerox: at the forefront of sustainable production 336
Summary 338 Key terms 338 Review questions 338 Discussion questions 339 Case study 339 Notes 341
CHAPTER 12) Human resources and sustainability 343
The Good Guys: sustainability leadership at work 344 Introduction 344 The human foundations of the sustainable organisation 345
Setting the foundations for sustainability success 349 Developing the business case for sustainability 351 Establish a strategic orientation to sustainability 352
SPOTLIGHT Qprint: even small organisations can do it 353 Organisational change and sustainable business 354
Utilise change capabilities 354 SPOTLIGHT Yarra Valley Water: building a sustainable future 355
The internal dimension of sustainable business 357 Developing a sustainability culture 357
SPOTLIGHT Leadership for 5ustainability 361 Summary 363 Key terms 363 Review questions 363 Discussion questions 364 Case study 364 Notes 365
CHAPTER 13) Global environment 367 The global environment - the biggest sustainability chal/enge 368 Introduction 368 The global environment and sustainability 369
Mapping approaches to environmental sllstainability 370 Sustainability and the global environment today 372 The ecological footprint: a tool for understanding the health
of the global environment 373 SPOTLIGHT Peak food 375 Climate change and carbon emissions 375
The science of climate change 376 Climate change impacts 378 Responding to climate change 379
5 P OT L I G H T Renewable energy businesses - opportunities in Australia and New Zealand 382 SPOT L I G H T Overview of carbon-reduction schemes around the world 384 Biodiversity 385
What does biodiversity do for us? 386 Biodiversity loss 386 Key strategies to protect biodiversity 388
SPOTLIGHT Water sanitation in Bangladesh 390 Summary 392 Key terms 392 Review questio1ls 392
Contents ta_ ....
Discussion questions 393 Case study 393 Notes 395
CHAPTER 14) Global development 397 If the world were a village of 100 people... 398
Introduction 398 Effective global governance for sustainable
development 400 The evolution of development approaches 402 The role of MNCs in development 403
S POT L I G H T The Forest Stewardship Council: developing new models of global governance 404
Approaches to global governance 406 New models of global governance 407
SPOTLIGHT Shades of green: cultural differences;n attitudes towards sustainable behaviour 408
Culture and sustainability 409 Defining culture 410 Culture and sustainable business practice 410 Implications for business sustainability 415
SPOTllGHT 10000 Tuvaluans 415
Sust.inability on the peripheq 416 Defining the periphery 416 Barriers to sustainable outcomes for peripheral regions 417 Future options for sustainable development 419
Summary 420 Key terms 420 Review questions 420
Discussion questions 421
Case study 421 Notes 423
CHAPTER 15) Social business 427 Westpac in Cape York 428
Introduction 429 A brief history of social business 430
S POT L I G H T Grameen Danone Foods 433
Social entrepreneurship 434 Describing the social entrepreneur 434 Evaluating success of social business 435 Microfinance 436 Hybrid social business models 438
SPOTLIGHT The Song Room 440 The Fairtrade system 441 SPOTLIGHT Fairtrade organic cacao in Belize 444
The Bottom of Pyramid model 445 SPOTLIGHT Mobile phones in Africa 447
Social business resources 447 Summary 449 Key terms 449 Review questiDns 449 DiscussiDn questions 450 Case study 450 Notes 451
Glossary 453
Illdex 461
1 Sustainability, Evil corporations • Cadbury Fairtrade chocolate Ecotourism in Botswana economy and green celebrities • The MBA Oath society and sustainability in • McWilliams Wines
popular culture
2 Sustainability, Sustainabilityand • Sustainability at Pacific Brands From 'No dams' to 'No stakeholders accountabi lity at • Conservation Volunteers- native-forest logging': and the nature NBAD 'connecting people with our the influence of the of the firm environment' Tasmanian environmental
• Increasing energy costs for movement Australian business
3 Business ethics, The myth of the • The Corporation: bad apples, HSBC: setting CSR corporate amazing Nepalese psychopaths or civic citizens? standards in Asia governance and porter • James Hardie: lessons in avoiding corporate social responsibility responsibility • ISO 26000: guidelines for social
responsibility for business
4 The economics Sustainable • Sustainable development in China: Sustainable development of sustainable development and myth or reality? across the Asia-Pacific development climate change • Eco-taxes versus cap-auction-trade region
systems: which is best? • How a sustainable production
philosophy can increase the profits of a business and benefit sOciety
5 Sustainable Ecostore • An industrial ecosystem in China CSL Ltd business models • City Farm
• Rocky Mountain Flatbread Company
6 Carbon Turning waste into • Australian small business carbon Yalumba Winery management energy footprint
• AGL • Sustainable Dance Club • Coopers Brewery
7 Strategy The Body Shop • Better Place and electric cars in Interface Global Israel
• McDonald's and waste • Marketing strategies: greenwash,
deep greenwash, and bluewash • 3M and the Pollution Prevention
Pays program
8 Sustainability Sustainability data • Corporate reporting breakthrough Lighting cost benefit accounting and wanted (CPA) with initial results from Puma's analysis reporting environmental profit and loss
account • Wesfarmers sustainability scorecard • BHP Billiton sustainability reporting
Applications at a glance -.....
9 Finance Oil spill damages BP's • Westpac The fall of Babcock &
share price • Sustainable Investment Research Brown Institute (SIRIS)
• SOcially responsible superannuation
10 Marketing and How many planets • Sustainable tourism Food sustainability: sustainability does it take to • Toyota Prius challenges and responses
support your • Sustainability marketing at Henkel lifestyle? (ecological • Ergon Energy's '10% less' campaign footprint calculator)
11 Sustainable Changing • Environmental management systems Visy Recycling production responsibilities of at Tyeo Water
producers • Eca-efficiency for the Australian dairy industry
• Fuji Xerox: at the forefront of sustainable production
12 Human The Good Guys: • Qprint: even small organisations can Rockcote: sustainability resources and sustainability do it leadership sustainability leadership at work • Yarra Valley Water: building a
sustainable future • Leadership for sustainability
13 Global The global • Peak food Climate change and environment environment - the • Renewable energy businesses- biodiversity in Cambodia:
biggest sustainability opportunities in Australia and NZ integrating conservation challenge • Overview of carbon-reduction and development for a
schemes around the world sustainable future • Water sanitation in Bangladesh
14 Global If the world were • The Forest Stewardship Council: The Millennium Villages development a village of 100 developing new models of global Project: opportunities for
people ... governance effective corporate social • Shades of green: cultural differences responsibility
in attitudes towards sustainable behaviour
.10000 Tuvaluans
15 Social business Westpac in Cape York • Grameen Danone Foods The Homeless World Cup • The Song Room • Fairtrade organic cacao in Belize • Mobile phones in Africa
Applications at a glance
The authors and publisher would like to thank the following copyright holders, organisations and individuals for their permission to reproduce copyright material in Sustainability in Australian business: principles and practice.
Images • Copyright Clearance Center: 6, 7 R. Costanza, j. Cumberland, H. Daly, R. Goodland & R. Norgaard (1997), An introduction to ecological economics, p. 139, TAYLOR & FRANCIS GROUP LLC: 39 T. Donaldson & 1. Preston (1995), 'The stakeholder theory of the corporation', Academy of. Management Review, vol. 20, no. I: 42 R. Mitchell, B. Agle & D. Wood (1997), 'Toward a theory of stakeholder identification and salience: Academy of Management Review, vol. 22, no. 4 .• Yale
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Professor Gianna Moscardo, taken from Benckendorff, Moscardo and Murphy (2006) .• Australian.. Conservation Foundation: 317 © Australian Conservation Foundation, Consuming Australia:~
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rights', Innovations, vol. 3, MIT Press Journal. • USEPA: 224 Source: USEPA (1995) .• lAG: 235 Supplied courtesy of IAG - Insurance Australia Group .• Westpac: 253 Reproduced with permission from the Westpac Group .• Global Footprint Network: 274 Source: Global Footprint Network, 2010 National Footprint Accounts .• Chris McGrath: 319 C. McGrath (2011), Synopsis of the Queensland environmental legal system, 5th edition .• UNEP Working Group for Cleaner Production 329, 330 From R. Pagan, P. Prasad, N. Price & E. Kemp (2004), 'Eco efficiency toolkit for the Queensland food processing industry: Australian Industry Group .• Kate O'Brien: 334 Source: K. O'Brien, R. Olive, YC. Hsu, L. Morris, R. Bell. N. Kendall (2009). Life cycle assessment: reusable and disposable nappies in Australia . • Don Parry: 353 Reproduced with permission of Don Parry .• 100 People Foundation:
398 Reproduced with permission of 100 People Foundation www.100people.org .• Yunus Centre: 436 © Muhammed Yunus, used with permission of the Yunus Center.
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